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

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

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

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

----

|                                 |   |                 |   |                                                                                                                                                                 |   |   |   |   |
|--------------------------------------|--------|----------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                 |   |                 |   |                                                                                                                                                                 |   | PAGE   |
|                                 |   |                 |   |                                                                                                                                                                 |   |   |   |   |
| PART I — FINANCIAL INFORMATION |   |                 | 2      |                                                                                                                                                                 |
|                                 |   | Item 1 —  |   |  Financial Statements                                                                                                                                           |   |   | 2      |   |
|                                 |   |                 |   |  Condensed Consolidated Balance Sheets at March 31, 2011 (Unaudited) and December 31, 2010                                                                      |   |   | 3      |   |
|                                 |   |                 |   |  Condensed Consolidated Statements of Operations and Comprehensive Income  for the three months ended March 31, 2011 (Unaudited) and 2010 (Unaudited) |   |   | 4      |   |
|                                 |   |                 |   |  Condensed Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2011 (Unaudited)                                           |   |   | 5      |   |
|                                 |   |                 |   |  Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 (Unaudited) and 2010  (Unaudited)                          |   |   | 6      |   |
|                                 |   |                 |   |  Notes to Condensed Consolidated Financial Statements  (Unaudited)                                                                                    |   |   | 7      |   |
|                                 |   | Item 2 —  |   |  Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                    |   |   | 23     |   |
|                                 |   | Item 3 —  |   |  Quantitative and Qualitative Disclosures About Market Risk                                                                                                     |   |   | 35     |   |
|                                 |   | Item 4—   |   |  Controls and Procedures                                                                                                                                        |   |   | 35     |   |
|                                 |   |                 |   |                                                                                                                                                                 |   |   |   |   |
| PART II — OTHER INFORMATION    |   |                 | 37     |                                                                                                                                                                 |
|                                 |   | Item 1 —  |   | Legal Proceedings                                                                                                                                                    |   |   | 37     |   |
|                                 |   | Item 1A — |   | Risk Factors                                                                                                                                                         |   |   | 37     |   |
|                                 |   | Item 2 —       |   | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                          |   |   | 37     |   |
|                                 |   | Item 3 —       |   | Defaults Upon Senior Securities                                                                                                                                      |   |   | 37     |   |
|                                 |   | Item 4 —  |   | Reserved                                                                                                                                                             |   |   | 37     |   |
|                                 |   | Item 5 —  |   | Other Information                                                                                                                                                    |   |   | 37     |   |
|                                 |   | Item 6 —  |   | Exhibits                                                                                                                                                             |   |   | 37     |   |
| Signatures                           |   |                 |   |                                                                                                                                                                 |
|  EXHIBIT 31(a)                  |
|  EXHIBIT 31(b)                  |
|  EXHIBIT 32                     |

----

----

----

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                                  |   |
|---------------------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Balance Sheets                                                             |   |
|                                                                                              |   | March 31, |   |   | December 31, |   |
|                                                                                              |   | 2011 |   |   |   | 2010* |   |
|                                                                                              |   | (unaudited) |   |   |   |   |   |
|  Assets                                                                                      |   |   |   |   |   |   |   |
|  Fixed-maturity securities, held to maturity, at amortized cost (fair value of $583,792 at   |   |   |   |   |   |   |   |
|  March 31, 2011 and $606,398 at December 31, 2010)                                           |   | $ | 606,222 |   |   | $ | 605,424 |   |
|  Fixed-maturity securities, available for sale, at fair value (amortized cost of $17,914,086 |   |   |   |   |   |   |   |   |
|  at March 31, 2011 and $16,277,052 at December 31, 2010)                                     |   |   | 18,030,072 |   |   |   | 16,339,101 |   |
|  Equity securities, available-for-sale, at fair value (cost of $2,485,876                    |   |   |   |   |   |   |   |   |
|  at March 31, 2011 and $2,825,015 at December 31, 2010)                                      |   |   | 2,621,809 |   |   |   | 2,983,035 |   |
|  Total investments                                                                           |   |   | 21,258,103 |   |   |   | 19,927,560 |   |
|  Cash and cash equivalents                                                                   |   |   | 393,968 |   |   |   | 326,620 |   |
|  Premiums receivable, net of provision for uncollectible amounts                             |   |   | 5,764,173 |   |   |   | 5,001,886 |   |
|  Receivables - reinsurance contracts                                                         |   |   | 1,920,313 |   |   |   | 1,174,729 |   |
|  Reinsurance receivables, net of provision for uncollectible amounts                         |   |   | 21,847,356 |   |   |   | 20,720,194 |   |
|  Notes receivable-sale of business                                                           |   |   | 624,581 |   |   |   | 705,019 |   |
|  Deferred acquisition costs                                                                  |   |   | 3,879,553 |   |   |   | 3,619,001 |   |
|  Intangible assets, net                                                                      |   |   | 4,017,457 |   |   |   | 4,136,386 |   |
|  Property and equipment, net of accumulated depreciation                                     |   |   | 1,549,590 |   |   |   | 1,585,029 |   |
|  Other assets                                                                                |   |   | 1,723,695 |   |   |   | 1,486,249 |   |
|  Total assets                                                                                |   | $ | 62,978,789 |   |   | $ | 58,682,673 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Liabilities                                                                                 |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                           |   | $ | 19,213,617 |   |   | $ | 17,711,907 |   |
|  Unearned premiums                                                                           |   |   | 18,512,071 |   |   |   | 17,277,332 |   |
|  Advance premiums                                                                            |   |   | 609,881 |   |   |   | 410,574 |   |
|  Reinsurance balances payable                                                                |   |   | 2,424,691 |   |   |   | 1,106,897 |   |
|  Deferred ceding commission revenue                                                          |   |   | 3,324,448 |   |   |   | 3,219,513 |   |
|  Notes payable and capital lease obligations (includes payable to                            |   |   |   |   |   |   |   |   |
|  related parties of $785,000)                                                                |   |   | 1,454,479 |   |   |   | 1,460,997 |   |
|  Accounts payable, accrued expenses and other liabilities                                    |   |   | 2,268,419 |   |   |   | 2,553,031 |   |
|  Deferred income taxes                                                                       |   |   | 2,039,179 |   |   |   | 1,998,557 |   |
|  Total liabilities                                                                           |   |   | 49,846,785 |   |   |   | 45,738,808 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Commitments and Contingencies                                                               |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Stockholders' Equity                                                                        |   |   |   |   |   |   |   |   |
|  Common stock, $.01 par value; authorized 10,000,000 shares; issued 4,643,122 shares;        |   |   |   |   |   |   |   |   |
|  outstanding 3,838,386 shares                                                                |   |   | 46,432 |   |   |   | 46,432 |   |
|  Preferred stock, $.01 par value; authorized 1,000,000 shares;                               |   |   |   |   |   |   |   |   |
|  -0- shares issued and outstanding                                                           |   |   | - |   |   |   | - |   |
|  Capital in excess of par                                                                    |   |   | 13,674,407 |   |   |   | 13,633,913 |   |
|  Accumulated other comprehensive income                                                      |   |   | 166,268 |   |   |   | 145,247 |   |
|  Retained earnings                                                                           |   |   | 408,155 |   |   |   | 281,531 |   |
|                                                                                              |   |   | 14,295,262 |   |   |   | 14,107,123 |   |
|  Treasury stock, at cost, 804,736 shares                                                     |   |   | (1,163,258 | ) |   |   | (1,163,258 | ) |
|  Total stockholders' equity                                                                  |   |   | 13,132,004 |   |   |   | 12,943,865 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|  Total liabilities and stockholders' equity                                                  |   | $ | 62,978,789 |   |   | $ | 58,682,673 |   |

