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| 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                                                       |   | 36-2476480                              |
|----------------------------------------------------------------|--------|-----------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification Number) |

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

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|                                 |                                                                                                                                                       |   | PAGE   |   |
|--------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                 |                                                                                                                                                       |   |   |   |
| PART I — FINANCIAL INFORMATION |                                                                                                                                                       |   | 2      |   |
|                                 |                                                                                                                                                       |   |   |   |
| Item 1 —                  | Financial Statements                                                                                                                                       |   |   | 2      |   |
|                                 | Condensed Consolidated Balance Sheets at June 30, 2012 (Unaudited) and December 31, 2011                                                                   |   |   | 2      |   |
|                                 | Condensed Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2012 (Unaudited) and 2011 (Unaudited) |   |   | 3      |   |
|                                 | Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2012 (Unaudited)                                          |   |   | 4      |   |
|                                 | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 (Unaudited) and 2011 (Unaudited)                                    |   |   | 5      |   |
|                                 | Notes to Condensed Consolidated Financial Statements  (Unaudited)                                                                                |   |   | 6      |   |
| Item 2 —                  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                |   |   | 26     |   |
| Item 3 —                  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                 |   |   | 41     |   |
| Item 4—                   | Controls and Procedures                                                                                                                                    |   |   | 41     |   |
|                                 |                                                                                                                                                       |   |   |   |   |
| PART II — OTHER INFORMATION    |                                                                                                                                                       |   | 42     |   |
|                                 |                                                                                                                                                       |   |   |   |
| Item 1 —                  | Legal Proceedings                                                                                                                                          |   |   | 42     |   |
| Item 1A —                 | Risk Factors                                                                                                                                               |   |   | 42     |   |
| Item 2 —                       | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                |   |   | 42     |   |
| Item 3 —                       | Defaults Upon Senior Securities                                                                                                                            |   |   | 42     |   |
| Item 4 —                  | Mine Safety Disclosures                                                                                                                                    |   |   | 42     |   |
| Item 5 —                  | Other Information                                                                                                                                          |   |   | 42     |   |
| Item 6 —                  | Exhibits                                                                                                                                                   |   |   | 43     |   |
| Signatures                           |                                                                                                                                                       |   | 44     |   |
|                                 |                                                                                                                                                       |   |   |   |
| EXHIBIT 3(a)                         |                                                                                                                                                       |   |   |   |
| EXHIBIT 3(b)                         |                                                                                                                                                       |   |   |   |
| EXHIBIT 10                           |                                                                                                                                                       |   |   |   |
| EXHIBIT 31(a)                        |                                                                                                                                                       |   |   |   |
| EXHIBIT 31(b)                        |                                                                                                                                                       |   |   |   |
| EXHIBIT 32                           |                                                                                                                                                       |   |   |   |

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| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                                                  |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Balance Sheets                                                                       |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   | June 30, |   |   | December 31, |   |
|                                                                                                        |   | 2012 |   |   | 2011 |   |
|                                                                                                        |   | (unaudited) |   |   |   |   |
| Assets                                                                                                      |   |   |   |   |   |   |
|  Fixed-maturity securities, held to maturity, at amortized cost (fair value of $797,992 at             |   |   |   |   |   |   |
|  June 30, 2012 and $777,953 at December 31, 2011)                                                      |   | $ | 606,265 |   |   | $ | 606,234 |   |
|  Fixed-maturity securities, available for sale, at fair value (amortized cost of $21,323,148           |   |   |   |   |   |   |   |   |
|  at June 30, 2012 and $22,215,191 at December 31, 2011)                                                |   |   | 22,164,430 |   |   |   | 22,568,932 |   |
|  Equity securities, available-for-sale, at fair value (cost of $4,155,363                              |   |   |   |   |   |   |   |   |
|  at June 30, 2012 and $3,857,741 at December 31, 2011)                                                 |   |   | 4,617,047 |   |   |   | 4,065,210 |   |
|  Total investments                                                                                     |   |   | 27,387,742 |   |   |   | 27,240,376 |   |
|  Cash and cash equivalents                                                                             |   |   | 1,025,724 |   |   |   | 173,126 |   |
|  Premiums receivable, net of provision for uncollectible amounts                                       |   |   | 6,951,282 |   |   |   | 5,779,085 |   |
|  Receivables - reinsurance contracts                                                                   |   |   | 3,423,759 |   |   |   | 1,734,535 |   |
|  Reinsurance receivables, net of provision for uncollectible amounts                                   |   |   | 26,166,406 |   |   |   | 23,880,814 |   |
|  Notes receivable-sale of business                                                                     |   |   | 339,102 |   |   |   | 393,511 |   |
|  Deferred acquisition costs                                                                            |   |   | 5,092,435 |   |   |   | 4,535,773 |   |
|  Intangible assets, net                                                                                |   |   | 3,422,815 |   |   |   | 3,660,672 |   |
|  Property and equipment, net of accumulated depreciation                                               |   |   | 1,652,262 |   |   |   | 1,646,341 |   |
|  Other assets                                                                                          |   |   | 952,463 |   |   |   | 660,672 |   |
| Total assets                                                                                                |   | $ | 76,413,990 |   |   | $ | 69,704,905 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Liabilities                                                                                                 |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                                                     |   | $ | 20,798,094 |   |   | $ | 18,480,717 |   |
|  Unearned premiums                                                                                     |   |   | 23,932,647 |   |   |   | 21,283,160 |   |
|  Advance premiums                                                                                      |   |   | 550,100 |   |   |   | 544,791 |   |
|  Reinsurance balances payable                                                                          |   |   | 3,556,919 |   |   |   | 2,761,828 |   |
|  Deferred ceding commission revenue                                                                    |   |   | 4,467,514 |   |   |   | 3,982,399 |   |
|  Notes payable (includes payable to related parties of $378,000                                        |   |   |   |   |   |   |   |   |
|  at June 30, 2012 and December 31, 2011)                                                               |   |   | 997,000 |   |   |   | 1,047,000 |   |
|  Accounts payable, accrued expenses and other liabilities                                              |   |   | 3,249,815 |   |   |   | 4,419,623 |   |
|  Income taxes payable                                                                                  |   |   | - |   |   |   | 85,393 |   |
|  Deferred income taxes                                                                                 |   |   | 1,886,541 |   |   |   | 1,789,439 |   |
| Total liabilities                                                                                           |   |   | 59,438,630 |   |   |   | 54,394,350 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Commitments and Contingencies                                                                               |   |   |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Stockholders' Equity                                                                                        |   |   |   |   |   |   |   |   |
|  Common stock, $.01 par value; authorized 10,000,000 shares; issued 4,696,593                          |   |   |   |   |   |   |   |   |
|  shares at June 30, 2012 and 4,643,122 shares at December 31, 2011;                                    |   |   |   |   |   |   |   |   |
|  outstanding 3,811,155 shares at June 30, 2012 and 3,759,900 shares                                    |   |   |   |   |   |   |   |   |
|  at December 31, 2011                                                                                  |   |   | 46,966 |   |   |   | 46,432 |   |
|  Preferred stock, $.01 par value; authorized 1,000,000 shares;                                         |   |   |   |   |   |   |   |   |
|  -0- shares issued and outstanding                                                                     |   |   | - |   |   |   | - |   |
|  Capital in excess of par                                                                              |   |   | 13,823,800 |   |   |   | 13,739,792 |   |
|  Accumulated other comprehensive income                                                                |   |   | 859,957 |   |   |   | 370,399 |   |
|  Retained earnings                                                                                     |   |   | 3,653,254 |   |   |   | 2,554,349 |   |
|                                                                                                        |   |   | 18,383,977 |   |   |   | 16,710,972 |   |
|  Treasury stock, at cost, 885,438 shares at June 30, 2012 and 883,222 shares at December 31, 2011 |   |   | (1,408,617 | ) |   |   | (1,400,417 | ) |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Total stockholders' equity                                                                                  |   |   | 16,975,360 |   |   |   | 15,310,555 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                  |   | $ | 76,413,990 |   |   | $ | 69,704,905 |   |

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                           |   |
|--------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) |   |   |   |   |
|                                                                                 |   |   |   |   |
|                                                                                 |   | For the Three Months Ended |   |   | For the Six Months Ended |   |
|                                                                                 |   | June 30, |   |   | June 30, |   |
|                                                                                 |   | 2012 |   |   | 2011 |   |   | 2012 |   |   | 2011 |   |
| Revenues                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                                                            |   | $ | 4,164,572 |   |   | $ | 3,517,249 |   |   | $ | 8,137,107 |   |   | $ | 6,884,948 |   |
|  Ceding commission revenue                                                      |   |   | 2,910,858 |   |   |   | 2,727,867 |   |   |   | 5,814,514 |   |   |   | 5,040,442 |   |
|  Net investment income                                                          |   |   | 229,879 |   |   |   | 160,464 |   |   |   | 497,396 |   |   |   | 338,134 |   |
|  Net realized gain on investments                                               |   |   | 6,160 |   |   |   | 89,961 |   |   |   | 45,560 |   |   |   | 160,432 |   |
|  Other income                                                                   |   |   | 222,691 |   |   |   | 217,101 |   |   |   | 461,746 |   |   |   | 464,573 |   |
|  Total revenues                                                                 |   |   | 7,534,160 |   |   |   | 6,712,642 |   |   |   | 14,956,323 |   |   |   | 12,888,529 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                              |   |   | 2,408,505 |   |   |   | 1,823,630 |   |   |   | 4,687,019 |   |   |   | 4,374,394 |   |
|  Commission expense                                                             |   |   | 1,805,810 |   |   |   | 1,504,894 |   |   |   | 3,477,417 |   |   |   | 2,876,643 |   |
|  Other underwriting expenses                                                    |   |   | 1,994,576 |   |   |   | 1,734,095 |   |   |   | 3,852,322 |   |   |   | 3,310,914 |   |
|  Other operating expenses                                                       |   |   | 287,442 |   |   |   | 299,002 |   |   |   | 574,329 |   |   |   | 602,965 |   |
|  Depreciation and amortization                                                  |   |   | 150,472 |   |   |   | 154,682 |   |   |   | 297,021 |   |   |   | 313,142 |   |
|  Interest expense                                                               |   |   | 20,111 |   |   |   | 38,907 |   |   |   | 40,896 |   |   |   | 84,672 |   |
|  Total expenses                                                                 |   |   | 6,666,916 |   |   |   | 5,555,210 |   |   |   | 12,929,004 |   |   |   | 11,562,730 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income from operations before taxes                                            |   |   | 867,244 |   |   |   | 1,157,432 |   |   |   | 2,027,319 |   |   |   | 1,325,799 |   |
|  Income tax expense                                                             |   |   | 306,928 |   |   |   | 383,501 |   |   |   | 701,585 |   |   |   | 425,244 |   |
| Net income                                                                           |   |   | 560,316 |   |   |   | 773,931 |   |   |   | 1,325,734 |   |   |   | 900,555 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross unrealized investment holding gains arising during period           |   |   | 294,590 |   |   |   | 301,456 |   |   |   | 741,755 |   |   |   | 333,306 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income tax expense related to items of other comprehensive income         |   |   | (100,161 | ) |   |   | (102,495 | ) |   |   | (252,197 | ) |   |   | (113,324 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                 |   | $ | 754,745 |   |   | $ | 972,892 |   |   | $ | 1,815,292 |   |   | $ | 1,120,537 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per common share:                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                |   | $ | 0.15 |   |   | $ | 0.20 |   |   | $ | 0.35 |   |   | $ | 0.23 |   |
| Diluted                                                                              |   | $ | 0.15 |   |   | $ | 0.20 |   |   | $ | 0.35 |   |   | $ | 0.23 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                |   |   | 3,789,592 |   |   |   | 3,838,386 |   |   |   | 3,780,351 |   |   |   | 3,838,386 |   |
| Diluted                                                                              |   |   | 3,883,779 |   |   |   | 3,918,763 |   |   |   | 3,780,351 |   |   |   | 3,921,289 |   |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends declared and paid per common share                                         |   | $ | 0.03 |   |   | $ | - |   |   | $ | 0.06 |   |   | $ | - |   |

