SECURITIES AND EXCHANGE COMMISSIONWashington, D. C.

FORM 10-Q/AAmendment #1

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF l934

For the period ended: September 30, 2000Commission file number:
0-2047

CAPITOL TRANSAMERICA CORPORATION (CTC)
(Exact name of registrant as specified in its charter)

A Wisconsin Corporation

39-1052658

|4610 University Avenue                  
|----------------------------------------
|Madison, Wisconsin                      
|(Address of principal executive offices)

|Registrant's telephone number, including area code:
(608) 231-4450
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK, $1.00 PAR VALUE(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of l934 during the preceding
twelve months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X     NO
Based on the closing average of the high (11 7/8) and low price (11 1/2), the
aggregate market value of voting stock held by non-affiliates of the registrant as of September
30, 2000 was approximately $129,172,576.
Indicate the number of shares of each of the issuer's class of common stock, as
of the latest practicable date:
At September 30, 2000Common Stock, $1.00 Par Value;
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Issued:      | 11,558,166
|------------ | ----------
|Outstanding: | 11,052,199

Total Pages: 18




Securities and Exchange CommissionWashington, D.C. 20549

Form 10-Q



Part I

|Financial Information                                                                 | Page   
|------------------------------------------------------------------------------------- | -------
|Consolidated Financial Statements                                                     | 3 - 7  
|
|Notes to Consolidated Financial Statements                                            | 8 - 10 
|
|Management's Discussion and Analysis of Financial Condition
and Results of Operations | 11 - 13
|
|Condensed Statutory Financial Statements of Insurance Subsidiaries                    | 14     



Part II

|Other Information      |   
|---------------------- | --
|Other Disclosures      | 16
|
|Officers and Directors | 17
|
|Signatures             | 18

2


CAPITOL TRANSAMERICA CORPORATION
CONSOLIDATED BALANCE SHEETSSeptember 30,2000

December 31,1999

September 30,1999ASSETSInvestments:Available-for-sale investment securities, at fair valueU.S. Government bonds (amortized cost $35,283, $39,428 and $40,796, respectively)

$
36,817

$
41,624

$
43,558State, municipal and political subdivision bonds (amortized cost $79,613,133, $78,855,846 and $77,683,184, respectively)

$
83,463,540

$
82,075,148

$
81,875,444Corporate bonds and notes (amortized cost $1,102,199, $1,123,983 and $876,194, respectively)


1,075,358


1,093,715


849,020Equity securities:Common stock (cost $123,861,536, $125,913,872 and $124,591,142, respectively)


119,542,064


116,656,582


119,873,972Nonredeemable preferred stock (cost $6,008,950, $5,725,500 and $5,975,500, respectively)


5,247,359


5,695,567


6,153,673Investment real estate, at cost, net of depreciation


10,943,776


10,540,426


10,326,864Short-term investments, at cost which approximates fair value


3,139,868


1,982,122


1,553,764Total investments


223,448,782


218,085,184


220,676,295Cash


1,469,541


1,080,435


858,085Accrued investment income


1,934,712


1,927,901


1,917,218Receivable from brokers for sales ofdoubtful accounts of $530,000 for each period)


19,719,340


14,892,647


16,843,834Balances due from reinsurers


3,472,137


71,755


155,328Funds held by ceding reinsurers


40,000


40,000


35,756Federal income taxes recoverable


27,885


686,240


1,071,876State income taxes recoverable


14,427


-


-Deferred income taxes


2,425,751


4,153,393


1,721,476Deferred insurance acquisition costs


14,306,963


12,644,189


13,785,484Prepaid reinsurance premiums


1,679,606


1,287,627


1,151,179Due from securities brokers


5,638,921


639,136


3,435,821Other assets


2,959,744


2,114,074


2,373,758TOTAL ASSETS

$
277,137,809

$
257,622,581

$
264,026,110


3


CAPITOL TRANSAMERICA CORPORATION
CONSOLIDATED BALANCE SHEETSSeptember 30,2000

December 31,1999

September 30,1999LIABILITIESPolicy liabilities and accruals:Reserve for losses

$
53,345,849

$
53,575,780

$
52,981,090Reserve for loss adjustment expenses


23,447,613


23,680,412


24,636,275Unearned premiums


46,348,561


39,454,257


40,912,754Total Policy Liabilities and Accruals


123,142,023


116,710,449


118,530,119Accounts payable


3,715,309


3,950,898


4,063,395Claim drafts outstanding


3,560,375


1,854,701


3,550,135Due to securities brokers


908,712


-


903,677Balances due to reinsurers


1,418,708


1,541,460


1,318,840Accrued premium taxes


573,524


338,863


271,889Total Other Liabilities


10,176,628


7,685,922


10,107,936Total Liabilities


133,318,651


124,396,371


128,638,055SHAREHOLDERS' INVESTMENTCommon stock ($1.00 par value, authorized 15,000,000 shares,issued 11,558,166, 11,538,970 and 11,536,015 shares respectively)