----

----

|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                     |   |
|--------------------------------------------------------------------------------------|--------|
|                                                                                 |   |   |   |   |   |   |
| Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) |   |
| Three months ended March 31,                                                         |   | 2011 |   |   | 2010 |   |
|                                                                                 |   |   |   |   |   |   |
|  Revenues                                                                       |   |   |   |   |   |   |
|  Net premiums earned                                                            |   | $ | 3,367,699 |   |   | $ | 2,217,947 |   |
|  Ceding commission revenue                                                      |   |   | 2,312,575 |   |   |   | 2,211,137 |   |
|  Net investment income                                                          |   |   | 177,670 |   |   |   | 132,280 |   |
|  Net realized gain on investments                                               |   |   | 70,471 |   |   |   | 34,660 |   |
|  Other income                                                                   |   |   | 247,472 |   |   |   | 221,104 |   |
|  Total revenues                                                                 |   |   | 6,175,887 |   |   |   | 4,817,128 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|  Expenses                                                                       |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                              |   |   | 2,550,764 |   |   |   | 1,434,618 |   |
|  Commission expense                                                             |   |   | 1,371,749 |   |   |   | 1,136,619 |   |
|  Other underwriting expenses                                                    |   |   | 1,576,819 |   |   |   | 1,103,920 |   |
|  Other operating expenses                                                       |   |   | 303,963 |   |   |   | 539,619 |   |
|  Depreciation and amortization                                                  |   |   | 158,460 |   |   |   | 156,687 |   |
|  Interest expense                                                               |   |   | 45,765 |   |   |   | 45,202 |   |
|  Interest expense - mandatorily redeemable preferred stock                      |   |   | - |   |   |   | 37,353 |   |
|  Total expenses                                                                 |   |   | 6,007,520 |   |   |   | 4,454,018 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|  Income from continuing operations before taxes                                 |   |   | 168,367 |   |   |   | 363,110 |   |
|  Income tax expense                                                             |   |   | 41,743 |   |   |   | 144,564 |   |
|  Income from continuing operations                                              |   |   | 126,624 |   |   |   | 218,546 |   |
|  Income from discontinued operations, net of taxes                              |   |   | - |   |   |   | 13,848 |   |
|  Net income                                                                     |   |   | 126,624 |   |   |   | 232,394 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
|  Gross unrealized investment holding gains                                      |   |   |   |   |   |   |   |   |
|  arising during period                                                          |   |   | 31,850 |   |   |   | 39,879 |   |
|  Income tax expense related to items of                                         |   |   |   |   |   |   |   |   |
|  other comprehensive income                                                     |   |   | (10,829 | ) |   |   | (13,559 | ) |
|  Comprehensive income                                                           |   | $ | 147,645 |   |   | $ | 258,714 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Basic and diluted earnings per common share:                                         |   |   |   |   |   |   |   |   |
| Income from continuing operations                                                    |   | $ | 0.03 |   |   | $ | 0.07 |   |
| Income from discontinued operations                                                  |   | $ | - |   |   | $ | 0.01 |   |
| Income per common share                                                              |   | $ | 0.03 |   |   | $ | 0.08 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding                                           |   |   |   |   |   |   |   |   |
| Basic                                                                                |   |   | 3,838,386 |   |   |   | 2,992,400 |   |
| Diluted                                                                              |   |   | 3,838,386 |   |   |   | 2,992,400 |   |

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|  KINGSTONE COMPANIES, INC. AND SUBSIDIARIES         |   |
|----------------------------------------------------------|--------|
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Condensed Consolidated Statement of Stockholders' Equity |   |
| Three months ended March 31, 2011 (unaudited)            |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   | Capital |   |   | Other |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   | Common Stock |   |   | Preferred Stock |   |   | in Excess |   |   | Comprehensive |   |   | Retained |   |   | Treasury Stock |   |   |   |   |
|                                                     |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | of Par |   |   | Income |   |   | Earnings |   |   | Shares |   |   | Amount |   |   | Total |   |
| Balance, December 31, 2010                               |   |   | 4,643,122 |   |   | $ | 46,432 |   |   |   | - |   |   | $ | - |   |   | $ | 13,633,913 |   |   | $ | 145,247 |   |   | $ | 281,531 |   |   |   | 804,736 |   |   | $ | (1,163,258 | ) |   | $ | 12,943,865 |   |
| Stock-based payments                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 40,494 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 40,494 |   |
| Net income                                               |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 126,624 |   |   |   | - |   |   |   | - |   |   |   | 126,624 |   |
| Net unrealized gains on securities                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale, net of income tax                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21,021 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 21,021 |   |
| Balance, March 31, 2011                                  |   |   | 4,643,122 |   |   | $ | 46,432 |   |   |   | - |   |   | $ | - |   |   | $ | 13,674,407 |   |   | $ | 166,268 |   |   | $ | 408,155 |   |   |   | 804,736 |   |   | $ | (1,163,258 | ) |   | $ | 13,132,004 |   |

----

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                          |   |
|-------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Statements of Cash Flows (Unaudited)                         |   |
| Three months ended March 31,                                                        |   | 2011 |   |   | 2010 |   |
|                                                                                |   |   |   |   |   |   |
|  Cash flows provided by (used in) operating activities:                        |   |   |   |   |   |   |
|  Net income                                                                    |   | $ | 126,624 |   |   | $ | 232,394 |   |
|  Adjustments to reconcile net income to net cash provided by operations:       |   |   |   |   |   |   |   |   |
|  Gain on sale of investments                                                   |   |   | (70,471 | ) |   |   | (34,660 | ) |
|  Depreciation and amortization                                                 |   |   | 158,460 |   |   |   | 156,687 |   |
|  Amortization of bond premium, net                                             |   |   | 23,482 |   |   |   | 17,358 |   |
|  Stock-based payments                                                          |   |   | 40,494 |   |   |   | 200,636 |   |
|  Deferred income taxes                                                         |   |   | 29,793 |   |   |   | (13,036 | ) |
|  (Increase) decrease in assets:                                                |   |   |   |   |   |   |   |   |
|  Short term investments                                                        |   |   | - |   |   |   | (160,056 | ) |
|  Premiums receivable, net                                                      |   |   | (762,287 | ) |   |   | (360,714 | ) |
|  Receivables - reinsurance contracts                                           |   |   | (745,584 | ) |   |   | (397,968 | ) |
|  Reinsurance receivables, net                                                  |   |   | (1,127,162 | ) |   |   | 603,965 |   |
|  Deferred acquisition costs                                                    |   |   | (260,552 | ) |   |   | (201,509 | ) |
|  Other assets                                                                  |   |   | (240,372 | ) |   |   | (118,142 | ) |
|  Increase (decrease) in liabilities:                                           |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                             |   |   | 1,501,710 |   |   |   | 23,502 |   |
|  Unearned premiums                                                             |   |   | 1,234,739 |   |   |   | 887,949 |   |
|  Advance premiums                                                              |   |   | 199,307 |   |   |   | 16,753 |   |
|  Reinsurance balances payable                                                  |   |   | 1,317,794 |   |   |   | (21,138 | ) |
|  Deferred ceding commission revenue                                            |   |   | 104,935 |   |   |   | (456,961 | ) |
|  Accounts payable, accrued expenses and other liabilities                      |   |   | (284,612 | ) |   |   | (608,262 | ) |
|  Net cash provided by (used in) operating activities of continuing operations  |   |   | 1,246,298 |   |   |   | (233,202 | ) |
|  Operating activities of discontinued operations                               |   |   | - |   |   |   | (19,500 | ) |
|  Net cash flows provided by (used in) operating activities                     |   |   | 1,246,298 |   |   |   | (252,702 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
|  Cash flows used in investing activities:                                      |   |   |   |   |   |   |   |   |
|  Purchase - fixed-maturity securities available for sale                       |   |   | (1,658,387 | ) |   |   | (249,390 | ) |
|  Purchase - equity securities                                                  |   |   | (580,638 | ) |   |   | (233,135 | ) |
|  Sale - equity securities                                                      |   |   | 990,247 |   |   |   | 410,167 |   |
|  Collections of notes receivable and accrued interest - Sale of businesses     |   |   | 80,438 |   |   |   | 67,769 |   |
|  Other investing activities                                                    |   |   | (4,092 | ) |   |   | (1,478 | ) |
|  Net cash flows used in investing activities                                   |   |   | (1,172,432 | ) |   |   | (6,067 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
|  Cash flows (used in) provided by financing activities:                        |   |   |   |   |   |   |   |   |
|  Proceeds from long term debt (includes $200,000 from related parties in 2010) |   |   | - |   |   |   | 400,000 |   |
|  Principal payments on long-term debt                                          |   |   | (6,518 | ) |   |   | (5,952 | ) |
|  Net cash flows (used in) provided by financing activities                     |   |   | (6,518 | ) |   |   | 394,048 |   |
|                                                                                |   |   |   |   |   |   |   |   |
|  Increase in cash and cash equivalents                                         |   |   | 67,348 |   |   |   | 135,279 |   |
|  Cash and cash equivalents, beginning of period                                |   |   | 326,620 |   |   |   | 625,320 |   |
|  Cash and cash equivalents, end of period                                      |   | $ | 393,968 |   |   | $ | 760,599 |   |
|                                                                                |   |   |   |   |   |   |   |   |
|  Supplemental disclosures of cash flow information:                            |   |   |   |   |   |   |   |   |
|  Cash paid for income taxes                                                    |   | $ | - |   |   | $ | 227,000 |   |
|  Cash paid for interest                                                        |   | $ | 91,441 |   |   | $ | 133,118 |   |