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                         |   |
|------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Statement of Stockholders' Equity                           |   |
| Six months ended June 30, 2012 (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, 2011                                                         |   |   | 4,643,122 |   |   |   | 46,432 |   |   |   | - |   |   |   | - |   |   |   | 13,739,792 |   |   |   | 370,399 |   |   |   | 2,554,349 |   |   |   | 883,222 |   |   |   | (1,400,417 | ) |   |   | 15,310,555 |   |
| Stock-based compensation                                                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 30,111 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 30,111 |   |
| Exercise of stock options                                                          |   |   | 64,361 |   |   |   | 643 |   |   |   | - |   |   |   | - |   |   |   | 46,430 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 47,073 |   |
| Shares deducted from exercise of stock                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options for payment of withholding taxes                                           |   |   | (10,890 | ) |   |   | (109 | ) |   |   | - |   |   |   | - |   |   |   | (56,521 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (56,630 | ) |
| Tax benefit from exercise of stock options                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 63,988 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 63,988 |   |
| Acquisition of treasury stock                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,216 |   |   |   | (8,200 | ) |   |   | (8,200 | ) |
| Dividends                                                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (226,829 | ) |   |   | - |   |   |   | - |   |   |   | (226,829 | ) |
| Net income                                                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,325,734 |   |   |   | - |   |   |   | - |   |   |   | 1,325,734 |   |
| Change in unrealized gains on available  for sale securities, net of tax |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 489,558 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 489,558 |   |
| Balance, June 30, 2012                                                             |   |   | 4,696,593 |   |   | $ | 46,966 |   |   |   | - |   |   | $ | - |   |   | $ | 13,823,800 |   |   | $ | 859,957 |   |   | $ | 3,653,254 |   |   |   | 885,438 |   |   | $ | (1,408,617 | ) |   | $ | 16,975,360 |   |

----

| KINGSTONE COMPANIES, INC. AND SUBSIDIARIES                                |   |
|---------------------------------------------------------------------------|--------|
| Condensed Consolidated Statements of Cash Flows (Unaudited)               |   |   |   |   |   |   |
| Six months ended June 30,                                                 |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |
|                                                                      |   | 2012 |   |   | 2011 |   |
|                                                                      |   |   |   |   |   |   |
| Cash flows provided by operating activities:                              |   |   |   |   |   |   |
| Net income                                                                |   | $ | 1,325,734 |   |   | $ | 900,555 |   |
| Adjustments to reconcile net income to net cash provided by operations:   |   |   |   |   |   |   |   |   |
|  Gain on sale of investments                                         |   |   | (45,560 | ) |   |   | (160,432 | ) |
|  Depreciation and amortization                                       |   |   | 297,021 |   |   |   | 313,142 |   |
|  Amortization of bond premium, net                                   |   |   | 66,998 |   |   |   | 123,001 |   |
|  Stock-based compensation                                            |   |   | 30,111 |   |   |   | 64,148 |   |
|  Deferred income tax expense                                         |   |   | (155,095 | ) |   |   | (176,236 | ) |
| (Increase) decrease in assets:                                            |   |   |   |   |   |   |   |   |
|  Premiums receivable, net                                            |   |   | (1,172,197 | ) |   |   | (1,237,243 | ) |
|  Receivables - reinsurance contracts                                 |   |   | (1,689,224 | ) |   |   | (1,728,174 | ) |
|  Reinsurance receivables, net                                        |   |   | (2,285,592 | ) |   |   | (2,323,212 | ) |
|  Deferred acquisition costs                                          |   |   | (556,662 | ) |   |   | (586,660 | ) |
|  Other assets                                                        |   |   | (348,303 | ) |   |   | 858,805 |   |
| Increase (decrease) in liabilities:                                       |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses                                   |   |   | 2,317,377 |   |   |   | 793,460 |   |
|  Unearned premiums                                                   |   |   | 2,649,487 |   |   |   | 2,912,817 |   |
|  Advance premiums                                                    |   |   | 5,309 |   |   |   | 195,004 |   |
|  Reinsurance balances payable                                        |   |   | 795,091 |   |   |   | 1,897,771 |   |
|  Deferred ceding commission revenue                                  |   |   | 485,115 |   |   |   | 452,878 |   |
|  Accounts payable, accrued expenses and other liabilities            |   |   | (1,255,201 | ) |   |   | (272,411 | ) |
| Net cash flows provided by operating activities                           |   |   | 464,409 |   |   |   | 2,027,213 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Cash flows provided by (used in) investing activities:                    |   |   |   |   |   |   |   |   |
| Purchase - fixed-maturity securities available for sale                   |   |   | (915,228 | ) |   |   | (4,065,722 | ) |
| Purchase - equity securities                                              |   |   | (853,000 | ) |   |   | (1,056,775 | ) |
| Sale or maturity - fixed-maturity securities available for sale           |   |   | 1,837,698 |   |   |   | 2,079,869 |   |
| Sale - equity securities                                                  |   |   | 559,993 |   |   |   | 1,215,296 |   |
| Collections of notes receivable and accrued interest - Sale of businesses |   |   | 54,409 |   |   |   | 297,678 |   |
| Other investing activities                                                |   |   | (65,085 | ) |   |   | (22,998 | ) |
| Net cash flows provided by (used in) investing activities                 |   |   | 618,787 |   |   |   | (1,552,652 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Cash flows used in financing activities:                                  |   |   |   |   |   |   |   |   |
| Proceeds from line of credit                                              |   |   | 50,000 |   |   |   | - |   |
| Principal payments on line of credit                                      |   |   | (100,000 | ) |   |   | - |   |
| Principal payments on long-term debt                                      |   |   | - |   |   |   | (713,997 | ) |
| Proceeds from exercise of stock options                                   |   |   | 47,073 |   |   |   | - |   |
| Withholding taxes paid on cashless exercise of stock options              |   |   | (56,630 | ) |   |   | - |   |
| Tax benefit from exercise of stock options                                |   |   | 63,988 |   |   |   | - |   |
| Purchase of treasury stock                                                |   |   | (8,200 | ) |   |   | - |   |
| Dividends paid                                                            |   |   | (226,829 | ) |   |   | - |   |
| Net cash flows used in financing activities                               |   |   | (230,598 | ) |   |   | (713,997 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                          |   | $ | 852,598 |   |   | $ | (239,436 | ) |
| Cash and cash equivalents, beginning of period                            |   |   | 173,126 |   |   |   | 326,620 |   |
| Cash and cash equivalents, end of period                                  |   | $ | 1,025,724 |   |   | $ | 87,184 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                        |   |   |   |   |   |   |   |   |
| Cash paid for income taxes                                                |   | $ | 1,505,000 |   |   | $ | 329,762 |   |
| Cash paid for interest                                                    |   | $ | 41,202 |   |   | $ | 125,994 |   |

----

----

|                                        |   | June 30, 2012 |       |
|---------------------------------------------|--------|---------------|------------|
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   | Net |   |
|                                   |   | 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      |   | $             | 99,930     |   |   | $ | 5,672 |   |   | $ | - |   |   | $ | - |   |   | $ | 105,602 |   |   | $ | 5,672 |   |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,           |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Territories and Possessions    |   |          | 5,572,075  |   |   |   | 279,663 |   |   |   | - |   |   |   | (29,967 | ) |   |   | 5,821,771 |   |   |   | 249,696 |   |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds             |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Industrial and miscellaneous          |   |          | 15,651,143 |   |   |   | 644,650 |   |   |   | (9,850 | ) |   |   | (48,886 | ) |   |   | 16,237,057 |   |   |   | 585,914 |   |
|  Total fixed-maturity securities       |   |          | 21,323,148 |   |   |   | 929,985 |   |   |   | (9,850 | ) |   |   | (78,853 | ) |   |   | 22,164,430 |   |   |   | 841,282 |   |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                          |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                            |   |          | 1,339,013  |   |   |   | 58,812 |   |   |   | - |   |   |   | (12,775 | ) |   |   | 1,385,050 |   |   |   | 46,037 |   |
| Common stocks                               |   |          | 2,816,350  |   |   |   | 442,031 |   |   |   | (26,384 | ) |   |   | - |   |   |   | 3,231,997 |   |   |   | 415,647 |   |
| Total equity securities                     |   |          | 4,155,363  |   |   |   | 500,843 |   |   |   | (26,384 | ) |   |   | (12,775 | ) |   |   | 4,617,047 |   |   |   | 461,684 |   |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $             | 25,478,511 |   |   | $ | 1,430,828 |   |   | $ | (36,234 | ) |   | $ | (91,628 | ) |   | $ | 26,781,477 |   |   | $ | 1,302,966 |   |