11,558,166


11,538,970


11,536,015Paid-in surplus


22,727,877


22,594,538


22,570,682Accumulated other comprehensive loss (net of deferred taxbenefit of ($439,587), ($2,133,595) and ($129,901), respectively)


(816,376
)

(3,962,398
)

(241,248
)Retained earnings


113,634,940


103,577,193


102,018,165Shareholders' investment before treasury stock


147,104,607


133,748,303


135,883,614Treasury stock (505,967, 271,071 and 268,146 shares,  respectively, at cost)


(3,285,449
)

(522,093
)

(495,559
)Total Shareholders' Investment


143,819,158


133,226,210


135,388,055Total Liabilities and Shareholders' Investment

$
277,137,809

$
257,622,581

$
264,026,110Book Value Per Share

$
13.01

$
11.82

$
12.02Shares Outstanding


11,052,199


11,267,899


11,267,869


4


CAPITOL TRANSAMERICA CORPORATIONCONSOLIDATED STATEMENTS OF INCOMEFor the Nine MonthsEnded September 30,

For the Three MonthsEnded September 30,2000

1999

2000

1999REVENUESPremiums earned

$
64,832,530

$
62,485,746

$
22,751,882

$
20,969,513Net investment income


6,800,513


6,738,773


2,298,110


2,299,894Realized investment gains


7,275,290


7,796,106


3,296,312


2,535,863Other revenues


253,434


181,010


96,021


51,940Total Revenues


79,161,767


77,201,635


28,442,325


25,857,210LOSSES INCURRED AND EXPENSESLosses incurred


29,794,673


25,412,081


12,667,179


9,721,718Loss adjustment expenses incurred


7,945,275


7,747,385


3,026,527


3,649,534Underwriting, acquisition and insurance expenses


24,544,624


22,487,587


8,102,761


7,425,510(Increase)/Decrease in deferred insurance acquisition costs


(1,662,774
)

(260,707
)

(246,845
)

329,556Other expenses


1,077,524


1,005,284


371,816


334,568Total Losses Incurred and Expenses


61,699,322


56,391,630


23,921,438


21,460,886Income from operations before income taxes


17,462,445


20,810,005


4,520,887


4,396,324Income tax expense (benefit)Current


5,032,432


6,555,699


1,240,703


1,597,051Deferred


33,632


(110,574
)

(43,567
)

(308,160
)5,066,064


6,445,125


1,197,136


1,288,891Net Income

$
12,396,381

$
14,364,880

$
3,323,751

$
3,107,433INCOME PER SHARE- BASIC

$
1.11

$
1.28

$
0.30

$
0.28Weighted Average Number of Shares Outstanding- Basic


11,177,654


11,241,710


11,177,654


11,241,710INCOME PER SHARE- DILUTED

$
1.11

$
1.27

$
0.30

$
0.28Weighted Average Number of Shares Outstanding- Diluted

$
11,211,427

$
11,271,876

$
11,211,427

$
11,271,876


5


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
AND COMPREHENSIVE INCOME (LOSS)CommonStock(Par Value$1.00)

Paid-InSurplus

ComprehensiveIncome (Loss)

AccumulatedOtherComprehensiveIncome (Loss)

RetainedEarnings

TreasuryStockBalance, January 1, 1998

$
11,502,520

$
21,832,206

$
-

$
32,676,572

$
73,732,118

$
(401,275
)Comprehensive incomeNet income


-


-


19,423,913


-


19,423,913


-Other comprehensive lossUnrealized depreciation on available-for-sale securities, net of deferred taxes


-


-


(6,078,237
)

-


-


-Less: reclassification adjustment, net of tax of $4,619,349, for gain included in net income


-


-


(8,578,790
)

-


-


-Other comprehensive loss


-


-


(14,657,027
)

(14,657,027
)