----

----

----

----

|                              |   |  March 31, 2011 |       |
|-----------------------------------|--------|----------------------|------------|
|                         |   | Cost or              |       |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                              |   | Amortized            |       |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Gains/ |   |
|  Category                    |   | Cost                 |       |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                              |   | (unaudited)          |       |
| Fixed-Maturity Securities:        |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and      |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government    |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| corporations and agencies         |   | $                    | 1,000,597  |   |   | $ | 34,668 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,035,265 |   |   | $ | 34,668 |   |
|                              |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States, |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Territories and Possessions       |   |                 | 7,264,437  |   |   |   | 73,805 |   |   |   | (46,262 | ) |   |   | (32,472 | ) |   |   | 7,259,508 |   |   |   | (4,929 | ) |
|                              |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds         |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial and miscellaneous      |   |                 | 9,649,052  |   |   |   | 200,179 |   |   |   | (113,932 | ) |   |   | - |   |   |   | 9,735,299 |   |   |   | 86,247 |   |
| Total fixed-maturity securities   |   |                 | 17,914,086 |   |   |   | 308,652 |   |   |   | (160,194 | ) |   |   | (32,472 | ) |   |   | 18,030,072 |   |   |   | 115,986 |   |
|                              |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                  |   |                 | 742,215    |   |   |   | 30,514 |   |   |   | (4,223 | ) |   |   | - |   |   |   | 768,506 |   |   |   | 26,291 |   |
| Common stocks                     |   |                 | 1,743,661  |   |   |   | 132,004 |   |   |   | (22,362 | ) |   |   | - |   |   |   | 1,853,303 |   |   |   | 109,642 |   |
| Total equity securities           |   |                 | 2,485,876  |   |   |   | 162,518 |   |   |   | (26,585 | ) |   |   | - |   |   |   | 2,621,809 |   |   |   | 135,933 |   |
|                              |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $                    | 20,399,962 |   |   | $ | 471,170 |   |   | $ | (186,779 | ) |   | $ | (32,472 | ) |   | $ | 20,651,881 |   |   | $ | 251,919 |   |

|                              |   |  December 31, 2010 |       |
|-----------------------------------|--------|-------------------------|------------|
|                         |   | Cost or                 |       |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                              |   | Amortized               |       |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Gains/ |   |
|  Category                    |   | Cost                    |       |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-Maturity Securities:        |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and      |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations of U.S. government    |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| corporations and agencies         |   | $                       | 1,000,572  |   |   | $ | 42,085 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,042,657 |   |   | $ | 42,085 |   |
|                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States, |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Territories and Possessions       |   |                    | 7,278,663  |   |   |   | 79,791 |   |   |   | (86,234 | ) |   |   | (12,995 | ) |   |   | 7,259,225 |   |   |   | (19,438 | ) |
|                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds         |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial and miscellaneous      |   |                    | 7,997,817  |   |   |   | 176,999 |   |   |   | (137,597 | ) |   |   | - |   |   |   | 8,037,219 |   |   |   | 39,402 |   |
| Total fixed-maturity securities   |   |                    | 16,277,052 |   |   |   | 298,875 |   |   |   | (223,831 | ) |   |   | (12,995 | ) |   |   | 16,339,101 |   |   |   | 62,049 |   |
|                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                  |   |                    | 824,569    |   |   |   | 29,934 |   |   |   | (6,333 | ) |   |   | - |   |   |   | 848,170 |   |   |   | 23,601 |   |
| Common stocks                     |   |                    | 2,000,446  |   |   |   | 188,783 |   |   |   | (54,364 | ) |   |   | - |   |   |   | 2,134,865 |   |   |   | 134,419 |   |
| Total equity securities           |   |                    | 2,825,015  |   |   |   | 218,717 |   |   |   | (60,697 | ) |   |   | - |   |   |   | 2,983,035 |   |   |   | 158,020 |   |
|                              |   |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $                       | 19,102,067 |   |   | $ | 517,592 |   |   | $ | (284,528 | ) |   | $ | (12,995 | ) |   | $ | 19,322,136 |   |   | $ | 220,069 |   |

----

|                             |   | March 31, 2011 |       |   |  December 31, 2010 |   |
|----------------------------------|--------|----------------|------------|--------|-------------------------|--------|
|                             |   | Amortized      |       |   |                    |   |   | Amortized |   |   |   |   |
|  Remaining Time to Maturity |   | Cost           |       |   | Fair Value              |   |   | Cost |   |   | Fair Value |   |
|                             |   | (unaudited)    |       |   |                    |   |   |   |   |
|  Less than one year         |   | $              | 572,785    |   |                    | $      | 558,284 |   |   | $ | 263,098 |   |   | $ | 253,385 |   |
|  One to five years          |   |           | 6,332,452  |   |                    |   | 6,451,604 |   |   |   | 6,868,952 |   |   |   | 6,997,694 |   |
|  Five to ten years          |   |           | 9,003,965  |   |                    |   | 9,019,288 |   |   |   | 7,132,079 |   |   |   | 7,118,405 |   |
|  More than 10 years    |   |           | 2,004,884  |   |                    |   | 2,000,896 |   |   |   | 2,012,923 |   |   |   | 1,969,617 |   |
|  Total                      |   | $              | 17,914,086 |   |                    | $      | 18,030,072 |   |   | $ | 16,277,052 |   |   | $ | 16,339,101 |   |

|                           |   |  March 31, 2011 |    |
|--------------------------------|--------|----------------------|---------|
|                      |   | Cost or              |    |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                           |   | Amortized            |    | Unrealized |   | Less than 12 |   | More than 12 |   | Fair |   |   | Gains/ |   |
|  Category                 |   | Cost                 |    |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                           |   | (unaudited)          |    |
|                           |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |   | $                    | 606,222 |   |   | $ | - |   |   | $ | (22,430 | ) |   | $ | - |   |   | $ | 583,792 |   |   | $ | (22,430 | ) |

|                           |   |  December 31, 2010 |    |
|--------------------------------|--------|-------------------------|---------|
|                      |   | Cost or                 |    |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | Unrealized |   |
|                           |   | Amortized               |    | Unrealized |   | Less than 12 |   | More than 12 |   | Fair |   |   | Gains/ |   |
|  Category                 |   | Cost                    |    |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |   | $                       | 605,424 |   |   | $ | 974 |   |   | $ | - |   |   | $ | - |   |   | $ | 606,398 |   |   | $ | 974 |   |