----

|                                        |   | December 31, 2011 |       |
|---------------------------------------------|--------|-------------------|------------|
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   | Net |   |
|                                   |   | 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      |   | $                 | 499,832    |   |   | $ | 50,356 |   |   | $ | - |   |   | $ | - |   |   | $ | 550,188 |   |   | $ | 50,356 |   |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,           |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Territories and Possessions    |   |              | 5,868,743  |   |   |   | 301,559 |   |   |   | - |   |   |   | - |   |   |   | 6,170,302 |   |   |   | 301,559 |   |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds                   |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industrial and miscellaneous                |   |              | 15,846,616 |   |   |   | 338,284 |   |   |   | (228,792 | ) |   |   | (107,666 | ) |   |   | 15,848,442 |   |   |   | 1,826 |   |
| Total fixed-maturity securities             |   |              | 22,215,191 |   |   |   | 690,199 |   |   |   | (228,792 | ) |   |   | (107,666 | ) |   |   | 22,568,932 |   |   |   | 353,741 |   |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                          |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                            |   |              | 1,428,435  |   |   |   | 36,762 |   |   |   | (76,969 | ) |   |   | (4,893 | ) |   |   | 1,383,335 |   |   |   | (45,100 | ) |
| Common stocks                               |   |              | 2,429,306  |   |   |   | 274,538 |   |   |   | (21,969 | ) |   |   | - |   |   |   | 2,681,875 |   |   |   | 252,569 |   |
| Total equity securities                     |   |              | 3,857,741  |   |   |   | 311,300 |   |   |   | (98,938 | ) |   |   | (4,893 | ) |   |   | 4,065,210 |   |   |   | 207,469 |   |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $                 | 26,072,932 |   |   | $ | 1,001,499 |   |   | $ | (327,730 | ) |   | $ | (112,559 | ) |   | $ | 26,634,142 |   |   | $ | 561,210 |   |

|                       |   | June 30, 2012 |       |   | December 31, 2011 |   |
|----------------------------|--------|---------------|------------|--------|-------------------|--------|
|                       |   | Amortized     |       |   |              |   |   | Amortized |   |   |   |   |
| Remaining Time to Maturity |   | Cost          |       |   | Fair Value        |   |   | Cost |   |   | Fair Value |   |
|                       |   | (unaudited)   |       |
| Less than one year         |   | $             | 1,082,670  |   |              | $      | 1,066,409 |   |   | $ | 1,063,493 |   |   | $ | 1,079,924 |   |
| One to five years          |   |          | 7,118,991  |   |              |   | 7,382,219 |   |   |   | 6,899,892 |   |   |   | 7,045,774 |   |
| Five to ten years          |   |          | 11,768,002 |   |              |   | 12,303,035 |   |   |   | 12,547,046 |   |   |   | 12,680,441 |   |
| More than 10 years    |   |          | 1,353,485  |   |              |   | 1,412,767 |   |   |   | 1,704,760 |   |   |   | 1,762,793 |   |
| Total                      |   | $             | 21,323,148 |   |              | $      | 22,164,430 |   |   | $ | 22,215,191 |   |   | $ | 22,568,932 |   |

----

|                     |   | June 30, 2012 |    |
|--------------------------|--------|---------------|---------|
|                |   | Cost or       |    |   | Gross |   |   |   Gross Unrealized Losses |   |   |   |   |   | Net Unrealized |   |
|                     |   | Amortized     |    |   | Unrealized |   |   | Less than 12 |   |   | More than 12 |   |   | Fair |   |   | Gains/ |   |
| Category                 |   | Cost          |    |   | Gains |   |   | Months |   |   | Months |   |   | Value |   |   | (Losses) |   |
|                     |   | (unaudited)   |    |
|                     |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities |   | $             | 606,265 |   |   | $ | 191,727 |   |   | $ | - |   |   | $ | - |   |   | $ | 797,992 |   |   | $ | 191,727 |   |

|                     |   | December 31, 2011 |    |
|--------------------------|--------|-------------------|---------|
|                     |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   | Net |   |
|                |   | 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 |   | $                 | 606,234 |   |   | $ | 171,719 |   |   | $ | - |   |   | $ | - |   |   | $ | 777,953 |   |   | $ | 171,719 |   |

|                      |   | Three months ended |    |   | Six months ended |   |
|---------------------------|--------|--------------------|---------|--------|------------------|--------|
|                      |   | June 30,           |    |   | June 30,         |   |
|                      |   | 2012               |    |   | 2011             |   |   | 2012 |   |   | 2011 |   |
|                      |   | (unaudited)        |    |   | (unaudited)      |   |
| Income:                   |   |               |    |   |             |   |   |   |   |   |   |   |
| Fixed-maturity securities |   | $                  | 226,777 |   |             | $      | 174,363 |   |   | $ | 461,270 |   |   | $ | 356,500 |   |
| Equity securities         |   |               | 62,310  |   |             |   | 33,474 |   |   |   | 148,239 |   |   |   | 70,298 |   |
| Cash and cash equivalents |   |               | (1,347  | )      |             |   | 236 |   |   |   | 59 |   |   |   | 2,223 |   |
| Other                     |   |               | 2       |   |             |   | (3,325 | ) |   |   | 4 |   |   |   | (3,315 | ) |
| Total                     |   |               | 287,742 |   |             |   | 204,748 |   |   |   | 609,572 |   |   |   | 425,706 |   |
| Expenses:                 |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Investment expenses       |   |               | 57,863  |   |             |   | 44,284 |   |   |   | 112,176 |   |   |   | 87,572 |   |
| Net investment income     |   | $                  | 229,879 |   |             | $      | 160,464 |   |   | $ | 497,396 |   |   | $ | 338,134 |   |

----

|                      |   | Three months ended |    |   | Six months ended |   |
|---------------------------|--------|--------------------|---------|--------|------------------|--------|
|                      |   | June 30,           |    |   | June 30,         |   |
|                      |   | 2011               |    |   | 2010             |   |   | 2012 |   |   | 2011 |   |
|                      |   | (unaudited)        |    |   | (unaudited)      |   |
| Fixed-maturity securities |   |               |    |   |             |   |   |   |   |   |   |   |
| Gross realized gains      |   | $                  | 55,004  |   |             | $      | 87,302 |   |   | $ | 95,150 |   |   | $ | 87,302 |   |
| Gross realized losses     |   |               | (54,404 | )      |             |   | (1,983 | ) |   |   | (54,404 | ) |   |   | (1,983 | ) |
|                      |   |               | 600     |   |             |   | 85,319 |   |   |   | 40,746 |   |   |   | 85,319 |   |
| Equity securities         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Gross realized gains      |   |               | 25,215  |   |             |   | 18,484 |   |   |   | 32,284 |   |   |   | 135,817 |   |
| Gross realized losses     |   |               | (19,655 | )      |             |   | (13,842 | ) |   |   | (27,470 | ) |   |   | (60,704 | ) |
|                      |   |               | 5,560   |   |             |   | 4,642 |   |   |   | 4,814 |   |   |   | 75,113 |   |
|                      |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net realized gains        |   | $                  | 6,160   |   |             | $      | 89,961 |   |   | $ | 45,560 |   |   | $ | 160,432 |   |

----

|                                       |   | June 30, 2012       |      |
|--------------------------------------------|--------|---------------------|-----------|
|                                       |   | 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:                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities                   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and obligations of U.S.        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   government corporations             |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and agencies                        |   | $                   | -         |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|                                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of                  |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   States, Territories and             |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Possessions                    |   |                | -         |   |   |   | - |   |   |   | - |   |   |   | 773,253 |   |   |   | (29,967 | ) |   |   | 2 |   |   |   | 773,253 |   |   |   | (29,967 | ) |
|                                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other                        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   bonds industrial and                |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   miscellaneous                       |   |                | 1,022,335 |   |   |   | (9,850 | ) |   |   | 5 |   |   |   | 1,821,008 |   |   |   | (48,886 | ) |   |   | 8 |   |   |   | 2,843,343 |   |   |   | (58,736 | ) |
|                                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed-maturity  securities |   | $                   | 1,022,335 |   |   | $ | (9,850 | ) |   |   | 5 |   |   | $ | 2,594,261 |   |   | $ | (78,853 | ) |   |   | 10 |   |   | $ | 3,616,596 |   |   | $ | (88,703 | ) |
|                                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                           |   | $                   | -         |   |   | $ | - |   |   |   | - |   |   | $ | 114,750 |   |   | $ | (12,775 | ) |   |   | 1 |   |   | $ | 114,750 |   |   | $ | (12,775 | ) |
| Common stocks                              |   |                | 238,502   |   |   |   | (26,384 | ) |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 238,502 |   |   |   | (26,384 | ) |
|                                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total equity securities                    |   | $                   | 238,502   |   |   | $ | (26,384 | ) |   |   | 2 |   |   | $ | 114,750 |   |   | $ | (12,775 | ) |   |   | 1 |   |   | $ | 353,252 |   |   | $ | (39,159 | ) |
|                                       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                      |   | $                   | 1,260,837 |   |   | $ | (36,234 | ) |   |   | 7 |   |   | $ | 2,709,011 |   |   | $ | (91,628 | ) |   |   | 11 |   |   | $ | 3,969,848 |   |   | $ | (127,862 | ) |

----

|                                          |   | June 30, 2012 |   |
|-----------------------------------------------|--------|---------------|--------|
| ($ 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                                  |   | $             | 106    |   |   | $ | - |   |   | $ | - |   |   | $ | 106 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of                     |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States, Territories and                       |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Possessions                                   |   |          | -      |   |   |   | 5,821 |   |   |   | - |   |   |   | 5,821 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other                           |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  bonds industrial and                    |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  miscellaneous                           |   |          | 7,776  |   |   |   | 8,461 |   |   |   | - |   |   |   | 16,237 |   |
|                                          |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed maturities                        |   |          | 7,882  |   |   |   | 14,282 |   |   |   | - |   |   |   | 22,164 |   |
| Equity investments                            |   |          | 4,617  |   |   |   | - |   |   |   | - |   |   |   | 4,617 |   |
| Total investments                             |   | $             | 12,499 |   |   | $ | 14,282 |   |   | $ | - |   |   | $ | 26,781 |   |