-


-Comprehensive income


-


-


4,766,886


-


-


-Stock options exercised


26,856


142,409


-


-


-


(18,952
)Purchases and sales of treasury stock, net


-


271,751


-


-


-


(75,332
)Cash dividends declared


-


-


-


-


(3,139,786
)

-Balance, December 31, 1998


11,529,376


22,246,366


-


18,019,545


90,016,245


(495,559
)Comprehensive incomeNet income


-


-


16,712,463


-


16,712,463


-Other comprehensive lossUnrealized depreciation on available-for-sale securities, net of deferred taxes


-


-


(16,662,277
)

-


-


-Less: reclassification adjustment, net of tax of $2,864,435, for gain included in net income


-


-


(5,319,666
)

-


-


-Other comprehensive loss


-


-


(21,981,943
)

(21,981,943
)

-


-Comprehensive loss


-


-


(5,269,480
)

-


-


-Stock options exercised


9,594


57,748


-


-


-


(26,534
)Purchases and sales of treasury stock, net


-


290,424


-


-


-


-Cash dividends declared


-


-


-


-


(3,151,515
)

-Balance, December 31, 1999

$
11,538,970

$
22,594,538

$
-

$
(3,962,398
)
$
103,577,193

$
(522,093
)Comprehensive incomeNet income


-


-


12,396,381


-


12,396,381


-Other comprehensive incomeUnrealized depreciation on available-for-sale securities, net of deferred taxes


-


-


7,874,961


-


-


-Less: reclassification adjustment, net of tax of $2,546,352, for gain included in net income


-


-


(4,728,939
)

-


-


-Other comprehensive loss


-


-


3,146,022


3,146,022


-


-Comprehensive income


-


-


15,542,403


-


-


-Stock options exercised


19,196


133,339


-


-


-


(76,250
)Purchases and sales of treasury stock, net


-


271,751


-


-


-


(2,687,106
)Cash dividends declared


-


-


-


-


(2,338,634
)

-Balance, September 30, 2000

$
11,558,166

$
22,727,877

$
-

$
(816,376
)
$
113,634,940

$
(3,285,449
)


6


CAPITOL TRANSAMERICA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWSSeptember 30,2000

December 31,1999

September 30,1999Cash flows provided by (used for) operating activities:Net Income

$
12,396,381

$
16,712,463

$
14,364,880Adjustments to reconcile net income to net cash provided by operating activities:Depreciation


897,412


1,161,702


815,254Realized investment gains


(7,275,290
)

(8,184,101
)

(7,796,106
)Change in:Deferred insurance acquisition costs


(1,662,774
)

880,588


(260,707
)Unearned premiums


6,894,304


(2,087,175
)

(628,678
)Allowance for doubtful accounts receivable from agents


-


30,000


30,000
)Accrued investment income


(6,811
)

(248,903
)

(238,220
)Receivables from agents, insureds and others


(4,826,693
)

2,294,999


343,812Balances due to/from reinsurers


230,148


317,498


271,121Reinsurance recoverable on paid and unpaid losses


(3,753,282
)

1,026,426


766,610Funds held by ceding reinsurers


-


(4,244
)

-Income taxes payable/recoverable


643,928


(635,702
)

(1,021,338
)Deferred income taxes


33,634


(538,796
)

(110,575
)Due to/from securities brokers


(4,091,073
)

763,512


(1,129,496
)Prepaid reinsurance premiums


(391,979
)

(560,553
)

(424,105
)Other assets


(683,062
)

(332,788
)

(612,445
)Reserve for losses and loss adjustment expenses


(462,730
)

(1,247,858
)

(886,685
)Accounts payable


1,470,085


(371,947
)

1,435,984Accrued premium taxes


234,661


101,692


34,718Net cash provided by (used for) operating activities


(353,141
)

9,076,813


4,954,024Cash flows provided by (used for) investing activities:Proceeds from sales of available-for-sale investments


17,600,356


29,718,246


27,319,608Purchases of available-for-sale investments


(14,617,489
)

(44,377,254
)

(36,970,188
)Maturities of available-for-sale investments


3,447,617


8,690,009


6,555,425Purchase of depreciable assets


(738,782
)

(751,534
)

(513,217
)Net cash provided by (used for) investing activities


5,691,702


(6,720,533
)

(3,608,372
)Cash flows provided by (used for) financing activities:Cash dividends paid


(2,338,634
)