----

|                            |   |  Three months ended |    |
|---------------------------------|--------|--------------------------|---------|
|                            |   | March 31,                |    |
|                            |   | 2011                     |    |   | 2010 |   |
|                            |   | (unaudited)              |    |
|  Income                    |   |                     |    |   |   |   |
|  Fixed-maturity securities |   | $                        | 182,137 |   |   | $ | 129,107 |   |
|  Equity securities         |   |                     | 36,824  |   |   |   | 27,301 |   |
|  Cash and cash equivalents |   |                     | 1,987   |   |   |   | 1,850 |   |
|  Other                     |   |                     | 10      |   |   |   | 15 |   |
|  Total                     |   |                     | 220,958 |   |   |   | 158,273 |   |
|  Expenses                  |   |                     |    |   |   |   |   |   |
|  Investment expenses       |   |                     | 43,288  |   |   |   | 25,993 |   |
|  Net investment income     |   | $                        | 177,670 |   |   | $ | 132,280 |   |

|                        |   |  Three months ended |    |
|-----------------------------|--------|--------------------------|---------|
|                        |   | March 31,                |    |
|                        |   | 2011                     |    |   | 2010 |   |
|                        |   | (unaudited)              |
|  Equity securities     |   |                     |    |   |   |   |
|  Gross realized gains  |   | $                        | 117,333 |   |   | $ | 46,398 |   |
|  Gross realized losses |   |                     | (46,862 | ) |   |   | (11,738 | ) |
|  Net realized gains    |   | $                        | 70,471  |   |   | $ | 34,660 |   |

----

|                       |   |  March 31, 2011 |      |
|----------------------------|--------|----------------------|-----------|
|                       |   | Less than 12 months  |      |   | 12 months or more |   |   | Total |   |
|                  |   |                 |      |   |   |   |   | No. of |   |   |   |   |   |   |   |   | No. of |   |   |   |   |   |   |   |
|                       |   | Fair                 |      |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |
|  Category             |   | Value                |      |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |
|                       |   | (unaudited)          |      |
| Fixed-Maturity Securities: |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of  |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States, Territories and    |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Possessions                |   | $                    | 1,638,318 |   |   | $ | (46,262 | ) |   |   | 7 |   |   | $ | 1,338,826 |   |   | $ | (32,472 | ) |   |   | 4 |   |   | $ | 2,977,144 |   |   | $ | (78,734 | ) |
|                       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other        |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| bonds industrial and       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| miscellaneous              |   |                 | 4,307,000 |   |   |   | (113,932 | ) |   |   | 22 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,307,000 |   |   |   | (113,932 | ) |
|                       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed-maturity       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities                 |   | $                    | 5,945,318 |   |   | $ | (160,194 | ) |   |   | 29 |   |   | $ | 1,338,826 |   |   | $ | (32,472 | ) |   |   | 4 |   |   | $ | 7,284,144 |   |   | $ | (192,666 | ) |
|                       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:         |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks           |   | $                    | 316,000   |   |   | $ | (4,223 | ) |   |   | 8 |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | 316,000 |   |   | $ | (4,223 | ) |
| Common stocks              |   |                 | 488,948   |   |   |   | (22,362 | ) |   |   | 9 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 488,948 |   |   |   | (22,362 | ) |
|                       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total equity securities    |   | $                    | 804,948   |   |   | $ | (26,585 | ) |   |   | 17 |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | 804,948 |   |   | $ | (26,585 | ) |
|                       |   |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      |   | $                    | 6,750,266 |   |   | $ | (186,779 | ) |   |   | 46 |   |   | $ | 1,338,826 |   |   | $ | (32,472 | ) |   |   | 4 |   |   | $ | 8,089,092 |   |   | $ | (219,251 | ) |

----

|                                                |   | March 31, 2011 |   |
|-----------------------------------------------------|--------|----------------|--------|
|  ($ in thousands)                              |   | Level 1        |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                                |   | (unaudited)    |   |
|  Fixed-maturity investments available for sale |   |           |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities                      |   |           |   |   |   |   |   |   |   |   |   |   |
|  and obligations of U.S.                       |   |           |   |   |   |   |   |   |   |   |   |   |
|  government corporations                       |   |           |   |   |   |   |   |   |   |   |   |   |
|  and agencies                                  |   | $              | 1,035  |   |   | $ | - |   |   | $ | - |   |   | $ | 1,035 |   |
|                                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of                     |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and                       |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions                                   |   |           | 5,352  |   |   |   | 1,908 |   |   |   | - |   |   |   | 7,260 |   |
|                                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other                           |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and                          |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous                                 |   |           | 9,501  |   |   |   | 234 |   |   |   | - |   |   |   | 9,735 |   |
|  Total fixed maturities                        |   |           | 15,888 |   |   |   | 2,142 |   |   |   | - |   |   |   | 18,030 |   |
|  Equity investments                            |   |           | 2,622  |   |   |   | - |   |   |   | - |   |   |   | 2,622 |   |
|  Total investments                             |   | $              | 18,510 |   |   | $ | 2,142 |   |   | $ | - |   |   | $ | 20,652 |   |

----

|                             |   | December 31, 2010 |   |
|----------------------------------|--------|-------------------|--------|
|  ($ 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               |   | $                 | 1,043  |   |   | $ | - |   |   | $ | - |   |   | $ | 1,043 |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions                |   |              | 5,351  |   |   |   | 1,908 |   |   |   | - |   |   |   | 7,259 |   |
|                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and       |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous              |   |              | 8,037  |   |   |   | - |   |   |   | - |   |   |   | 8,037 |   |
|  Total fixed maturities     |   |              | 14,431 |   |   |   | 1,908 |   |   |   | - |   |   |   | 16,339 |   |
|  Equity investments         |   |              | 2,983  |   |   |   | - |   |   |   | - |   |   |   | 2,983 |   |
|  Total investments          |   | $                 | 17,414 |   |   | $ | 1,908 |   |   | $ | - |   |   | $ | 19,322 |   |

----

|                                              |   | March 31, 2011 |       |   | December 31, 2010 |   |
|---------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                              |   | Carrying Value |       |   | Fair Value        |   |   | Carrying Value |   |   | Fair Value |   |
|                                              |   | (unaudited)    |       |   |              |   |   |   |   |
|  Fixed-maturity investments held to maturity |   | $              | 606,222    |   |              | $      | 583,792 |   |   | $ | 605,424 |   |   | $ | 606,398 |   |
|  Cash and cash equivalents                   |   |           | 393,968    |   |              |   | 393,968 |   |   |   | 326,620 |   |   |   | 326,620 |   |
|  Premiums receivable                         |   |           | 5,764,173  |   |              |   | 5,764,173 |   |   |   | 5,001,886 |   |   |   | 5,001,886 |   |
|  Receivables - reinsurance contracts         |   |           | 1,920,313  |   |              |   | 1,920,313 |   |   |   | 1,174,729 |   |   |   | 1,174,729 |   |
|  Reinsurance receivables                     |   |           | 21,847,356 |   |              |   | 21,847,356 |   |   |   | 20,720,194 |   |   |   | 20,720,194 |   |
|  Notes receivable-sale of business           |   |           | 624,581    |   |              |   | 624,581 |   |   |   | 705,019 |   |   |   | 705,019 |   |
|  Real estate, net of                         |   |           |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  accumulated depreciation                    |   |           | 1,423,302  |   |              |   | 1,510,000 |   |   |   | 1,437,787 |   |   |   | 1,510,000 |   |
|  Reinsurance balances payable                |   |           | 2,424,691  |   |              |   | 2,424,691 |   |   |   | 1,106,897 |   |   |   | 1,106,897 |   |
|  Notes payable (including related parties)   |   |           | 1,454,479  |   |              |   | 1,454,479 |   |   |   | 1,460,997 |   |   |   | 1,460,997 |   |