----

|                                          |   | December 31, 2011 |   |
|-----------------------------------------------|--------|-------------------|--------|
| ($ in thousands)                              |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                          |   |              |   |
| Fixed-maturity investments available for sale |   |              |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities                      |   |              |   |   |   |   |   |   |   |   |   |   |
|    and obligations of U.S.          |   |              |   |   |   |   |   |   |   |   |   |   |
|    government corporations          |   |              |   |   |   |   |   |   |   |   |   |   |
|    and agencies                     |   | $                 | 550    |   |   | $ | - |   |   | $ | - |   |   | $ | 550 |   |
|                                          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    States, Territories and          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Possessions                      |   |              | -      |   |   |   | 6,171 |   |   |   | - |   |   |   | 6,171 |   |
|                                          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    bonds industrial and             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    miscellaneous                    |   |              | 8,465  |   |   |   | 7,383 |   |   |   | - |   |   |   | 15,848 |   |
|                                          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed maturities                        |   |              | 9,015  |   |   |   | 13,554 |   |   |   | - |   |   |   | 22,569 |   |
| Equity investments                            |   |              | 4,065  |   |   |   | - |   |   |   | - |   |   |   | 4,065 |   |
| Total investments                             |   | $                 | 13,080 |   |   | $ | 13,554 |   |   | $ | - |   |   | $ | 26,634 |   |

----

|                                              |   | June 30, 2012  |       |   | December 31, 2011 |   |
|---------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                                              |   | Carrying Value |       |   | Fair Value        |   |   | Carrying Value |   |   | Fair Value |   |
|                                              |   | (unaudited)    |       |
|                                              |   |           |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-maturity investments held to maturity       |   | $              | 606,265    |   |              | $      | 797,992 |   |   | $ | 606,234 |   |   | $ | 777,953 |   |
| Cash and cash equivalents                         |   |           | 1,025,724  |   |              |   | 1,025,724 |   |   |   | 173,126 |   |   |   | 173,126 |   |
| Premiums receivable                               |   |           | 6,951,282  |   |              |   | 6,951,282 |   |   |   | 5,779,085 |   |   |   | 5,779,085 |   |
| Receivables - reinsurance contracts               |   |           | 3,423,759  |   |              |   | 3,423,759 |   |   |   | 1,734,535 |   |   |   | 1,734,535 |   |
| Reinsurance receivables                           |   |           | 26,166,406 |   |              |   | 26,166,406 |   |   |   | 23,880,814 |   |   |   | 23,880,814 |   |
| Notes receivable-sale of business                 |   |           | 339,102    |   |              |   | 339,102 |   |   |   | 393,511 |   |   |   | 393,511 |   |
| Real estate, net of accumulated depreciation |   |           | 1,455,255  |   |              |   | 1,510,000 |   |   |   | 1,477,639 |   |   |   | 1,510,000 |   |
| Reinsurance balances payable                      |   |           | 3,556,919  |   |              |   | 3,556,919 |   |   |   | 2,761,828 |   |   |   | 2,761,828 |   |
| Notes payable (including related parties)         |   |           | 997,000    |   |              |   | 997,000 |   |   |   | 1,047,000 |   |   |   | 1,047,000 |   |

----

|                        |   | June 30, 2012 |    |   | December 31, 2011 |   |
|-----------------------------|--------|---------------|---------|--------|-------------------|--------|
|                        |   | Total         |    |   | Current           |   |   |   |   |   | Total |   |   | Current |   |   |   |   |
|                        |   | Note          |    |   | Maturities        |   |   | Long-Term |   |   | Note |   |   | Maturities |   |   | Long-Term |   |
|                        |   | (unaudited)   |    |   |              |   |   |   |   |   |   |   |
| Sale of Pennsylvania stores |   | $             | 336,681 |   |              | $      | 32,391 |   |   | $ | 304,290 |   |   | $ | 351,861 |   |   | $ | 31,028 |   |   | $ | 320,833 |   |
| Sale of Franchise business  |   |          | -       |   |              |   | - |   |   |   | - |   |   |   | 37,797 |   |   |   | 37,797 |   |   |   | - |   |
|                        |   |          | 336,681 |   |              |   | 32,391 |   |   |   | 304,290 |   |   |   | 389,658 |   |   |   | 68,825 |   |   |   | 320,833 |   |
| Accrued interest            |   |          | 2,421   |   |              |   | 2,421 |   |   |   | - |   |   |   | 3,853 |   |   |   | 3,853 |   |   |   | - |   |
| Total                       |   | $             | 339,102 |   |              | $      | 34,812 |   |   | $ | 304,290 |   |   | $ | 393,511 |   |   | $ | 72,678 |   |   | $ | 320,833 |   |

----

|                                         |   | Direct |       |   | Assumed |   |   | Ceded  |   |   | Net         |   |
|----------------------------------------------|--------|--------|------------|--------|---------|--------|--------|--------|--------|--------|-------------|--------|
|                                         |   |   |       |   |    |   |   |   |   |   |        |   |
| Six months ended June 30, 2012 (unaudited)   |   |   |       |   |    |   |   |   |   |   |        |   |
| Premiums written                             |   | $      | 23,674,526 |   |    | $      | 3,199  |   |   | $      | (14,480,602 | )      |   | $ | 9,197,123 |   |
| Change in unearned premiums                  |   |   | (2,653,399 | )      |    |   | 3,912  |   |   |   | 1,589,471   |   |   |   | (1,060,016 | ) |
| Premiums earned                              |   | $      | 21,021,127 |   |    | $      | 7,111  |   |   | $      | (12,891,131 | )      |   | $ | 8,137,107 |   |
|                                         |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Six months ended June 30, 2011 (unaudited)   |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Premiums written                             |   | $      | 20,120,159 |   |    | $      | 2,880  |   |   | $      | (11,979,870 | )      |   | $ | 8,143,169 |   |
| Change in unearned premiums                  |   |   | (2,914,468 | )      |    |   | 1,652  |   |   |   | 1,654,595   |   |   |   | (1,258,221 | ) |
| Premiums earned                              |   | $      | 17,205,691 |   |    | $      | 4,532  |   |   | $      | (10,325,275 | )      |   | $ | 6,884,948 |   |
|                                         |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Three months ended June 30, 2012 (unaudited) |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Premiums written                             |   | $      | 12,438,801 |   |    | $      | 1,799  |   |   | $      | (7,623,640  | )      |   | $ | 4,816,960 |   |
| Change in unearned premiums                  |   |   | (1,681,258 | )      |    |   | 2,333  |   |   |   | 1,026,537   |   |   |   | (652,388 | ) |
| Premiums earned                              |   | $      | 10,757,543 |   |    | $      | 4,132  |   |   | $      | (6,597,103  | )      |   | $ | 4,164,572 |   |
|                                         |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Three months ended June 30, 2011 (unaudited) |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Premiums written                             |   | $      | 10,587,013 |   |    | $      | 2,646  |   |   | $      | (6,483,505  | )      |   | $ | 4,106,154 |   |
| Change in unearned premiums                  |   |   | (1,677,592 | )      |    |   | (486   | )      |   |   | 1,089,173   |   |   |   | (588,905 | ) |
| Premiums earned                              |   | $      | 8,909,421  |   |    | $      | 2,160  |   |   | $      | (5,394,332  | )      |   | $ | 3,517,249 |   |

----

|                             |   | Six months ended |        |
|----------------------------------|--------|------------------|-------------|
|                             |   | June 30,         |        |
|                             |   | 2012             |        |   | 2011 |   |
|                             |   | (unaudited)      |        |
| Balance at beginning of period   |   | $                | 18,480,717  |   |   | $ | 17,711,907 |   |
| Less reinsurance recoverables    |   |             | (10,001,060 | ) |   |   | (10,431,415 | ) |
| Net balance, beginning of period |   |             | 8,479,657   |   |   |   | 7,280,492 |   |
|                             |   |             |        |   |   |   |   |   |
| Incurred related to:             |   |             |        |   |   |   |   |   |
| Current year                     |   |             | 4,359,416   |   |   |   | 4,141,042 |   |
| Prior years                      |   |             | 327,603     |   |   |   | 233,352 |   |
| Total incurred                   |   |             | 4,687,019   |   |   |   | 4,374,394 |   |
|                             |   |             |        |   |   |   |   |   |
| Paid related to:                 |   |             |        |   |   |   |   |   |
| Current year                     |   |             | 933,939     |   |   |   | 1,322,676 |   |
| Prior years                      |   |             | 2,586,898   |   |   |   | 1,921,555 |   |
| Total paid                       |   |             | 3,520,837   |   |   |   | 3,244,231 |   |
|                        |   |             |        |   |   |   |   |   |
| Net balance at end of period     |   |             | 9,645,839   |   |   |   | 8,410,655 |   |
| Add reinsurance recoverables     |   |             | 11,152,255  |   |   |   | 10,094,712 |   |
| Balance at end of period         |   | $                | 20,798,094  |   |   | $ | 18,505,367 |   |

----

----

|                                  |   | Three months ended |      |   | Six months ended |   |
|---------------------------------------|--------|--------------------|-----------|--------|------------------|--------|
|                                  |   | June 30,           |      |   | June 30,         |   |
|                                  |   | 2012               |      |   | 2011             |   |   | 2012 |   |   | 2011 |   |
|                                  |   | (unaudited)        |      |   | (unaudited)      |   |
| Provisional ceding commissions earned |   | $                  | 2,074,732 |   |             | $      | 1,696,373 |   |   | $ | 4,059,715 |   |   | $ | 3,284,679 |   |
| Contingent ceding commissions earned  |   |               | 836,126   |   |             |   | 1,031,494 |   |   |   | 1,754,799 |   |   |   | 1,755,763 |   |
|                                  |   | $                  | 2,910,858 |   |             | $      | 2,727,867 |   |   | $ | 5,814,514 |   |   | $ | 5,040,442 |   |

|           |   | June 30, 2012 |    |   | December 31, 2011 |   |
|----------------|--------|---------------|---------|--------|-------------------|--------|
|           |   |          |    |   | Less              |   |   |   |   |   |   |   |   | Less |   |   |   |   |
|           |   | Total         |    |   | Current           |   |   | Long-Term |   |   | Total |   |   | Current |   |   | Long-Term |   |
|           |   | Debt          |    |   | Maturities        |   |   | Debt |   |   | Debt |   |   | Maturities |   |   | Debt |   |
|           |   | (unaudited)   |    |   |              |   |   |   |   |   |   |   |
|           |   |          |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes payable  |   | $             | 747,000 |   |              | $      | - |   |   | $ | 747,000 |   |   | $ | 747,000 |   |   | $ | - |   |   | $ | 747,000 |   |
| Line of credit |   |          | 250,000 |   |              |   | 250,000 |   |   |   | - |   |   |   | 300,000 |   |   |   | 300,000 |   |   |   | - |   |
|           |   | $             | 997,000 |   |              | $      | 250,000 |   |   | $ | 747,000 |   |   | $ | 1,047,000 |   |   | $ | 300,000 |   |   | $ | 747,000 |   |