(3,151,515
)

(2,362,960
)Stock options exercised


76,285


40,808


40,531Net (cost of) proceeds from (purchase) sale of treasury stock


(2,687,106
)

290,424


290,424Net cash used for financing activities


(4,949,455
)

(2,820,283
)

(2,032,005
)Net increase (decrease) in cash


389,106


(464,003
)

(686,353
)Cash, beginning of period


1,080,435


1,544,438


1,544,438Cash, end of period

$
1,469,541

$
1,080,435

$
858,085Cash paid during the year for:Income taxes

$
4,380,677

$
8,611,726

$
8,377,064


7


|CAPITOL TRANSAMERICA CORPORATIONNOTES TO
CONSOLIDATED FINANCIAL STATEMENTSSeptember 30, 2000

(1) Basis of PresentationThe condensed financial statements included
herein of Capitol Transamerica Corporation (the "Company"), other than the Consolidated Balance
Sheet as of December 31, 1999, the Shareholders' Investment in the Company and the Consolidated
Statement of Cash Flows as of December 31, 1999, have been prepared by the Company without audit,
 pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain
information and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations.
Although the Company believes the disclosures are adequate to make the
information presented not misleading, it is suggested that these condensed financial statements
be read in conjunction with the financial statements and the notes thereto included in the
Company's 1999 annual report on Form 10-K.
(2) Income Per ShareBasic income per share is computed by dividing
net income by the weighted-average number of shares of stock outstanding during the period.
Diluted income per share is computed by dividing net income by the weighted-average number of
shares of common stock and common stock equivalents from options outstanding. The following table
 sets forth the computation of basic and diluted EPS:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                       | Sept. 30,    | Dec. 31,     | Sept. 30,   
|------------------------------------------------------ | ------------ | ------------ | ------------
|                                                       | 2000         | 1999         | 1999        
|Numerator:                                            
|
|Consolidated net income                                | $ 12,396,381 | $ 16,712,463 | $ 14,364,880
|Denominator:                                          
|Denominator for basic EPS - weighted average shares    | 11,177,654   | 11,252,358   | 11,241,710  
|Effect of dilutive securities - employee stock options | 33,773       | 44,931       | 30,166      
|
|Denominator for diluted EPS - weighted average shares  | 11,211,427   | 11,297,289   | 11,271,876  

|(3) Comprehensive Income (Loss)Comprehensive income (loss) is defined
 as net income plus or minus other comprehensive income (loss), which for the Company, under
existing accounting standards, includes unrealized gains and losses, net of income tax effects,
on certain investments in debt and equity securities. Comprehensive income (loss) is reported by
the Company in the Consolidated Statements of Shareholders' Investment and Comprehensive Income
(Loss).
(4) Income TaxesDeferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for financial
statement purposes and the amounts used for income taxes.
(5) Common Stock OptionsThere were 19,196 options exercised during
the nine months ended September 30, 2000 and there were 6,639 options exercised during the nine
months ended September 30, 1999. For further information regarding stock options, refer to Note 6
 of Notes to Consolidated Financial Statements included in the Company's 1999 annual report.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8


|(6) Dividends
2000On September 5, 2000, a cash dividend of $.07
per share was declared to shareholders of record September 15, 2000 and paid September 26, 2000
in the amount of $773,993.On May 30, 2000, a cash dividend of $.07 per share was declared to shareholders
of record June 16, 2000 and paid June 28, 2000 in the amount of $775,865.
On February 18, 2000, a cash dividend of $.07 per share was declared to
shareholders of record March 10, 2000 and paid March 23, 2000 in the amount of $788,776.
1999On October 20, 1999, a cash dividend of $.07 per share was
declared to shareholders of record December 9, 1999 and paid December 23, 1999 in the amount of
$788,560.
On July 23, 1999, a cash dividend of $.07 per share was declared to shareholders
 of record September 10, 1999 and paid September 24, 1999 in the amount of $788,751.
On May 13, 1999, a cash dividend of $.07 per share was declared to shareholders
of record June 11, 1999 and paid June 25, 1999 in the amount of $788,708.
On February 26, 1999, a cash dividend of $.07 per share was declared to
shareholders of record March 12, 1999 and paid March 26, 1999 in the amount of $785,999.
(7) InvestmentsFixed maturities and equity securities are classified
as available-for-sale and accordingly are carried at fair value, with unrealized gains and losses
 reported as a separate component of shareholders' investment, net of taxes.  The cost of fixed
maturities is adjusted for amortization of premiums and accretion of discounts to maturity.
Fixed maturities and equity securities deemed to have declines in value that are other than
temporary are written down through the statement of income to carrying values equal to their
estimated fair values.
Investment real estate is carried at cost net of accumulated depreciation of
$1,488,842, $1,173,643 and $1,047,699 as of September 30, 2000, December 31, 1999 and September
30, 1999, respectively. The real estate is depreciated over the estimated useful life of the
asset.
Cost of investments sold is determined under the specific identification method.
(8) Contingent LiabilitiesThe Company is a defendant in certain
lawsuits involving complaints which demand damages and recoveries for claims and losses allegedly
 related to risks insured by the Company.  In the opinion of management, such lawsuits are
routine in that they result from the ordinary course of business in the insurance industry.  The
reserve for losses includes management's estimates of the probable ultimate cost of settling all
losses involving lawsuits.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9