----

|                        |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------|--------|----------------|---------|--------|-------------------|--------|
|                        |   | Total          |    |   | Current           |   |   |   |   |   | Total |   |   | Current |   |   |   |   |
|                        |   | Note           |    |   | Maturities        |   |   | Long-Term |   |   | Note |   |   | Maturities |   |   | Long-Term |   |
|                        |   | (unaudited)    |    |   |              |   |   |   |   |   |   |   |
| Sale of NY stores           |   | $              | 129,036 |   |              | $      | 129,036 |   |   | $ | - |   |   | $ | 211,536 |   |   | $ | 211,536 |   |   | $ | - |   |
| Sale of Pennsylvania stores |   |           | 371,052 |   |              |   | 36,172 |   |   |   | 334,880 |   |   |   | 375,211 |   |   |   | 28,730 |   |   |   | 346,481 |   |
| Sale of Franchise business  |   |           | 100,000 |   |              |   | 75,000 |   |   |   | 25,000 |   |   |   | 100,000 |   |   |   | 100,000 |   |   |   | - |   |
|                        |   |           | 600,088 |   |              |   | 240,208 |   |   |   | 359,880 |   |   |   | 686,747 |   |   |   | 340,266 |   |   |   | 346,481 |   |
| Accrued interest            |   |           | 24,493  |   |              |   | 24,493 |   |   |   | - |   |   |   | 18,272 |   |   |   | 18,272 |   |   |   | - |   |
| Total                       |   | $              | 624,581 |   |              | $      | 264,701 |   |   | $ | 359,880 |   |   | $ | 705,019 |   |   | $ | 358,538 |   |   | $ | 346,481 |   |

|                                          |   | Direct |       |   | Assumed |   |   | Ceded  |   |   | Net        |   |
|-----------------------------------------------|--------|--------|------------|--------|---------|--------|--------|--------|--------|--------|------------|--------|
|                                          |   |   |       |   |    |   |   |   |   |   |       |   |
| Three months ended March 31, 2011 (unaudited) |   |   |       |   |    |   |   |   |   |   |
|  Premiums written                        |   | $      | 9,533,146  |   |    | $      | 234    |   |   | $      | (5,496,365 | )      |   | $ | 4,037,015 |   |
|  Change in unearned premiums             |   |   | (1,236,876 | )      |    |   | 2,138  |   |   |   | 565,422    |   |   |   | (669,316 | ) |
|  Premiums earned                         |   | $      | 8,296,270  |   |    | $      | 2,372  |   |   | $      | (4,930,943 | )      |   | $ | 3,367,699 |   |
|                                          |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
| Three months ended March 31, 2010 (unaudited) |   |   |       |   |    |   |   |   |   |   |       |   |   |
|  Premiums written                        |   | $      | 7,660,983  |   |    | $      | 1,361  |   |   | $      | (4,283,853 | )      |   | $ | 3,378,491 |   |
|  Change in unearned premiums             |   |   | (889,358   | )      |    |   | 1,409  |   |   |   | (272,595   | )      |   |   | (1,160,544 | ) |
|  Premiums earned                         |   | $      | 6,771,625  |   |    | $      | 2,770  |   |   | $      | (4,556,448 | )      |   | $ | 2,217,947 |   |

----

|                                   |   | Three months ended |        |
|----------------------------------------|--------|--------------------|-------------|
|                                   |   | March 31,          |        |
|                                   |   | 2011               |        |   | 2010 |   |
|                                   |   | (unaudited)        |        |
|  Balance at beginning of period   |   | $                  | 17,711,907  |   |   | $ | 16,513,318 |   |
|  Less reinsurance recoverables    |   |               | (10,431,415 | ) |   |   | (10,512,203 | ) |
|  Net balance, beginning of period |   |               | 7,280,492   |   |   |   | 6,001,115 |   |
|                                   |   |               |        |   |   |   |   |   |
|  Incurred related to:             |   |               |        |   |   |   |   |   |
|  Current year                     |   |               | 2,617,490   |   |   |   | 1,133,892 |   |
|  Prior years                      |   |               | (66,726     | ) |   |   | 300,726 |   |
|  Total incurred                   |   |               | 2,550,764   |   |   |   | 1,434,618 |   |
|                                   |   |               |        |   |   |   |   |   |
|  Paid related to:                 |   |               |        |   |   |   |   |   |
|  Current year                     |   |               | 502,497     |   |   |   | 407,338 |   |
|  Prior years                      |   |               | 936,756     |   |   |   | 848,472 |   |
|  Total paid                       |   |               | 1,439,253   |   |   |   | 1,255,810 |   |
|                              |   |               |        |   |   |   |   |   |
|  Net balance at end of period     |   |               | 8,392,003   |   |   |   | 6,179,923 |   |
|  Add reinsurance recoverables     |   |               | 10,821,614  |   |   |   | 10,356,897 |   |
|  Balance at end of period         |   | $                  | 19,213,617  |   |   | $ | 16,536,820 |   |

----

|                                           |   | Three months ended |      |
|------------------------------------------------|--------|--------------------|-----------|
|                                           |   | March 31,          |      |
|                                           |   | 2011               |      |   | 2010 |   |
|                                           |   | (unaudited)        |      |
|  Ceded commission on reinsurance treaties |   | $                  | 1,588,306 |   |   | $ | 1,809,593 |   |
|  Contingent commission ceded              |   |               | 724,269   |   |   |   | 401,544 |   |
|                                           |   | $                  | 2,312,575 |   |   | $ | 2,211,137 |   |

----

|                     |   | March 31, 2011    |      |   | December 31, 2010 |   |
|--------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                     |   |              |      |   | Less              |   |   |   |   |   |   |   |   | Less |   |   |   |   |
|                     |   | Total             |      |   | Current           |   |   | Long-Term |   |   | Total |   |   | Current |   |   | Long-Term |   |
|                     |   | Debt              |      |   | Maturities        |   |   | Debt |   |   | Debt |   |   | Maturities |   |   | Debt |   |
|                     |   |  (unaudited) |      |   |              |   |   |   |   |   |   |   |
| Capital lease obligation |   | $                 | 4,479     |   |              | $      | 4,479 |   |   | $ | - |   |   | $ | 10,997 |   |   | $ | 10,997 |   |   | $ | - |   |
| Notes payable            |   |              | 1,450,000 |   |              |   | 1,450,000 |   |   |   | - |   |   |   | 1,450,000 |   |   |   | 1,450,000 |   |   |   | - |   |
|                     |   | $                 | 1,454,479 |   |              | $      | 1,454,479 |   |   | $ | - |   |   | $ | 1,460,997 |   |   | $ | 1,460,997 |   |   | $ | - |   |

----

| 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, 2011           |   |             | 393,865 |   |                                      | $      | 2.32   |                                        |   |   | 3.28                      |   |   | $ | 463,465 |   |
| Granted                                  |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   |   | - |   |
| Forfeited                                |   |             | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   |   | - |   |
|                                     |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Outstanding at March 31, 2011            |   |             | 393,865 |   |                                      | $      | 2.32   |                                        |   |   | 3.03                      |   |   | $ | 301,980 |   |
|                                     |   |             |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Vested and Exercisable at March 31, 2011 |   |             | 251,932 |   |                                      | $      | 2.25   |                                        |   |   | 2.62                      |   |   | $ | 211,340 |   |

|  Type of NOL                                           |   | Amount |      | Expiration |
|-------------------------------------------------------------|--------|--------|-----------|------------|
|  Federal only                                          |   | $      | 37,270    |       | December 31, 2030 |
|  State only                                            |   | $      | 2,742,552 |       | December 31, 2030 |
|  Amount subject to Annual Limitation, Federal only (A) |   | $      | 110,000   |       | December 31, 2019 |