----

| Barry Goldstein IRA (Mr. Goldstein is Chairman of the Board, President and |   |   |    |
|----------------------------------------------------------------------------|--------|--------|---------|
| Chief Executive Officer, and principal stockholder of the Company)         |   | $      | 90,000  |   |
| Jay Haft, a director of the Company                                        |   |   | 30,000  |   |
| A member of the family of Michael Feinsod, a director of the Company       |   |   | 60,000  |   |
| Mr. Yedid, a director of KICO, and members of his family                   |   |   | 156,000 |   |
| A member of the family of Floyd Tupper, a director of KICO                 |   |   | 42,000  |   |
| Total related party balances                                               |   | $      | 378,000 |   |

----

| Stock Options                           |   | Number ofShares |    |   | Weighted Average Exercise Price per Share |   |   | Weighted Average Remaining Contractual Term |   |   | Aggregate Intrinsic Value |   |
|-----------------------------------------|--------|-----------------|---------|--------|-------------------------------------------|--------|--------|---------------------------------------------|--------|--------|---------------------------|--------|
|                                    |   |            |    |   |                                      |   |   |                                        |   |   |                      |   |
| Outstanding at January 1, 2012          |   |            | 393,865 |   |                                      | $      | 2.32   |                                        |   |   | 2.28                      |   |   | $ | 498,913 |   |
|                                    |   |            |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Granted                                 |   |            | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
| Exercised                               |   |            | (95,000 | )      |                                      | $      | 2.12   |                                        |   |   | -                         |   |   | $ | 243,075 |   |
| Forfeited                               |   |            | -       |   |                                      | $      | -      |                                        |   |   | -                         |   |   | $ | - |   |
|                                    |   |            |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Outstanding at June 30, 2012            |   |            | 298,865 |   |                                      | $      | 2.39   |                                        |   |   | 2.13                      |   |   | $ | 852,540 |   |
|                                    |   |            |    |   |                                      |   |   |                                        |   |   |                      |   |   |   |   |   |
| Vested and Exercisable at June 30, 2012 |   |            | 221,648 |   |                                      | $      | 2.37   |                                        |   |   | 2.01                      |   |   | $ | 636,616 |   |

----

|                                        |   | For the Three Months Ended |    |   | For the Six Months Ended |   |
|---------------------------------------------|--------|----------------------------|---------|--------|--------------------------|--------|
|                                        |   | June 30,                   |    |   | June 30,                 |   |
|                                        |   | 2012                       |    |   | 2011                     |   |   | 2012 |   |   | 2011 |   |
|                                        |   |                       |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Computed expected tax expense               |   | $                          | 294,863 |   |                     |   | 34.0 | % |   | $ | 393,527 |   |   |   | 34.0 | % |   | $ | 689,289 |   |   |   | 34.0 | % |   | $ | 450,772 |   |   |   | 34.0 | % |
| State taxes, net of Federal benefit         |   |                       | 17,301  |   |                     |   | 2.0 |   |   |   | (13,713 | ) |   |   | (1.2 | ) |   |   | 45,798 |   |   |   | 2.3 |   |   |   | (14,751 | ) |   |   | (1.1 | ) |
| Permanent differences                       |   |                       |    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Dividends received deduction          |   |                       | (16,126 | )      |                     |   | (1.9 | ) |   |   | - |   |   |   | - |   |   |   | (36,577 | ) |   |   | (1.8 | ) |   |   | (7,129 | ) |   |   | (0.5 | ) |
|  Non-taxable investment income         |   |                       | (16,772 | )      |                     |   | (1.9 | ) |   |   | (24,399 | ) |   |   | (2.1 | ) |   |   | (33,810 | ) |   |   | (1.7 | ) |   |   | (46,544 | ) |   |   | (3.5 | ) |
|  Stock-based compensation expense |   |                       | 3,607   |   |                     |   | 0.4 |   |   |   | 8,042 |   |   |   | 0.7 |   |   |   | 10,237 |   |   |   | 0.5 |   |   |   | 21,810 |   |   |   | 1.6 |   |
|  Other permanent differences           |   |                       | 5,831   |   |                     |   | 0.7 |   |   |   | 4,531 |   |   |   | 0.4 |   |   |   | 12,281 |   |   |   | 0.6 |   |   |   | 14,545 |   |   |   | 1.1 |   |
| Other                                       |   |                       | 18,224  |   |                     |   | 2.1 |   |   |   | 15,513 |   |   |   | 1.3 |   |   |   | 14,367 |   |   |   | 0.7 |   |   |   | 6,541 |   |   |   | 0.5 |   |
| Total tax                                   |   | $                          | 306,928 |   |                     |   | 35.4 | % |   | $ | 383,501 |   |   |   | 33.1 | % |   | $ | 701,585 |   |   |   | 34.6 | % |   | $ | 425,244 |   |   |   | 32.1 | % |

----

|                                                           |   | June 30,    |       |   | December 31, |   |
|----------------------------------------------------------------|--------|-------------|------------|--------|--------------|--------|
|                                                           |   | 2012        |       |   | 2011         |   |
|                                                           |   | (unaudited) |       |   |         |   |
| Deferred tax asset:                                            |   |        |       |   |         |   |
| Net operating loss carryovers (1)                              |   | $           | 264,293    |   |         | $      | 276,312 |   |
| Claims reserve discount                                        |   |        | 250,659    |   |         |   | 220,354 |   |
| Unearned premium                                               |   |        | 720,037    |   |         |   | 647,596 |   |
| Deferred ceding commission revenue                             |   |        | 1,518,955  |   |         |   | 1,354,016 |   |
| Other                                                          |   |        | 7,919      |   |         |   | 4,583 |   |
| Total deferred tax assets                                      |   |        | 2,761,863  |   |         |   | 2,502,861 |   |
|                                                           |   |        |       |   |         |   |   |   |
| Deferred tax liability:                                        |   |        |       |   |         |   |   |   |
| Investment in KICO (2)                                         |   |        | 1,169,000  |   |         |   | 1,169,000 |   |
| Deferred acquisition costs                                     |   |        | 1,731,428  |   |         |   | 1,542,163 |   |
| Intangibles                                                    |   |        | 1,163,757  |   |         |   | 1,244,628 |   |
| Depreciation and amortization                                  |   |        | 143,586    |   |         |   | 133,411 |   |
| Reinsurance recoverable                                        |   |        | 20,400     |   |         |   | 20,400 |   |
| Net unrealized appreciation of securities - available for sale |   |        | 420,233    |   |         |   | 172,155 |   |
| Investment income                                              |   |        | -          |   |         |   | 10,543 |   |
| Total deferred tax liabilities                                 |   |        | 4,648,404  |   |         |   | 4,292,300 |   |
|                                                           |   |        |       |   |         |   |   |   |
| Net deferred income tax liability                              |   | $           | (1,886,541 | )      |         | $      | (1,789,439 | ) |

|                                                              |   | June 30, |    |   | December 31, |   |       |
|-------------------------------------------------------------------|--------|----------|---------|--------|--------------|--------|------------|
|  Type of NOL                                                 |   | 2012     |    |   | 2011         |   | Expiration |
|  State only (A)                                              |   | $        | 338,594 |   |         | $      | 352,749    |   | December 31, 2027 |
|  Valuation allowance                                         |   |     | 104,819 |   |         |   | 42,437     |   |   |
|  State only, net of valuation allowance                      |   |     | 233,775 |   |         |   | 310,312    |   |   |
|  Amount subject to Annual Limitation, Federal only (B)       |   |     | 30,600  |   |         |   | 34,000     |   | December 31, 2019 |
|  Total deferred tax asset from net operating loss carryovers |   | $        | 264,375 |   |         | $      | 344,312    |   |   |

----

| (2)   | Deferred tax liability -  investment in KICO |
|-----------------|--------------------------------------------------------|

|                                                           |   | Three months ended June 30, |      |   | Six months ended June 30, |   |
|----------------------------------------------------------------|--------|-----------------------------|-----------|--------|---------------------------|--------|
|                                                           |   | 2012                        |      |   | 2011                      |   |   | 2012 |   |   | 2011 |   |
|                                                           |   | (unaudited)                 |      |   | (unaudited)               |   |
| Net income used in the calculation of basic earnings per share |   | $                           | 560,316   |   |                      | $      | 773,931 |   |   | $ | 1,325,734 |   |   | $ | 900,555 |   |
| Effect of dilutive securities, common share equivalents        |   |                        | 12,168    |   |                      |   | - |   |   |   | - |   |   |   | 16,839 |   |
|                                                           |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|  Net income used for computing diluted earnings per share |   | $                           | 572,484   |   |                      | $      | 773,931 |   |   | $ | 1,325,734 |   |   | $ | 917,394 |   |
|                                                           |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding                  |   |                        | 3,789,592 |   |                      |   | 3,838,386 |   |   |   | 3,780,351 |   |   |   | 3,838,386 |   |
| Effect of dilutive securities, common share equivalents        |   |                        | 94,187    |   |                      |   | 80,377 |   |   |   | - |   |   |   | 82,903 |   |
|                                                           |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding,                 |   |                        |      |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| used for computing diluted earnings per share                  |   |                        | 3,883,779 |   |                      |   | 3,918,763 |   |   |   | 3,780,351 |   |   |   | 3,921,289 |   |