|(9) Industry Segment DisclosuresEffective January 1, 1998, the
Company adopted the Financial Accounting Standards Board's Statement of Financial Standards No.
131, "Disclosures about Segments of an Enterprise and Related Information." The adoption of SFAS
No. 131 did not affect results of operations or financial position, but did affect the
disclosures of segment information.
The Company has three business segments, which are segregated based on the types
 of products and services provided. The segments are (1) property and casualty, (2) fidelity and
surety, and (3) discontinued reinsurance assumed operations. These segments constitute 100% of
the operations of the Company. Data for each segment as required for interim reporting follows:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

September 30,2000

December 31,1999

September 30,1999Total Revenues:Property & Casualty

$
54,632,636

$
69,183,120

$
52,407,467Fidelity & Surety


15,760,898


19,587,513


14,994,117Reinsurance Assumed


658,877


727,895


599,351Totals:

$
71,052,411

$
89,498,528

$
68,000,935Before-tax Profit (Loss):Property & Casualty

$
5,065,563

$
16,939,311

$
9,470,258Fidelity & Surety


1,585,773


(2,840,387
)

1,863,266Reinsurance Assumed


1,495,625


292,609


342,693Totals:

$
8,146,961

$
14,391,533

$
11,676,217Reconciliation to Consolidated GAAP:Capital and Surplus


7,885,316


9,466,745


7,842,507Inter-company adjustments


1,430,168


52,419


1,291,281Consolidated net income before tax:

$
17,462,445

$
23,910,697

$
20,810,005 There has been no material change in the allocation
of assets among the segments, and there has been nochange in the method of
measurement for the results of the segment operations.


10


|Management's Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEWCapitol Transamerica Corporation (the "Company") is an insurance holding company,
which operates in 37 states and writes, through its subsidiaries, both property-casualty and
fidelity-surety insurance.  The property-casualty segment accounts for approximately 75% of the
business written while the fidelity-surety segment accounts for approximately 25% of the
Company's business.
The underwriting cycles of the property-casualty insurance industry have been
characterized by peak periods of adequate rates, underwriting profits and lower combined ratios,
while the down side of the cycle is characterized by inadequate rates, underwriting losses and,
as a result, higher combined ratios.  The adequacy of premium rates is affected primarily by the
severity and frequency of claims, which, in turn, are affected by natural disasters, regulatory
measures and court decisions, which continue to uphold the "deep pocket" theory in awarding
against insurance companies.  Unfortunately for the insurance industry, the trend of increasing
price competition has continued as has the number of significant natural disasters.  This
combination has resulted in a considerable reduction in underwriting profitability for the
industry as a whole.
Adequate premium rates continue to be of concern to the Company and the
property-casualty insurance industry as a whole.  Management feels strongly that rate regulators
have been slow to adjust rates in response to increased claim costs from the factors noted above.
  This, when combined with increased competition in the Company's' niche market, has presented an
 unprecedented challenge to management.  The Company has responded to this challenge with
increased marketing efforts as well as the addition of innovative programs and alliances that
should position the Company for continued expansion and profitability.OPERATING RESULTSAs mentioned in the Overview, management believes that the
property-casualty insurance industry is in a downward cycle.  However, due to a combination of
increased marketing efforts and the re-underwriting of the Company's book of business undertaken
in 1998 and 1999, the Company's operating results in the first nine months of 2000 remain quite
favorable. Net income decreased compared to 1999 due to unusual losses related to a few specific
risks, which accounted for most of the $4 million increase in the loss and loss adjustment
expenses incurred.  Had these losses not occurred, year-to-date net income would have increased
approximately $2 million over 1999.  Gross premiums written increased $11.3 million, or 17.3%,
this year compared with the first nine months of 1999, and the Company's combined ratio is at
93.5%.  Had the losses described above not occurred, the combined ratio would have been
approximately 87%, a level typical of the Company's history. Management is confident that the
return to solid underwriting standards and continued profitability of the Company's core
operations will provide a foundation for increasing shareholder value.
For the nine months ended September 30, 2000, gross premiums written totaled
$76,777,047 compared to $65,473,654 for the same period last year. Net premiums followed suit,
increasing from $61,432,962 in the first nine months of 1999 to $71,344,856 during 2000, an
increase of 16.1%.
Premiums earned are recognized as net revenues after a reduction for reinsurance
 ceded and after establishment of the provision for a pro-rata unearned portion of premiums
written.  Net premiums earned totaled $64,832,531 for the first nine months of 2000 compared to
$82,841,104 for the year 1999 and $62,485,746 for the first nine months of 1999. The unearned
premium reserve was $46,348,561, $39,454,257 and $40,912,754 at the end of each period.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

