--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                    FORM 10-Q/A
                                Amendment No. 1

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

For the period ended:  June 30, 2001             Commission file number: 0-2047
                       -------------                                    -------

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

    A Wisconsin Corporation                                  39-1052658
    -----------------------                                  ----------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                         Identification Number)


        4610 University Avenue
          Madison, Wisconsin                            53705-0900
          ------------------                            ----------
(Address of principal executive offices)                (Zip Code)


   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 1934
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
                            -------            -------

 Indicate the number of shares of each issuer's class of common stock, as of the
                            latest practicable date:

                                At June 30, 2001

                          Common Stock, $1.00 Par Value

                               Issued:  11,560,970

                            Outstanding:  10,950,403


                                Explanatory Note
                                ----------------

This Amendment No. 1 to the Quarterly Report for the three month period ended
June 30, 2001 of Capitol Transamerica Corporation (the "Company") is being filed
by the Company to amend and restate Part I of the Quarterly Report for the three
month period ended June 30, 2001. In accordance with Rule 12b-15 promulgated
under the Securities Exchange Act of 1934, as amended, the text of the amended
items is amended and restated in its entirety as set forth in this Amendment
No. 1.
<PAGE>
                       Securities and Exchange Commission
                       ----------------------------------

                                Washington, D.C.
                                ----------------

                                    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                            11-16

    Condensed  Statutory  Financial  Statements  of
        Insurance Subsidiaries                                          17





                                        2
<PAGE>
<TABLE>
<CAPTION>
                                          CAPITOL TRANSAMERICA CORPORATION
                                            CONSOLIDATED BALANCE SHEETS


                                                                            June 30,    December 31,     June 30,
                                                                              2001           2000          2000
                                                                          ------------  -------------  ------------
<S>                                                                       <C>           <C>            <C>
ASSETS
Investments:
   Available-for sale investment securities, at fair value:
       U.S. Government bonds (amortized cost $27,728, $33,930 and
            $36,729, respectively)                                        $     30,007  $      35,620  $     38,158
       State, municipal and political subdivision bonds (amortized cost
            $94,845,487, $84,236,165 and $77,472,800, respectively)         99,652,064     89,732,054    80,912,733
       Corporate bonds and notes (amortized cost $1,095,190,
            $1,099,888 and $1,119,485, respectively)                         1,071,657      1,074,137     1,091,332
       Equity securities:
            Common stock (cost $112,753,050, $123,504,211 and
                 $125,727,134, respectively)                               116,990,647    119,413,538   114,456,520
            Non-redeemable preferred stock (cost $5,344,152, $6,470,793
                 and $5,809,582, respectively)                               5,194,659      5,516,567     5,006,663
   Investment real estate, at cost, net of depreciation                     11,385,595     11,008,554    10,800,128
   Short-term investments, at cost which approximates fair value             6,249,395      5,587,306     2,398,329
                                                                          ------------  -------------  ------------
        Total Investments                                                  240,574,024    232,367,776   214,703,863

Cash                                                                         4,569,659      3,641,628     1,121,753
Accrued investment income                                                    2,066,163      1,953,466     1,834,048
Receivables from agents, insureds and others, less allowance for
     doubtful accounts of $530,000 for each period                          24,307,358     18,438,610    20,393,815
Balances due from reinsurers                                                 1,638,394      1,794,851     1,303,352
Funds held by ceding reinsurers                                                 47,000         47,000        40,000
Deferred insurance acquisition costs                                        15,024,286     13,726,372    14,060,118
Prepaid reinsurance premiums                                                 2,304,716      1,714,017     1,558,020
Due from securities brokers                                                  1,198,000      4,218,650     6,989,479
State income taxes recoverable                                                 105,919         32,263             -
Federal income taxes recoverable                                             2,203,577         35,200             -
Deferred income taxes                                                                -      2,468,713     4,973,709
Other assets                                                                 2,503,142      2,819,506     3,044,207
                                                                          ------------  -------------  ------------
       Total Assets                                                       $296,542,238  $ 283,258,052  $270,022,364
                                                                          ============  =============  ============
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                         CAPITOL TRANSAMERICA CORPORATION
                                            CONSOLIDATED BALANCE SHEETS