----

----

----

|                                                |   | Six months ended June 30, |   |
|-----------------------------------------------------|--------|---------------------------|--------|
| ($ in thousands)                                    |   | 2012                      |   |   | 2011 |   |   | Change |   |   | Percent |   |
| Revenues                                            |   |                      |   |   |   |   |   |   |   |   |   |   |
|  Direct written premiums                       |   | $                         | 23,675 |   |   | $ | 20,120 |   |   | $ | 3,555 |   |   |   | 17.7 | % |
|  Net written premiums                          |   |                      | 9,197  |   |   |   | 8,143 |   |   |   | 1,054 |   |   |   | 12.9 | % |
|  Change in net unearned premiums               |   |                      | (1,060 | ) |   |   | (1,258 | ) |   |   | 198 |   |   |   | (15.7 | )  % |
|  Net premiums earned                           |   |                      | 8,137  |   |   |   | 6,885 |   |   |   | 1,252 |   |   |   | 18.2 | % |
|  Ceding commission revenue                     |   |                      | 5,815  |   |   |   | 5,040 |   |   |   | 775 |   |   |   | 15.4 | % |
|  Net investment income                         |   |                      | 497    |   |   |   | 338 |   |   |   | 159 |   |   |   | 47.0 | % |
|  Net realized gain on investments              |   |                      | 46     |   |   |   | 160 |   |   |   | (114 | ) |   |   | (71.3 | )  % |
|  Other income                                  |   |                      | 461    |   |   |   | 465 |   |   |   | (4 | ) |   |   | (0.9 | )  % |
|  Total revenues                                |   |                      | 14,956 |   |   |   | 12,888 |   |   |   | 2,068 |   |   |   | 16.0 | % |
|                                                |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                                            |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses (1)         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Direct loss and loss adjustment expenses      |   |                      | 9,314  |   |   |   | 7,788 |   |   |   | 1,526 |   |   |   | 19.6 | % |
|  Less: ceded loss and loss adjustment expenses |   |                      | (4,627 | ) |   |   | (3,414 | ) |   |   | (1,213 | ) |   |   | 35.5 | % |
|  Net loss and loss adjustment expenses         |   |                      | 4,687  |   |   |   | 4,374 |   |   |   | 313 |   |   |   | 7.2 | % |
|  Commission expense                            |   |                      | 3,477  |   |   |   | 2,877 |   |   |   | 600 |   |   |   | 20.9 | % |
|  Other underwriting expenses                   |   |                      | 3,852  |   |   |   | 3,311 |   |   |   | 541 |   |   |   | 16.3 | % |
|  Other operating expenses                      |   |                      | 574    |   |   |   | 603 |   |   |   | (29 | ) |   |   | (4.8 | )  % |
|  Depreciation and amortization                 |   |                      | 297    |   |   |   | 313 |   |   |   | (16 | ) |   |   | (5.1 | )  % |
|  Interest expense                              |   |                      | 41     |   |   |   | 85 |   |   |   | (44 | ) |   |   | (51.8 | )  % |
|  Total expenses                                |   |                      | 12,928 |   |   |   | 11,563 |   |   |   | 1,365 |   |   |   | 11.8 | % |
|                                                |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income from operations before taxes           |   |                      | 2,028  |   |   |   | 1,325 |   |   |   | 703 |   |   |   | 53.1 | % |
|  Provision for income tax                      |   |                      | 702    |   |   |   | 425 |   |   |   | 277 |   |   |   | 65.2 | % |
| Net income                                          |   | $                         | 1,326  |   |   | $ | 900 |   |   | $ | 426 |   |   |   | 47.3 | % |
|                                                |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of total revenues:                          |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                           |   |                      | 54.4   | % |   |   | 53.4 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                     |   |                      | 38.9   | % |   |   | 39.1 | % |   |   |   |   |   |   |   |   |
|  Net investment income                         |   |                      | 3.3    | % |   |   | 2.6 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments             |   |                      | 0.3    | % |   |   | 1.2 | % |   |   |   |   |   |   |   |   |
|  Other income                                  |   |                      | 3.1    | % |   |   | 3.6 | % |   |   |   |   |   |   |   |   |
|                                                |   |                      | 100.0  | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |

----

----

|                                                |   | Three months ended June 30, |   |
|-----------------------------------------------------|--------|-----------------------------|--------|
| ($ in thousands)                                    |   | 2012                        |   |   | 2011 |   |   | Change |   |   | Percent |   |
| Revenues                                            |   |                        |   |   |   |   |   |   |   |   |   |   |
|  Direct written premiums                       |   | $                           | 12,439 |   |   | $ | 10,587 |   |   | $ | 1,852 |   |   |   | 17.5 | % |
|  Net written premiums                          |   |                        | 4,817  |   |   |   | 4,106 |   |   |   | 711 |   |   |   | 17.3 | % |
|  Change in net unearned premiums               |   |                        | (652   | ) |   |   | (589 | ) |   |   | (63 | ) |   |   | 10.7 | % |
|  Net premiums earned                           |   |                        | 4,165  |   |   |   | 3,517 |   |   |   | 648 |   |   |   | 18.4 | % |
|  Ceding commission revenue                     |   |                        | 2,911  |   |   |   | 2,728 |   |   |   | 183 |   |   |   | 6.7 | % |
|  Net investment income                         |   |                        | 230    |   |   |   | 160 |   |   |   | 70 |   |   |   | 43.8 | % |
|  Net realized gain on investments              |   |                        | 6      |   |   |   | 90 |   |   |   | (84 | ) |   |   | (93.3 | )  % |
|  Other income                                  |   |                        | 222    |   |   |   | 217 |   |   |   | 5 |   |   |   | 2.3 | % |
|  Total revenues                                |   |                        | 7,534  |   |   |   | 6,712 |   |   |   | 822 |   |   |   | 12.2 | % |
|                                                |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                                            |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses (1)         |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Direct loss and loss adjustment expenses      |   |                        | 4,347  |   |   |   | 3,550 |   |   |   | 797 |   |   |   | 22.5 | % |
|  Less: ceded loss and loss adjustment expenses |   |                        | (1,938 | ) |   |   | (1,726 | ) |   |   | (212 | ) |   |   | 12.3 | % |
|  Net loss and loss adjustment expenses         |   |                        | 2,409  |   |   |   | 1,824 |   |   |   | 585 |   |   |   | 32.1 | % |
|  Commission expense                            |   |                        | 1,806  |   |   |   | 1,505 |   |   |   | 301 |   |   |   | 20.0 | % |
|  Other underwriting expenses                   |   |                        | 1,995  |   |   |   | 1,734 |   |   |   | 261 |   |   |   | 15.1 | % |
|  Other operating expenses                      |   |                        | 287    |   |   |   | 299 |   |   |   | (12 | ) |   |   | (4.0 | )  % |
|  Depreciation and amortization                 |   |                        | 150    |   |   |   | 154 |   |   |   | (4 | ) |   |   | (2.6 | )  % |
|  Interest expense                              |   |                        | 20     |   |   |   | 39 |   |   |   | (19 | ) |   |   | (48.7 | )  % |
|  Total expenses                                |   |                        | 6,667  |   |   |   | 5,555 |   |   |   | 1,112 |   |   |   | 20.0 | % |
|                                                |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income from operations before taxes           |   |                        | 867    |   |   |   | 1,157 |   |   |   | (290 | ) |   |   | (25.1 | )  % |
|  Provision for income tax                      |   |                        | 307    |   |   |   | 383 |   |   |   | (76 | ) |   |   | (19.8 | )  % |
| Net income                                          |   | $                           | 560    |   |   | $ | 774 |   |   | $ | (214 | ) |   |   | (27.6 | )  % |
|                                                |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of total revenues:                          |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net premiums earned                           |   |                        | 55.3   | % |   |   | 52.4 | % |   |   |   |   |   |   |   |   |
|  Ceding commission revenue                     |   |                        | 38.6   | % |   |   | 40.6 | % |   |   |   |   |   |   |   |   |
|  Net investment income                         |   |                        | 3.1    | % |   |   | 2.4 | % |   |   |   |   |   |   |   |   |
|  Net realized gains on investments             |   |                        | 0.1    | % |   |   | 1.3 | % |   |   |   |   |   |   |   |   |
|  Other income                                  |   |                        | 2.9    | % |   |   | 3.2 | % |   |   |   |   |   |   |   |   |
|                                                |   |                        | 100.0  | % |   |   | 100.0 | % |   |   |   |   |   |   |   |   |

----

|                                        |   | Three months ended June 30, |   |
|---------------------------------------------|--------|-----------------------------|--------|
| ($ in thousands)                            |   | 2012                        |   |   | 2011 |   |   | Change |   |   | Percent |   |
|  Provisional ceding commissions earned |   | $                           | 2,075  |   |   | $ | 1,696 |   |   | $ | 379 |   |   |   | 22.3 | % |
|  Contingent ceding commissions earned  |   |                        | 836    |   |   |   | 1,032 |   |   |   | (196 | ) |   |   | (19.0 | )% |
|  Total ceding commission revenue       |   |                        | 2,911  |   |   |   | 2,728 |   |   |   | 183 |   |   |   | 6.7 | % |

----

|                                    |   | Three months ended |      |   | Six months ended |   |
|-----------------------------------------|--------|--------------------|-----------|--------|------------------|--------|
|                                    |   | June 30,           |      |   | June 30,         |   |
|                                    |   | 2012               |      |   | 2011             |   |   | 2012 |   |   | 2011 |   |
|                                    |   |               |      |   |             |   |   |   |   |   |   |   |
| Revenues                                |   |               |      |   |             |   |   |   |   |   |   |   |
|  Net premiums earned               |   | $                  | 4,164,572 |   |             | $      | 3,517,249 |   |   | $ | 8,137,107 |   |   | $ | 6,884,948 |   |
|  Ceding commission revenue         |   |               | 2,910,858 |   |             |   | 2,727,867 |   |   |   | 5,814,514 |   |   |   | 5,040,442 |   |
|  Net investment income             |   |               | 229,879   |   |             |   | 160,464 |   |   |   | 497,396 |   |   |   | 338,134 |   |
|  Net realized gain on investments  |   |               | 6,160     |   |             |   | 89,961 |   |   |   | 45,560 |   |   |   | 160,432 |   |
|  Other income                      |   |               | 124,247   |   |             |   | 100,129 |   |   |   | 239,297 |   |   |   | 198,059 |   |
|  Total revenues                    |   |               | 7,435,716 |   |             |   | 6,595,670 |   |   |   | 14,733,874 |   |   |   | 12,622,015 |   |
|                                    |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Expenses                                |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Loss and loss adjustment expenses |   |               | 2,408,505 |   |             |   | 1,823,630 |   |   |   | 4,687,019 |   |   |   | 4,374,394 |   |
|  Commission expense                |   |               | 1,805,810 |   |             |   | 1,504,894 |   |   |   | 3,477,417 |   |   |   | 2,876,643 |   |
|  Other underwriting expenses       |   |               | 1,994,576 |   |             |   | 1,734,095 |   |   |   | 3,852,321 |   |   |   | 3,310,914 |   |
|  Depreciation and amortization     |   |               | 150,183   |   |             |   | 152,466 |   |   |   | 296,442 |   |   |   | 308,381 |   |
|  Total expenses                    |   |               | 6,359,074 |   |             |   | 5,215,085 |   |   |   | 12,313,199 |   |   |   | 10,870,332 |   |
|                                    |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Income from operations            |   |               | 1,076,642 |   |             |   | 1,380,585 |   |   |   | 2,420,675 |   |   |   | 1,751,683 |   |
|  Income tax expense                |   |               | 353,760   |   |             |   | 452,265 |   |   |   | 770,597 |   |   |   | 571,644 |   |
| Net income                              |   | $                  | 722,882   |   |             | $      | 928,320 |   |   | $ | 1,650,078 |   |   | $ | 1,180,039 |   |