September 30,2000

December 31,1999

September 30,1999Gross Premiums Written

$
76,777,047

$
86,002,801

$
65,473,654Reinsurance Ceded


5,442,191


5,809,425


4,040,692Net Premiums Written

$
71,344,856

$
80,193,376

$
61,432,962Net Premiums Earned

$
64,832,531

$
82,841,104

$
62,485,746Net Unearned Premium Reserve

$
46,348,561

$
39,454,257

$
40,912,754


11


|The Company's underwriting results can be measured by reference to the combined
loss and expense ratios.  The following table includes the operating results of the Company's two
 subsidiary insurance companies on a statutory basis.  Losses and loss adjustment expenses are
stated as a ratio of net premiums earned, while underwriting expenses are stated as a ratio of
net premiums written. The combined ratios were as follows:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

September 30,2000

December 31,1999

September 30,1999Insurance Operating Ratios (Statutory Basis):Losses & Loss Adjustment Expenses


58.4%


54.9%


53.3%Underwriting Expenses


35.1%


37.0%


37.5%Combined Ratio


93.5%


91.9%


90.8%


|The Company's combined ratio consistently compares very favorably to the
industry average, as indicated by the following chart:
|-------------------------------------------------------------------------------------------------------------------------------

Year-to-date2000

Year-end1999

Year-end1998Combined RatioCompany


93.5%


91.9%


95.0%Industry Average *


108.3%


110.5%


107.4%


|* The industry number for YTD 2000 is the ratio for commercial carriers as of
June 30, 2000.REINSURANCE
The Company follows the customary practice of reinsuring with other companies, i.e.,
ceding a portion of its exposure on the policies it has written.  This program of reinsurance
permits the Company greater diversification of business and the ability to write larger policies
while limiting the extent of its maximum net loss.  It provides protection for the Company
against unusually serious occurrences in which a number of claims could produce a large aggregate
 loss.  Management continually monitors the Company's reinsurance program to obtain protection
that should be adequate to ensure the availability of funds for losses while maintaining future
growth.NET INVESTMENT INCOME AND REALIZED GAINS
The Company's fixed maturities and equity securities are
classified as available-for-sale and are carried at fair value.  The unrealized gains and losses,
 net of tax, are reported as "Accumulated Other Comprehensive Income (Loss)" in the equity
portion of the balance sheet.
Interest and Dividend Income: Interest on fixed maturities is recorded as income
 when earned and is adjusted for any amortization of purchase premium or accretion of discount.
Dividends on equity securities are recorded as income on ex-dividend dates.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