                                                                        June 30,      December 31,     June 30,
                                                                          2001            2000           2000
                                                                      -------------  --------------  -------------
<S>                                                                   <C>            <C>             <C>
LIABILITIES
Policy liabilities and accruals:
     Reserve for losses                                               $ 51,659,083   $  52,231,685   $ 54,279,583
     Reserve for loss adjustment expenses                               25,741,871      25,749,288     23,578,052
     Unearned premiums                                                  53,589,577      45,587,586     45,540,141
                                                                      -------------  --------------  -------------
        Total Policy Liabilities and Accruals                          130,990,531     123,568,559    123,397,776
                                                                      -------------  --------------  -------------

Accounts payable                                                         3,638,222       4,203,407      3,380,360
Claim drafts outstanding                                                 5,987,411       4,927,097      3,766,846
Balances due to securities brokers                                         401,500          34,125        201,633
Balances due to reinsurers                                               5,792,798       4,097,368      1,642,391
Accrued premium taxes                                                      717,447         727,627        441,924
State income taxes payable                                                       -               -         48,681
Federal income taxes payable                                                     -               -        343,036
Deferred income taxes                                                      418,771               -              -
                                                                      -------------  --------------  -------------
      Total Other Liabilities                                           16,956,149      13,989,624      9,824,871
                                                                      -------------  --------------  -------------

      Total Liabilities                                                147,946,680     137,558,183    133,222,647
                                                                      -------------  --------------  -------------

SHAREHOLDERS' INVESTMENT
Common stock ($1.00 par value, authorized 15,000,000 shares, issued
     11,560,970, 11,558,767 and 11,558,166 shares, respectively)        11,560,970      11,558,767     11,558,166
Paid-in surplus                                                         22,744,662      22,733,088     22,727,877
Accumulated other comprehensive income (loss) (net of deferred tax
     expense (benefit) of $3,105,699, $149,425 and ($3,031,113),
     respectively)                                                       5,767,728         277,504     (5,629,211)
Retained earnings                                                      113,083,886     114,944,048    111,085,182
                                                                      -------------  --------------  -------------

Shareholders' Investment Before Treasury Stock                         153,157,246     149,513,407    139,742,014

Treasury stock (610,567, 549,867 and 476,152 shares, respectively,
     at cost)                                                           (4,561,688)     (3,813,538)    (2,942,297)
                                                                      -------------  --------------  -------------

      Total Shareholders' Investment                                   148,595,558     145,699,869    136,799,717
                                                                      -------------  --------------  -------------

      Total Liabilities and Shareholders' Investment                  $296,542,238   $ 283,258,052   $270,022,364
                                                                      =============  ==============  =============

Book Value Per Share                                                  $      13.57   $       13.23   $      12.34
                                                                      =============  ==============  =============

Shares Outstanding                                                      10,950,403      11,008,900     11,082,014
                                                                      =============  ==============  =============
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                     CAPITOL TRANSAMERICA CORPORATION
                                    CONSOLIDATED STATEMENTS OF INCOME

                                                      For the Six Months        For the Three Months
                                                        Ended June 30,              Ended June 30,
                                                  --------------------------  ---------------------------
                                                      2001          2000          2001           2000
                                                  ------------  ------------  -------------  ------------
<S>                                               <C>           <C>           <C>            <C>
REVENUES
Premiums earned                                   $47,320,300   $42,080,648   $ 24,477,487   $21,414,099
Net investment income                               4,843,119     4,502,403      2,389,338     2,243,802
Realized investment (losses) gains                 (1,748,074)    3,978,978         74,414     2,932,470
Other revenues                                        267,584       157,413        141,366        86,009
                                                  ------------  ------------  -------------  ------------
    Total Revenues                                 50,682,929    50,719,442     27,082,605    26,676,380
                                                  ------------  ------------  -------------  ------------

LOSSES AND EXPENSES INCURRED
Losses incurred                                    28,094,100    17,127,494     18,460,750    11,199,458
Loss adjustment expenses incurred                   5,495,667     4,918,748      2,873,243     3,007,547
Underwriting, acquisition and insurance expenses   18,796,536    16,441,863      9,955,057     8,435,991
Increase in deferred insurance acquisition costs   (1,297,914)   (1,415,929)      (988,845)     (995,722)
Other expenses                                        719,057       705,708        359,234       361,831
                                                  ------------  ------------  -------------  ------------
    Total Losses and Expenses Incurred             51,807,446    37,777,884     30,659,439    22,009,105
                                                  ------------  ------------  -------------  ------------