----

|                                    |   | Direct |       |   | Assumed |   |   | Ceded  |   |   | Net         |   |
|-----------------------------------------|--------|--------|------------|--------|---------|--------|--------|--------|--------|--------|-------------|--------|
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |
| Six months ended June 30, 2012          |   |   |       |   |    |   |   |   |   |   |        |   |
|  Written premiums                  |   | $      | 23,674,526 |   |    | $      | 3,199  |   |   | $      | (14,480,602 | )      |   | $ | 9,197,123 |   |
|  Unearned premiums                 |   |   | (2,653,399 | )      |    |   | 3,912  |   |   |   | 1,589,471   |   |   |   | (1,060,016 | ) |
|  Earned premiums                   |   | $      | 21,021,127 |   |    | $      | 7,111  |   |   | $      | (12,891,131 | )      |   | $ | 8,137,107 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 9,298,687  |   |    | $      | 14,907 |   |   | $      | (4,626,575  | )      |   | $ | 4,687,019 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 44.2       | %      |    |   | 209.6  | %      |   |   | 35.9        | %      |   |   | 57.6 | % |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Six months ended June 30, 2011          |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Written premiums                  |   | $      | 20,120,159 |   |    | $      | 2,880  |   |   | $      | (11,979,870 | )      |   | $ | 8,143,169 |   |
|  Unearned premiums                 |   |   | (2,914,468 | )      |    |   | 1,652  |   |   |   | 1,654,595   |   |   |   | (1,258,221 | ) |
|  Earned premiums                   |   | $      | 17,205,691 |   |    | $      | 4,532  |   |   | $      | (10,325,275 | )      |   | $ | 6,884,948 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 7,781,979  |   |    | $      | 6,055  |   |   | $      | (3,413,640  | )      |   | $ | 4,374,394 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 45.2       | %      |    |   | 133.6  | %      |   |   | 33.1        | %      |   |   | 63.5 | % |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Three months ended June 30, 2012        |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Written premiums                  |   | $      | 12,438,801 |   |    | $      | 1,799  |   |   | $      | (7,623,640  | )      |   | $ | 4,816,960 |   |
|  Unearned premiums                 |   |   | (1,681,258 | )      |    |   | 2,333  |   |   |   | 1,026,537   |   |   |   | (652,388 | ) |
|  Earned premiums                   |   | $      | 10,757,543 |   |    | $      | 4,132  |   |   | $      | (6,597,103  | )      |   | $ | 4,164,572 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 4,342,618  |   |    | $      | 3,810  |   |   | $      | (1,937,923  | )      |   | $ | 2,408,505 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 40.4       | %      |    |   | 92.2   | %      |   |   | 29.4        | %      |   |   | 57.8 | % |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
| Three months ended June 30, 2011        |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Written premiums                  |   | $      | 10,587,013 |   |    | $      | 2,646  |   |   | $      | (6,483,505  | )      |   | $ | 4,106,154 |   |
|  Unearned premiums                 |   |   | (1,677,592 | )      |    |   | (486   | )      |   |   | 1,089,173   |   |   |   | (588,905 | ) |
|  Earned premiums                   |   | $      | 8,909,421  |   |    | $      | 2,160  |   |   | $      | (5,394,332  | )      |   | $ | 3,517,249 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss and loss adjustment expenses |   | $      | 3,544,590  |   |    | $      | 4,429  |   |   | $      | (1,725,389  | )      |   | $ | 1,823,630 |   |
|                                    |   |   |       |   |    |   |   |   |   |   |        |   |   |   |   |   |
|  Loss ratio                        |   |   | 39.8       | %      |    |   | 205.0  | %      |   |   | 32.0        | %      |   |   | 51.8 | % |

----

|                                                         |   | Three months ended |       |   | Six months ended |   |
|--------------------------------------------------------------|--------|--------------------|------------|--------|------------------|--------|
|                                                         |   | June 30,           |       |   | June 30,         |   |
|                                                         |   | 2012               |       |   | 2011             |   |   | 2012 |   |   | 2011 |   |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |
| Net premiums earned                                          |   | $                  | 4,164,572  |   |             | $      | 3,517,249 |   |   | $ | 8,137,107 |   |   | $ | 6,884,948 |   |
| Ceding commission revenue                                    |   |               | 2,910,858  |   |             |   | 2,727,867 |   |   |   | 5,814,514 |   |   |   | 5,040,442 |   |
| Other income                                                 |   |               | 124,247    |   |             |   | 100,129 |   |   |   | 239,297 |   |   |   | 198,059 |   |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Loss and loss adjustment expenses                            |   |               | 2,408,505  |   |             |   | 1,823,630 |   |   |   | 4,687,019 |   |   |   | 4,374,394 |   |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Acquistion costs and other underwriting expenses:            |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Commission expense                                     |   |               | 1,805,810  |   |             |   | 1,504,894 |   |   |   | 3,477,417 |   |   |   | 2,876,643 |   |
|  Other underwriting expenses                            |   |               | 1,994,576  |   |             |   | 1,734,095 |   |   |   | 3,852,322 |   |   |   | 3,310,914 |   |
| Total acquistion costs and other underwriting expenses  |   |               | 3,800,386  |   |             |   | 3,238,989 |   |   |   | 7,329,739 |   |   |   | 6,187,557 |   |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Underwriting income                                          |   | $                  | 990,786    |   |             | $      | 1,282,626 |   |   | $ | 2,174,160 |   |   | $ | 1,561,498 |   |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Key Measures:                                                |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Net loss ratio                                         |   |               | 57.8       | %      |             |   | 51.9 | % |   |   | 57.6 | % |   |   | 63.5 | % |
|  Net underwriting expense ratio                         |   |               | 18.4       | %      |             |   | 11.7 | % |   |   | 15.7 | % |   |   | 13.8 | % |
|  Net combined ratio                                     |   |               | 76.2       | %      |             |   | 63.5 | % |   |   | 73.3 | % |   |   | 77.3 | % |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Reconciliation of net underwriting expense ratio:      |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Acquisition costs and other underwriting expenses |   | $                  | 3,800,386  |   |             | $      | 3,238,989 |   |   | $ | 7,329,739 |   |   | $ | 6,187,557 |   |
|  Less: Ceding commission revenue                        |   |               | (2,910,858 | )      |             |   | (2,727,867 | ) |   |   | (5,814,514 | ) |   |   | (5,040,442 | ) |
|  Less: Other income                                     |   |               | (124,247   | )      |             |   | (100,129 | ) |   |   | (239,297 | ) |   |   | (198,059 | ) |
|                                               |   | $                  | 765,281    |   |             | $      | 410,993 |   |   | $ | 1,275,928 |   |   | $ | 949,056 |   |
|                                                         |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Net earned premium                                     |   | $                  | 4,164,572  |   |             | $      | 3,517,249 |   |   | $ | 8,137,107 |   |   | $ | 6,884,948 |   |

----

|                                        |   | June 30, 2012 |       |
|---------------------------------------------|--------|---------------|------------|
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | 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      |   | $             | 99,930     |   |   | $ | 5,672 |   |   | $ | - |   |   | $ | - |   |   | $ | 105,602 |   |   |   | 0.4 | % |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Political subdivisions of States,     |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Territories and Possessions    |   |          | 5,572,075  |   |   |   | 279,663 |   |   |   | - |   |   |   | (29,967 | ) |   |   | 5,821,771 |   |   |   | 21.7 | % |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Corporate and other bonds             |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Industrial and miscellaneous   |   |          | 15,651,143 |   |   |   | 644,650 |   |   |   | (9,850 | ) |   |   | (48,886 | ) |   |   | 16,237,057 |   |   |   | 60.6 | % |
|  Total fixed-maturity securities       |   |          | 21,323,148 |   |   |   | 929,985 |   |   |   | (9,850 | ) |   |   | (78,853 | ) |   |   | 22,164,430 |   |   |   | 82.8 | % |
|                                        |   |          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Equity Securities                     |   |          | 4,155,363  |   |   |   | 500,843 |   |   |   | (26,384 | ) |   |   | (12,775 | ) |   |   | 4,617,047 |   |   |   | 17.2 | % |
|  Total                                 |   | $             | 25,478,511 |   |   | $ | 1,430,828 |   |   | $ | (36,234 | ) |   | $ | (91,628 | ) |   | $ | 26,781,477 |   |   |   | 100.0 | % |

|                                        |   | December 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 |   |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities and                |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    obligations of U.S. government |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    corporations and agencies      |   | $                 | 499,832    |   |   | $ | 50,356 |   |   | $ | - |   |   | $ | - |   |   | $ | 550,188 |   |   |   | 2.1 | % |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,           |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Territories and Possessions    |   |              | 5,868,743  |   |   |   | 301,559 |   |   |   | - |   |   |   | - |   |   |   | 6,170,302 |   |   |   | 23.2 | % |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds                   |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Industrial and miscellaneous   |   |              | 15,846,616 |   |   |   | 338,284 |   |   |   | (228,792 | ) |   |   | (107,666 | ) |   |   | 15,848,442 |   |   |   | 59.5 | % |
|  Total fixed-maturity securities       |   |              | 22,215,191 |   |   |   | 690,199 |   |   |   | (228,792 | ) |   |   | (107,666 | ) |   |   | 22,568,932 |   |   |   | 84.7 | % |
|                                        |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities                           |   |              | 3,857,741  |   |   |   | 311,300 |   |   |   | (98,938 | ) |   |   | (4,893 | ) |   |   | 4,065,210 |   |   |   | 15.3 | % |
|  Total                                 |   | $                 | 26,072,932 |   |   | $ | 1,001,499 |   |   | $ | (327,730 | ) |   | $ | (112,559 | ) |   | $ | 26,634,142 |   |   |   | 100.0 | % |