September 30,2000

December 31,1999

September 30,1999Investments:Invested Assets

$
223,448,782

$
218,085,184

$
220,676,295Net Investment Income


6,800,513


9,136,244


6,738,773Percent of Return to Average Carrying Value


4.0%


4.2%


4.2%Realized Gains


7,275,290


8,184,101


7,796,106Change in Unrealized Gains

$
3,146,022

$
(21,981,943
)
$
(18,260,793
)


|The net unrealized gain of $3,146,022 for the first nine months of 2000
consisted of a $412,017 unrealized gain on fixed maturities and a $2,734,005 unrealized gain on
the Company's equity portfolio. Management has begun to increase its tax-free bond holdings and
de-emphasize the equity portfolio, but is optimistic that the recent downturn in the value of its
 equity investments is temporary and that the current market conditions provide an even greater
opportunity to invest and build shareholder value over the long term.  This appears to be coming
 to fruition, as evidenced by the current year's increase (decrease) in unrealized gains (losses).
Net investment income in the nine months of 2000 increased $61,740 over the same
 period last year, an increase of 0.9%. The Company holds a larger percentage of equity
investments than is typical for the property-casualty industry, which leads to a comparatively
low rate of return on invested assets.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12


|INCOME TAXES
Income tax expense is based on income reported for financial statement purposes and tax
laws and rates in effect for the years presented.  Deferred federal income taxes arise from
timing differences between the recognition of income determined for financial reporting purposes
and income tax purposes.  Such timing differences are related principally to the deferral of
policy acquisition costs, the recognition of unearned premiums and discounting of claims reserves
 for tax purposes. Deferred taxes are also provided on unrealized gains and losses.
LOSS RESERVES
Reserves for losses and loss adjustment expenses reflect the Company's best
estimate of the liability for the ultimate cost of reported claims and incurred but not reported
(IBNR) claims as of the end of each period.  The estimates are based on past claim experience and
 consider current claim trends as well as social and economic conditions.  The Company's reserves
 for losses and loss adjustment expenses were $76,793,462 as of September 30, 2000, compared with
 $77,617,365 as of September 30, 1999. Management continues to closely monitor the reserves for
losses and loss adjustment expenses to assure adequate recognition of the ultimate liability for
 claims and claim expenses.LIQUIDITY AND CAPITAL RESOURCES
Liquidity refers to the Company's ability to meet obligations as
they become due.  The obligations and cash outflows of the Company include claim settlements,
acquisition and administrative expenses, investment purchases and dividends to shareholders. In
addition to satisfying obligations and cash outflows through premium collections, there are cash
inflows obtained from interest and dividend	income, maturities and sales of investments.
Because cash inflows from premiums are received in advance of cash outflows required to settle
claims, the Company accumulates funds which it invests pending liquidity requirements. Therefore,
 investments represent the majority (80.6%, 84.7% and 83.6% at each respective period) of the
Company's assets. Cash outflows can be unpredictable for two reasons: first, a large portion of
liabilities representing loss reserves have uncertainty regarding settlement dates; and second,
there is a potential for losses occurring either individually or in the aggregate. As a result,
the Company maintains adequate short-term investment programs necessary to ensure the
availability of funds. The investment programs are structured so that a forced sale liquidation
of fixed maturities should not be necessary during the ordinary course of business.  The Company
has no material capital expenditure commitments.YEAR 2000
In prior years, the Company discussed the nature and progress of its plans to become year
2000 ready. In 1999, the Company completed its remediation and testing of systems. As a result of
 the planning and implementation efforts, the Company experienced no significant disruptions in
mission critical information technology and non-information technology systems and believes those
 systems successfully responded to the year 2000 date change.
The Company expensed approximately $90,000 during 1999 in connection with
remediating its systems. The Company is not aware of any material problems resulting from year
2000 issues, either with our products, our internal systems or the products and services of third
 parties. The Company will continue to monitor its mission critical computer applications and
those of its agents and vendors throughout the year 2000 to ensure that any latent year 2000
matters that may arise are addressed promptly.SAFE HARBOR STATEMENT
Some of the statements in this report, as well as statements by the Company in
periodic press releases and oral statements made by the Company's officials to analysts and
shareholders in the course of presentations about the Company, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform act of 1995. Such
forward-looking statements involve known and unknown risks, estimates subject to change in
circumstances, uncertainties and other factors that may cause the actual results, performance or
achievements of the Company to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13


INSURANCE SUBSIDIARY FINANCIAL STATEMENTS
Statutory Basis as Reported to State Regulatory Authorities
September 30, 2000, December 31, 1999 and September 30, 1999CAPITOL INDEMNITY CORPORATIONBalance Sheets