----

----

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

----

----

|                                                       |   | Three months ended March 31, |   |
|------------------------------------------------------------|--------|------------------------------|--------|
| ($ in thousands)                                           |   | 2011                         |   |   | 2010 |   |   | Change |   |   | Percent |   |
|  Revenues                                             |   |                         |   |   |   |   |   |   |   |   |   |   |
|  Gross written premium                                |   | $                            | 9,533  |   |   | $ | 7,661 |   |   | $ | 1,872 |   |   |   | 24.4 | % |
|  Net written premium                                  |   |                         | 4,037  |   |   |   | 3,378 |   |   |   | 659 |   |   |   | 19.5 | % |
|  Change in net unearned premiums                      |   |                         | (669   | ) |   |   | (1,160 | ) |   |   | 491 |   |   |   | (42.3 | )  % |
|  Net premiums earned                                  |   |                         | 3,368  |   |   |   | 2,218 |   |   |   | 1,150 |   |   |   | 51.8 | % |
|  Ceding commission revenue                            |   |                         | 2,313  |   |   |   | 2,211 |   |   |   | 102 |   |   |   | 4.6 | % |
|  Net investment income                                |   |                         | 178    |   |   |   | 132 |   |   |   | 46 |   |   |   | 34.8 | % |
|  Net realized gain on investments                     |   |                         | 70     |   |   |   | 35 |   |   |   | 35 |   |   |   | 100.0 | % |
|  Other income                                         |   |                         | 247    |   |   |   | 221 |   |   |   | 26 |   |   |   | 11.8 | % |
|  Total revenues                                       |   |                         | 6,176  |   |   |   | 4,817 |   |   |   | 1,359 |   |   |   | 28.2 | % |
|                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Expenses                                             |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross loss and loss adjustment expenses              |   |                         | 4,239  |   |   |   | 4,074 |   |   |   | 165 |   |   |   | 4.0 | % |
|  Less: ceded loss and loss adjustment expenses        |   |                         | (1,688 | ) |   |   | (2,641 | ) |   |   | 952 |   |   |   | (36.1 | )  % |
|  Net loss and loss adjustment expenses                |   |                         | 2,551  |   |   |   | 1,434 |   |   |   | 1,117 |   |   |   | 77.9 | % |
|  Commission expense                                   |   |                         | 1,372  |   |   |   | 1,137 |   |   |   | 235 |   |   |   | 20.7 | % |
|  Other underwriting expenses                          |   |                         | 1,577  |   |   |   | 1,104 |   |   |   | 473 |   |   |   | 42.8 | % |
|  Other operating expenses                             |   |                         | 304    |   |   |   | 540 |   |   |   | (236 | ) |   |   | (43.7 | )  % |
|  Depreciation and amortization                        |   |                         | 158    |   |   |   | 157 |   |   |   | 1 |   |   |   | 0.6 | % |
|  Interest expense                                     |   |                         | 46     |   |   |   | 45 |   |   |   | 1 |   |   |   | 2.2 | % |
|  Interest expense - mandatorily                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  redeemable preferred stock                           |   |                         | -      |   |   |   | 37 |   |   |   | (37 | ) |   |   | (100.0 | )  % |
|  Total expenses                                       |   |                         | 6,008  |   |   |   | 4,454 |   |   |   | 1,554 |   |   |   | 34.9 | % |
|                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income from continuing operations before taxes       |   |                         | 168    |   |   |   | 363 |   |   |   | (195 | ) |   |   | (53.7 | )  % |
|  Provision for income tax                             |   |                         | 42     |   |   |   | 145 |   |   |   | (103 | ) |   |   | (71.0 | )  % |
|  Income from continuing operations                    |   |                         | 126    |   |   |   | 218 |   |   |   | (92 | ) |   |   | (42.2 | )  % |
|  Income from discontinued operations, net of taxes    |   |                         | -      |   |   |   | 14 |   |   |   | (14 | ) |   |   | 100.0 | % |
|  Net income                                           |   | $                            | 126    |   |   | $ | 232 |   |   | $ | (106 | ) |   |   | (45.7 | )  % |
|                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Percent of total revenues:                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                                  |   |                         | 54.5   | % |   |   | 46.0 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                            |   |                         | 37.5   | % |   |   | 45.9 | % |   |   |   |   |   |   |   |   |
|  Net investment income                                |   |                         | 2.9    | % |   |   | 2.8 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments                    |   |                         | 1.1    | % |   |   | 0.7 | % |   |   |   |   |   |   |   |   |
|  Other income                                         |   |                         | 4.0    | % |   |   | 4.6 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                         | 100.0  | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Ceded premiums as a percent of gross premiums:       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Written                                              |   |                         | 57.7   | % |   |   | 55.9 | % |   |   |   |   |   |   |   |   |
|  Earned                                               |   |                         | 59.4   | % |   |   | 67.3 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Ceded loss and loss adjustment expenses as a percent |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of gross loss and loss and loss adjustment expenses  |   |                         | 39.8   | % |   |   | 64.8 | % |   |   |   |   |   |   |   |   |
|                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net loss ratio                                       |   |                         | 75.7   | % |   |   | 64.6 | % |   |   |   |   |   |   |   |   |

----

----

|                                    |   | Three months ended |      |
|-----------------------------------------|--------|--------------------|-----------|
|                                    |   | March 31,          |      |
|                                    |   | 2011               |      |   | 2010 |   |
|                                    |   |               |      |   |   |   |
|  Revenues                          |   |               |      |   |   |   |
|  Net premiums earned               |   | $                  | 3,367,699 |   |   | $ | 2,217,947 |   |
|  Ceding commission revenue         |   |               | 2,312,575 |   |   |   | 2,211,137 |   |
|  Net investment income             |   |               | 177,670   |   |   |   | 132,280 |   |
|  Net realized gain on investments  |   |               | 70,471    |   |   |   | 34,660 |   |
|  Other income                      |   |               | 97,930    |   |   |   | 75,077 |   |
|  Total revenues                    |   |               | 6,026,345 |   |   |   | 4,671,101 |   |
|                                    |   |               |      |   |   |   |   |   |
|  Expenses                          |   |               |      |   |   |   |   |   |
|  Loss and loss adjustment expenses |   |               | 2,550,764 |   |   |   | 1,434,618 |   |
|  Commission expense                |   |               | 1,371,749 |   |   |   | 1,136,619 |   |
|  Other underwriting expenses       |   |               | 1,576,819 |   |   |   | 1,103,920 |   |
|  Depreciation and amortization     |   |               | 155,915   |   |   |   | 155,629 |   |
|  Total expenses                    |   |               | 5,655,247 |   |   |   | 3,830,786 |   |
|                                    |   |               |      |   |   |   |   |   |
|  Income from operations            |   |               | 371,098   |   |   |   | 840,315 |   |
|  Income tax expense                |   |               | 119,379   |   |   |   | 275,814 |   |
|  Net income                        |   | $                  | 251,719   |   |   | $ | 564,501 |   |

----

|                                     |   | Direct |       |   | Assumed |   |   | Ceded  |   |   | Net        |   |
|------------------------------------------|--------|--------|------------|--------|---------|--------|--------|--------|--------|--------|------------|--------|
|                                     |   |   |       |   |    |   |   |   |   |   |       |   |
|  Three months ended March 31, 2011: |   |   |       |   |    |   |   |   |   |   |       |   |
|  Written premiums                   |   | $      | 9,533,146  |   |    | $      | 234    |   |   | $      | (5,496,365 | )      |   | $ | 4,037,015 |   |
|  Unearned premiums                  |   |   | (1,236,876 | )      |    |   | 2,138  |   |   |   | 565,422    |   |   |   | (669,316 | ) |
|  Earned premiums                    |   | $      | 8,296,270  |   |    | $      | 2,372  |   |   | $      | (4,930,943 | )      |   | $ | 3,367,699 |   |
|                                     |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss and loss adjustment expenses  |   | $      | 4,237,389  |   |    | $      | 1,626  |   |   | $      | (1,688,251 | )      |   | $ | 2,550,764 |   |
|                                     |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss ratio                         |   |   | 51.1       | %      |    |   | 68.5   | %      |   |   | 34.2       | %      |   |   | 75.7 | % |
|                                     |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Three months ended March 31, 2010: |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Written premiums                   |   | $      | 7,660,983  |   |    | $      | 1,361  |   |   | $      | (4,283,853 | )      |   | $ | 3,378,491 |   |
|  Unearned premiums                  |   |   | (889,358   | )      |    |   | 1,409  |   |   |   | (272,595   | )      |   |   | (1,160,544 | ) |
|  Earned premiums                    |   | $      | 6,771,625  |   |    | $      | 2,770  |   |   | $      | (4,556,448 | )      |   | $ | 2,217,947 |   |
|                                     |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss and loss adjustment expenses  |   | $      | 4,074,050  |   |    | $      | 1,130  |   |   | $      | (2,640,562 | )      |   | $ | 1,434,618 |   |
|                                     |   |   |       |   |    |   |   |   |   |   |       |   |   |   |   |   |
|  Loss ratio                         |   |   | 60.2       | %      |    |   | 40.8   | %      |   |   | 58.0       | %      |   |   | 64.7 | % |