----

|                     |   | June 30, 2012     |    |
|--------------------------|--------|-------------------|---------|
|                     |   | (unaudited)       |    |
|                     |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                |   | 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 |   | $                 | 606,265 |   |   | $ | 191,727 |   |   | $ | - |   |   | $ | - |   |   | $ | 797,992 |   |   |   | 100.0 | % |
|                     |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   | December 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 |   |
|                     |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities |   | $                 | 606,234 |   |   | $ | 171,719 |   |   | $ | - |   |   | $ | - |   |   | $ | 779,953 |   |   |   | 100.0 | % |

|                     |   | June 30, 2012 |       |   | December 31, 2011 |   |
|--------------------------|--------|---------------|------------|--------|-------------------|--------|
|                     |   |          |       |   | Percentage of     |   |   |   |   |   | Percentage of |   |
|                     |   | Fair Market   |       |   | Fair Market       |   |   | Fair Market |   |   | Fair Market |   |
|                     |   | Value         |       |   | Value             |   |   | Value |   |   | Value |   |
|                     |   | (unaudited)   |       |   |              |   |   |   |   |
| Rating                   |   |          |       |   |              |   |   |   |   |   |   |   |
| U.S. Treasury securities |   | $             | 105,602    |   |              |   | 0.5 | % |   | $ | 550,188 |   |   |   | 2.4 | % |
| AAA                      |   |          | 3,014,089  |   |              |   | 13.6 | % |   |   | 3,041,576 |   |   |   | 13.5 | % |
| AA                       |   |          | 4,036,508  |   |              |   | 18.2 | % |   |   | 4,502,733 |   |   |   | 20.0 | % |
| A                        |   |          | 6,496,040  |   |              |   | 29.3 | % |   |   | 6,977,222 |   |   |   | 30.9 | % |
| BBB                      |   |          | 8,512,191  |   |              |   | 38.4 | % |   |   | 7,497,213 |   |   |   | 33.2 | % |
|  Total              |   | $             | 22,164,430 |   |              |   | 100.00 | % |   | $ | 22,568,932 |   |   |   | 100.0 | % |

----

|                                        |   | June 30, 2012 |   |   | December 31, 2011 |   |
|---------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                                        |   |          |   |   | Weighted          |   |   |   |   |   | Weighted |   |
|                                        |   |          |   |   | Average           |   |   |   |   |   | Average |   |
|                                        |   | Average       |   |   | Duration in       |   |   | Average |   |   | Duration in |   |
| Category                                    |   | Yield %       |   |   | Years             |   |   | Yield % |   |   | Years |   |
|                                        |   |          |   |   |              |   |   |   |   |   |   |   |
| U.S. Treasury securities and                |   |          |   |   |              |   |   |   |   |   |   |   |
|    obligations of U.S. government |   |          |   |   |              |   |   |   |   |   |   |   |
|    corporations and agencies      |   |          | 3.17   | %      |              |   | 25.6 |   |   |   | 2.75 | % |   |   | 17.8 |   |
|                                        |   |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of States,           |   |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Territories and Possessions    |   |          | 4.11   | %      |              |   | 4.9 |   |   |   | 3.86 | % |   |   | 5.2 |   |
|                                        |   |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other bonds                   |   |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Industrial and miscellaneous   |   |          | 4.85   | %      |              |   | 6.7 |   |   |   | 4.98 | % |   |   | 7.1 |   |

----

|                              |   | June 30, 2012       |      |
|-----------------------------------|--------|---------------------|-----------|
|                              |   | 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:        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities          |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and obligations of U.S.    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   government corporations    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and agencies               |   | $                   | -         |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|                              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of         |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   States, Territories and    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Possessions                |   |                | -         |   |   |   | - |   |   |   | - |   |   |   | 773,253 |   |   |   | (29,967 | ) |   |   | 2 |   |   |   | 773,253 |   |   |   | (29,967 | ) |
|                              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other               |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    bonds industrial and |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    miscellaneous        |   |                | 1,022,335 |   |   |   | (9,850 | ) |   |   | 5 |   |   |   | 1,821,008 |   |   |   | (48,886 | ) |   |   | 8 |   |   |   | 2,843,343 |   |   |   | (58,736 | ) |
|                              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed-maturity              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    securities           |   | $                   | 1,022,335 |   |   | $ | (9,850 | ) |   |   | 5 |   |   | $ | 2,594,261 |   |   | $ | (78,853 | ) |   |   | 10 |   |   | $ | 3,616,596 |   |   | $ | (88,703 | ) |
|                              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                  |   | $                   | -         |   |   | $ | - |   |   |   | - |   |   | $ | 114,750 |   |   | $ | (12,775 | ) |   |   | 1 |   |   | $ | 114,750 |   |   | $ | (12,775 | ) |
| Common stocks                     |   |                | 238,502   |   |   |   | (26,384 | ) |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 238,502 |   |   |   | (26,384 | ) |
|                              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total equity securities           |   | $                   | 238,502   |   |   | $ | (26,384 | ) |   |   | 2 |   |   | $ | 114,750 |   |   | $ | (12,775 | ) |   |   | 1 |   |   | $ | 353,252 |   |   | $ | (39,159 | ) |
|                              |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $                   | 1,260,837 |   |   | $ | (36,234 | ) |   |   | 7 |   |   | $ | 2,709,011 |   |   | $ | (91,628 | ) |   |   | 11 |   |   | $ | 3,969,848 |   |   | $ | (127,862 | ) |

----

|                                 |   | December 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 |   |
|                                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-Maturity Securities:           |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities             |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and obligations of U.S.  |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   government corporations       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   and agencies                  |   | $                   | -         |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |   | $ | - |   |
|                                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Political subdivisions of            |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   States, Territories and       |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Possessions                   |   |                | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate and other                  |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    bonds industrial and    |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    miscellaneous           |   |                | 4,849,378 |   |   |   | (228,792 | ) |   |   | 26 |   |   |   | 1,483,425 |   |   |   | (107,666 | ) |   |   | 7 |   |   |   | 6,332,803 |   |   |   | (336,458 | ) |
|                                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total fixed-maturity securities |   | $                   | 4,849,378 |   |   | $ | (228,792 | ) |   |   | 26 |   |   | $ | 1,483,425 |   |   | $ | (107,666 | ) |   |   | 7 |   |   | $ | 6,332,803 |   |   | $ | (336,458 | ) |
|                                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity Securities:                   |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stocks                     |   | $                   | 368,350   |   |   | $ | (76,969 | ) |   |   | 12 |   |   | $ | 189,364 |   |   | $ | (4,893 | ) |   |   | 5 |   |   | $ | 557,714 |   |   | $ | (81,862 | ) |
| Common stocks                        |   |                | 397,268   |   |   |   | (21,969 | ) |   |   | 14 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 397,268 |   |   |   | (21,969 | ) |
| Total equity securities              |   | $                   | 765,618   |   |   | $ | (98,938 | ) |   |   | 26 |   |   | $ | 189,364 |   |   | $ | (4,893 | ) |   |   | 5 |   |   | $ | 954,982 |   |   | $ | (103,831 | ) |
|                                 |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                |   | $                   | 5,614,996 |   |   | $ | (327,730 | ) |   |   | 52 |   |   | $ | 1,672,789 |   |   | $ | (112,559 | ) |   |   | 12 |   |   | $ | 7,287,785 |   |   | $ | (440,289 | ) |

----

----

| Six Months Ended June 30,                            |   | 2012   |      |   | 2011   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                 |   |   |      |   |   |   |
|  Cash flows provided by (used in):              |   |   |      |   |   |   |
|  Operating activities                           |   | $      | 464,409   |   |   | $      | 2,027,213 |   |
|  Investing activities                           |   |   | 618,787   |   |   |   | (1,552,652 | ) |
|  Financing activities                           |   |   | (230,598  | )      |   |   | (713,997 | ) |
|  Net increase in cash and cash equivalents      |   |   | 852,598   |   |   |   | (239,436 | ) |
|  Cash and cash equivalents, beginning of period |   |   | 173,126   |   |   |   | 326,620 |   |
|                                                 |   |   |      |   |   |   |   |   |
|  Cash and cash equivalents, end of period       |   | $      | 1,025,724 |   |   | $      | 87,184 |   |

----

----

| Period                 |   | Total Number of Shares Purchased(1) |   |   |  Average PricePaid per Share |   |   | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | Maximum Number of Shares that May Be Purchased Under the Plans or Programs |   |
|------------------------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|--------|----------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------|--------|
|                   |   |                                |   |   |                              |   |   |                                                                             |   |   |                                                                       |   |
| 4/1/12 - 4/30/12       |   |                                | 4,851  |   |                              | $      | 3.42   |                                                                             |   |   | -                                                                          |   |   |   | - |   |
| 5/1/12 – 5/31/12 |   |                                | 1,000  |   |                              | $      | 4.33   |                                                                             |   |   | -                                                                          |   |   |   | - |   |
| 6/1/12 - 6/30/12       |   |                                | 1,398  |   |                              | $      | 5.12   |                                                                             |   |   | -                                                                          |   |   |   | - |   |
| Total                  |   |                                | 7,249  |   |                              | $      | 3.88   |                                                                             |   |   | -                                                                          |   |   |   | - |   |

(1) Represents shares purchased by persons who may be considered “affiliated purchasers.”

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| 3(a)   |   | Restated Certificate of Incorporation, as amended2                                                                                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                               |
| 3(b)   |   | By-laws, as amended3                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                               |
| 10     |   | Amendment No. 4, dated as of April 16, 2012, to Employment Agreement between Kingstone Companies, Inc. and Barry B. Goldstein4                                                                                                                     |
|   |   |                                                                                                                                                                                                                                               |
| 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 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 |

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|                              | KINGSTONE COMPANIES, INC. |                           |
|-----------------------------------|---------------------------|--------------------------------|
|                              |                      |                           |   |
| Dated:  August 14, 2012 | By:                       | /s/ Barry B. Goldstein         |   |
|                              |                      | Barry B. Goldstein   |   |
|                              |                      | President                      |   |
|                              |                      |                           |   |
|                              | By:                       | /s/ Victor Brodsky             |   |
|                              |                      | Victor Brodsky                 |   |
|                              |                      | Chief Financial Officer        |   |

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