September 30,2000

December 31,1999

September 30,1999ASSETSCash and Invested Assets

$
211,845,785

$
204,375,352

$
205,922,046Other Assets


32,294,910


16,790,134


21,481,632Total Assets

$
244,140,695

$
221,165,486

$
227,403,678LIABILITIESReserves for Losses and Loss Expenses

$
76,253,944

$
77,044,646

$
77,294,600Unearned Premiums


44,668,955


38,166,630


39,761,575Other Liabilities


17,162,732


14,383,974


18,413,287Total Liabilities


138,085,631


129,595,250


135,469,462SURPLUS AS REGARDS POLICYHOLDERSShareholder's Equity


106,055,064


91,570,236


91,934,216Total Liabilities and Capital

$
244,140,695

$
221,165,486

$
227,403,678Statements of IncomePremiums Earned

$
64,832,531

$
82,841,104

$
62,485,746Underwriting Deductions


62,984,073


75,368,177


56,535,507Net Underwriting Gain


1,848,458


7,472,927


5,950,239Investment Income Including Sales


13,851,823


15,876,984


13,178,590Other Income


253,374


247,184


179,106Dividends to Policyholders


400,688


363,074


283,352Income Tax Expense


4,679,263


6,927,999


5,808,103Net Income

$
10,873,704

$
16,306,022

$
13,216,480CAPITOL SPECIALTY INSURANCE CORPORATIONBalance SheetsASSETSCash and Invested Assets

$
4,409,431

$
4,648,359

$
4,687,587Other Assets


184,411


224,846


239,990Total Assets

$
4,593,842

$
4,873,205

$
4,927,577LIABILITIESLiabilities other than for Insurance Obligations

$
7,713

$
7,711

$
7,710Total Liabilities


7,713


7,711


7,710SURPLUS AS REGARDS POLICYHOLDERSShareholder's Equity


4,586,129


4,865,494


4,919,867Total Liabilities and Capital

$
4,593,842

$
4,873,205

$
4,927,577Statements of IncomeUnderwriting Deductions

$
5,028

$
6,659

$
6,189Net Underwriting (Loss) Gain


(5,028
)

(6,659
)

(6,189
)Investment Income Including Sales


190,045


950,853


884,191Income Tax Expense


17,868


255,061


250,674Net Income

$
167,149

$
689,133

$
627,328


14












PART II











15


Other Disclosures

|Item 1. | Legal Proceedings                                                                                                                                                                                                                                                                                                       
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | Reference is made to footnote number 8 "Contingent Liabilities" on
 page 9 of this report.                                                                                                                                                                                                                              
|
|
|Item 2. | Changes in Securities and Use of Proceeds                                                                                                                                                                                                                                                                               
|
|        | NONE                                                                                                                                                                                                                                                                                                                    
|
|
|Item 3. | Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                         
|
|        | NONE                                                                                                                                                                                                                                                                                                                    
|
|
|Item 4. | Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                     
|
|
|        | Reference is made to the Notice of Annual Meeting of Shareholders
and Proxy Statement for the Annual Meeting of Shareholders which was held May 15, 2000, both of
which are dated April 7, 2000 and previously filed with the Securities and Exchange Commission
and are incorporated herein as an exhibit by reference.
|
|
|Item 5. | Other Information                                                                                                                                                                                                                                                                                                       
|
|        | NONE                                                                                                                                                                                                                                                                                                                    
|
|
|Item 6. | Exhibits and Reports on Form 8-K                                                                                                                                                                                                                                                                                        
|
|        | NONE                                                                                                                                                                                                                                                                                                                    

16


CAPITOL TRANSAMERICA CORPORATION

SubsidiariesCapitol Indemnity CorporationCapitol Specialty
Insurance CorporationCapitol Facilities Corporation

|Board of Directors                                                                               
|-------------------------------------------------------------------------------------------------
|Paul J. BreitnauerVice President & TreasurerCapitol Transamerica
CorporationMadison, Wisconsin   
|
|
|
|Larry BurcalowOwner and PresidentYahara Materials, Inc.
Middleton, Wisconsin                     
|
|
|
|George A. FaitChairman of the Board & PresidentCapitol Transamerica
CorporationMadison, Wisconsin
|Officers                                                                                         
|George A. FaitChairman of the Board & President                                                  
|
|
|
|Paul J. BreitnauerVice President & Treasurer                                                     

17


SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.CAPITOL  TRANSAMERICA  CORPORATIONDate:   November 6, 2000

/s/ George A. Fait
George A. FaitChairman of the Board and PresidentDate:   November 6, 2000

/s/ Paul J. Breitnauer
Paul J. BreitnauerVice President and Treasurer


18