|                                                         |   | Three months ended |       |
|--------------------------------------------------------------|--------|--------------------|------------|
|                                                         |   | March 31,          |       |
|                                                         |   | 2011               |       |   | 2010 |   |
|                                                         |   |               |       |   |   |   |
|  Net premiums earned                                    |   | $                  | 3,367,699  |   |   | $ | 2,217,947 |   |
|  Ceding commission revenue                              |   |               | 2,312,575  |   |   |   | 2,211,137 |   |
|  Other income                                           |   |               | 97,930     |   |   |   | 75,077 |   |
|                                                         |   |               |       |   |   |   |   |   |
|  Loss and loss adjustment expenses                      |   |               | 2,550,764  |   |   |   | 1,434,618 |   |
|                                                         |   |               |       |   |   |   |   |   |
|  Acquistion costs and other underwriting expenses:      |   |               |       |   |   |   |   |   |
|  Commission expense                                     |   |               | 1,371,749  |   |   |   | 1,136,619 |   |
|  Other underwriting expenses                            |   |               | 1,576,819  |   |   |   | 1,103,920 |   |
|  Total acquistion costs and other underwriting expenses |   |               | 2,948,568  |   |   |   | 2,240,539 |   |
|                                                         |   |               |       |   |   |   |   |   |
|  Underwriting income                                    |   | $                  | 278,872    |   |   | $ | 829,004 |   |
|                                                         |   |               |       |   |   |   |   |   |
|  Key Measures:                                          |   |               |       |   |   |   |   |   |
|  Net loss ratio                                         |   |               | 75.7       | % |   |   | 64.7 | % |
|  Net underwriting expense ratio                         |   |               | 16.0       | % |   |   | -2.1 | % |
|  Net combined ratio                                     |   |               | 91.7       | % |   |   | 62.6 | % |
|                                                         |   |               |       |   |   |   |   |   |
|  Reconciliation of net underwriting expense ratio:      |   |               |       |   |   |   |   |   |
|  Acquisition costs and other underwriting expenses      |   | $                  | 2,948,568  |   |   | $ | 2,240,539 |   |
|  Less: Ceding commission revenue                        |   |               | (2,312,575 | ) |   |   | (2,211,137 | ) |
|  Less: Other income                                     |   |               | (97,930    | ) |   |   | (75,077 | ) |
|                                               |   | $                  | 538,063    |   |   | $ | (45,675 | ) |
|                                                         |   |               |       |   |   |   |   |   |
|  Net earned premium                                     |   | $                  | 3,367,699  |   |   | $ | 2,217,947 |   |

----

|                                    |   |  March 31, 2011 |       |
|-----------------------------------------|--------|----------------------|------------|
|                                    |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | Cost or              |       |   | Gross |   |   | Gross Unrealized Losses |   |   | Aggregate |   |   | % of |   |
|                                    |   | Amortized            |       |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                          |   | Cost                 |       |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                                    |   | (unaudited)          |       |
|  U.S. Treasury securities and      |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  obligations of U.S. government    |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies         |   | $                    | 1,000,597  |   |   | $ | 34,668 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,035,265 |   |   |   | 5.0 | % |
|                                    |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |                 | 7,264,437  |   |   |   | 73,805 |   |   |   | (46,262 | ) |   |   | (32,472 | ) |   |   | 7,259,508 |   |   |   | 35.2 | % |
|                                    |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |                 | 9,649,052  |   |   |   | 200,179 |   |   |   | (113,932 | ) |   |   | - |   |   |   | 9,735,299 |   |   |   | 47.1 | % |
|  Total fixed-maturity securities   |   |                 | 17,914,086 |   |   |   | 308,652 |   |   |   | (160,194 | ) |   |   | (32,472 | ) |   |   | 18,030,072 |   |   |   | 87.3 | % |
|  Equity Securities                 |   |                 | 2,485,876  |   |   |   | 162,518 |   |   |   | (26,585 | ) |   |   | - |   |   |   | 2,621,809 |   |   |   | 12.7 | % |
|  Total                             |   | $                    | 20,399,962 |   |   | $ | 471,170 |   |   | $ | (186,779 | ) |   | $ | (32,472 | ) |   | $ | 20,651,881 |   |   |   | 100.0 | % |

|                          |   | December 31, 2010 |       |
|-----------------------------------------|--------|-------------------|------------|
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | Cost or           |       |   | Gross |   |   | Gross Unrealized Losses |   |   | Aggregate |   |   | % of |   |
|                                    |   | Amortized         |       |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                          |   | Cost              |       |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities and      |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  obligations of U.S. government    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  corporations and agencies         |   | $                 | 1,000,572  |   |   | $ | 42,085 |   |   | $ | - |   |   | $ | - |   |   | $ | 1,042,657 |   |   |   | 5.4 | % |
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |              | 7,278,663  |   |   |   | 79,791 |   |   |   | (86,234 | ) |   |   | (12,995 | ) |   |   | 7,259,225 |   |   |   | 37.6 | % |
|                                    |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |              | 7,997,817  |   |   |   | 176,999 |   |   |   | (137,597 | ) |   |   | - |   |   |   | 8,037,219 |   |   |   | 41.6 | % |
|  Total fixed-maturity securities   |   |              | 16,277,052 |   |   |   | 298,875 |   |   |   | (223,831 | ) |   |   | (12,995 | ) |   |   | 16,339,101 |   |   |   | 84.6 | % |
|  Equity Securities                 |   |              | 2,825,015  |   |   |   | 218,717 |   |   |   | (60,697 | ) |   |   | - |   |   |   | 2,983,035 |   |   |   | 15.4 | % |
|  Total                             |   | $                 | 19,102,067 |   |   | $ | 517,592 |   |   | $ | (284,528 | ) |   | $ | (12,995 | ) |   | $ | 19,322,136 |   |   |   | 100.0 | % |

----

|                           |   | March 31, 2011 |    |
|--------------------------------|--------|----------------|---------|
|                           |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | Cost or        |    |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | % of |   |
|                           |   | Amortized      |    |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                 |   | Cost           |    |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                           |   | (unaudited)    |    |
|                           |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |   | $              | 606,222 |   |   | $ | - |   |   | $ | (22,430 | ) |   | $ | - |   |   | $ | 583,792 |   |   |   | 100.0 | % |

|                           |   | December 31, 2010 |    |
|--------------------------------|--------|-------------------|---------|
|                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      |   | Cost or           |    |   | Gross |   |   | Gross Unrealized Losses |   |   |   |   |   | % of |   |
|                           |   | Amortized         |    |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Fair |   |
|  Category                 |   | Cost              |    |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | Value |   |
|                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  U.S. Treasury securities |   | $                 | 605,424 |   |   | $ | 974 |   |   | $ | - |   |   | $ | - |   |   | $ | 606,398 |   |   |   | 100.0 | % |

|                     |   |   | March 31, 2011 |       |      | December 31, 2010 |   |
|--------------------------|--------|--------|----------------|------------|-----------|-------------------|--------|
|                     |   |   |           |       |      | Percentage of     |   |   |   |   |   | Percentage of |   |
|                     |   |   | Fair Market    |       |      | Fair Market       |   |   | Fair Market |   |   | Fair Market |   |
|                     |   |   | Value          |       |      | Value             |   |   | Value |   |   | Value |   |
|                     |   |   | (unaudited)    |       |      |              |   |   |   |   |
| Rating                   |   |   |           |       |      |              |   |   |   |   |   |   |   |
| U.S. Treasury securities |   |   | $              | 1,035,265  |      |              |   | 5.7 | % |   | $ | 1,042,657 |   |   |   | 6.4 | % |
| AAA                      |   |   |           | 4,233,318  |      |              |   | 23.6 | % |   |   | 4,229,483 |   |   |   | 25.9 | % |
| AA                       |   |   |           | 3,847,658  |      |              |   | 21.3 | % |   |   | 3,698,610 |   |   |   | 22.6 | % |
| A                        |   |   |           |       | 5,283,590 |              |   |   | 29.3 | % |   |   | 4,770,488 |   |   |   | 29.2 | % |
| BBB                      |   |   |           | 3,630,241  |      |              |   | 20.1 | % |   |   | 2,597,863 |   |   |   | 15.9 | % |
| Total                    |   |   | $              | 18,030,072 |      |              |   | 100.0 | % |   | $ | 16,339,101 |   |   |   | 100.0 | % |

----

|                                    |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-----------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                    |   |           |   |   | Weighted          |   |   |   |   |   | Weighted |   |
|                                    |   |           |   |   | Average           |   |   |   |   |   | Average |   |
|                                    |   | Average        |   |   | Duration in       |   |   | Average |   |   | Duration in |   |
|  Category                          |   | Yield %        |   |   | Years             |   |   | Yield % |   |   | Years |   |
|                                    |   | (unaudited)    |   |   |              |   |   |   |   |
|  U.S. Treasury securities and      |   |           |   |   |              |   |   |   |   |   |   |   |
|  obligations of U.S. government    |   |           |   |   |              |   |   |   |   |   |   |   |
|  corporations and agencies         |   |           | 2.68   | %      |              |   | 13.8 |   |   |   | 3.27 | % |   |   | 14.1 |   |
|                                    |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States, |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Territories and Possessions       |   |           | 4.24   | %      |              |   | 6.7 |   |   |   | 4.24 | % |   |   | 6.9 |   |
|                                    |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds         |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous      |   |           | 5.10   | %      |              |   | 7.4 |   |   |   | 5.20 | % |   |   | 7.6 |   |

----

|                          |   | March 31, 2011      |      |
|-------------------------------|--------|---------------------|-----------|
|                          |   | Less than 12 months |      |   | 12 months or more |   |   | Total |   |
|                     |   |                |      |   |   |   |   | No. of |   |   |   |   |   |   |   |   | No. of |   |   | Aggregate |   |   |   |   |
|                          |   | Fair                |      |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |
|  Category                |   | Value               |      |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |
|                          |   | (unaudited)         |      |
| Fixed-Maturity Securities:    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of     |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  States, Territories and |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Possessions             |   | $                   | 1,638,318 |   |   | $ | (46,262 | ) |   |   | 7 |   |   | $ | 1,338,826 |   |   | $ | (32,472 | ) |   |   | 4 |   |   | $ | 2,977,144 |   |   | $ | (78,734 | ) |
|                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other     |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous           |   |                | 4,307,000 |   |   |   | (113,932 | ) |   |   | 22 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,307,000 |   |   |   | (113,932 | ) |
|                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total fixed-maturity    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  securities              |   | $                   | 5,945,318 |   |   | $ | (160,194 | ) |   |   | 29 |   |   | $ | 1,338,826 |   |   | $ | (32,472 | ) |   |   | 4 |   |   | $ | 7,284,144 |   |   | $ | (192,666 | ) |
|                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities:      |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Preferred stocks        |   | $                   | 316,000   |   |   | $ | (4,223 | ) |   |   | 8 |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | 316,000 |   |   | $ | (4,223 | ) |
|  Common stocks           |   |                | 488,948   |   |   |   | (22,362 | ) |   |   | 9 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 488,948 |   |   |   | (22,362 | ) |
|                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total equity securities |   | $                   | 804,948   |   |   | $ | (26,585 | ) |   |   | 17 |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | 804,948 |   |   | $ | (26,585 | ) |
|                          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Total                   |   | $                   | 6,750,266 |   |   | $ | (186,779 | ) |   |   | 46 |   |   | $ | 1,338,826 |   |   | $ | (32,472 | ) |   |   | 4 |   |   | $ | 8,089,092 |   |   | $ | (219,251 | ) |

----

|                       |   | December 31, 2010   |      |
|----------------------------|--------|---------------------|-----------|
|                       |   | Less than 12 months |      |   | 12 months or more |   |   | Total |
|                  |   |                |      |   |   |   |   | No. of |   |   |   |   |   |   |   |   | No. of |   |   | Aggregate |   |   |   |   |
|                       |   | Fair                |      |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |   | Positions |   |   | Fair |   |   | Unrealized |   |
|  Category             |   | Value               |      |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |   | Held |   |   | Value |   |   | Losses |   |
|                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-Maturity Securities: |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of  |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States, Territories and    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Possessions                |   | $                   | 2,870,728 |   |   | $ | (86,234 | ) |   |   | 11 |   |   | $ | 1,119,244 |   |   | $ | (12,995 | ) |   |   | 4 |   |   | $ | 3,989,972 |   |   | $ | (99,229 | ) |
|                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| bonds industrial and       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| miscellaneous              |   |                | 4,113,912 |   |   |   | (137,597 | ) |   |   | 20 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,113,912 |   |   |   | (137,597 | ) |
|                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed-maturity       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities                 |   | $                   | 6,984,640 |   |   | $ | (223,831 | ) |   |   | 31 |   |   | $ | 1,119,244 |   |   | $ | (12,995 | ) |   |   | 4 |   |   | $ | 8,103,884 |   |   | $ | (236,826 | ) |
|                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks           |   | $                   | 363,670   |   |   | $ | (6,333 | ) |   |   | 9 |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | 363,670 |   |   | $ | (6,333 | ) |
| Common stocks              |   |                | 690,634   |   |   |   | (54,364 | ) |   |   | 16 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 690,634 |   |   |   | (54,364 | ) |
| Total equity securities    |   | $                   | 1,054,304 |   |   | $ | (60,697 | ) |   |   | 25 |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | 1,054,304 |   |   | $ | (60,697 | ) |
|                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      |   | $                   | 8,038,944 |   |   | $ | (284,528 | ) |   |   | 56 |   |   | $ | 1,119,244 |   |   | $ | (12,995 | ) |   |   | 4 |   |   | $ | 9,158,188 |   |   | $ | (297,523 | ) |

----

----

| Three Months Ended March 31,                         |   | 2011   |       |   | 2010   |   |
|------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                 |   |   |       |   |   |   |
|  Cash flows provided by (used in):              |   |   |       |   |   |   |
|  Operating activities                           |   | $      | 1,246,298  |   |   | $      | (252,702 | ) |
|  Investing activities                           |   |   | (1,172,432 | )      |   |   | (6,067 | ) |
|  Financing activities                           |   |   | (6,518     | )      |   |   | 394,048 |   |
|  Net increase in cash and cash equivalents      |   |   | 67,348     |   |   |   | 135,279 |   |
|  Cash and cash equivalents, beginning of period |   |   | 326,620    |   |   |   | 625,320 |   |
|  Cash and cash equivalents, end of period       |   | $      | 393,968    |   |   | $      | 760,599 |   |

----

----

|   | 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       | Amendment No. 3, dated as of February 28, 2011, to Employment Contract between Kingstone Insurance Company and John D. Reiersen12                                             |
|   |     |                                                                                                                                                                          |
|   | 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:  May 20, 2011 | By:                       | /s/ Barry B. Goldstein |   |
|                           |                      | Barry B. Goldstein          |   |
|                           |                      | President              |   |
|                           |                      |                        |   |
|                           |                      |                        |   |
|                           | By:                       | /s/ Victor Brodsky          |   |
|                           |                      | Victor Brodsky              |   |
|                           |                      | Chief Financial Officer     |   |