(Loss) Income Before Income Taxes                  (1,124,517)   12,941,558     (3,576,834)    4,667,275
                                                  ------------  ------------  -------------  ------------

Income tax (benefit) expense:
    Current                                          (742,145)    3,791,729     (2,184,731)    1,063,266
    Deferred                                          (68,790)       77,199        821,950       212,258
                                                  ------------  ------------  -------------  ------------
                                                     (810,935)    3,868,928     (1,362,781)    1,275,524
                                                  ------------  ------------  -------------  ------------


Net (Loss) Income                                   ($313,582)  $ 9,072,630    ($2,214,053)  $ 3,391,751
                                                  ============  ============  =============  ============


Per Share Data:

     Cash Dividends Declared                      $      0.16   $      0.14   $       0.08   $      0.07
                                                  ============  ============  =============  ============

     Earnings Per Share - Basic                        ($0.03)  $      0.81         ($0.20)  $      0.30
                                                  ============  ============  =============  ============

     Earnings Per Share - Diluted                      ($0.03)  $      0.81         ($0.20)  $      0.30
                                                  ============  ============  =============  ============
</TABLE>


                                        5
<PAGE>
<TABLE>
<CAPTION>
                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT AND COMPREHENSIVE INCOME (LOSS)



                                            Common     Accumulated
                                            Stock         Other
                                          (Par Value     Paid-In     Comprehensive    Comprehensive    Retained       Treasury
                                            $1.00)       Surplus     Income (Loss)    Income (Loss)    Earnings        Stock
                                         ------------  ------------  --------------  --------------- -------------  ------------
<S>                                      <C>           <C>           <C>             <C>             <C>            <C>
Balance, January 1, 1999                 $11,529,376   $ 22,246,366              -   $   18,019,545  $ 90,016,245     ($495,559)
 Comprehensive income (loss):
   Net income                                      -              -     16,712,463                -    16,712,463             -
                                                                     --------------
   Other comprehensive loss:
    Unrealized 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 paid                               -              -              -                -    (3,151,515)            -
                                         ------------  ------------  --------------  --------------- -------------  ------------
Balance, December 31, 1999               $11,538,970   $ 22,594,538              -      ($3,962,398) $103,577,193     ($522,093)
 Comprehensive income:
   Net income                                      -              -     14,453,317                -    14,453,317             -
                                                                     --------------
   Other comprehensive income:
    Unrealized appreciation on
      available-for-sale securities,
      net of deferred taxes                        -              -     11,913,380                -             -             -
    Less: reclassification adjustment,
      net of tax of $2,546,352, for
      gain included in net income                  -              -     (7,673,478)               -             -             -
                                                                    --------------
      Other comprehensive income                   -              -      4,239,902        4,239,902             -             -
                                                                    --------------
   Comprehensive income                            -              -     18,693,219                -             -             -
 Stock options exercised                      19,797        138,550              -                -             -       (76,250)
 Stock-based compensation                          -              -              -                -        25,476             -
 Purchases and sales of treasury
  stock, net                                       -              -              -                -             -    (3,215,195)
 Cash dividends paid                               -              -              -                -    (3,111,938)            -
                                         ------------  ------------  --------------  --------------- -------------  ------------
Balance, December 31, 2000               $11,558,767   $ 22,733,088              -   $      277,504  $114,944,048   ($3,813,538)
 Comprehensive (loss) income:
   Net loss                                        -              -       (313,582)               -      (313,582)            -
                                                                     --------------
   Other comprehensive income:
    Unrealized appreciation on
      available-for-sale securities,
      net of deferred taxes                        -              -      4,353,976                -             -             -
    Less: reclassification adjustment,
      net of tax of $611,826, for
      gain included in net income                  -              -      1,136,248                -             -             -
                                                                    --------------
      Other comprehensive income                   -              -      5,490,224        5,490,224             -             -
                                                                    --------------
   Comprehensive income                            -              -      5,176,642                -             -             -
 Stock options exercised                       2,203         11,574              -                -             -             -
 Stock-based compensation                          -              -              -                -       207,224             -
 Purchases and sales of treasury
  stock, net                                       -              -              -                -             -      (748,150)
 Cash dividends paid                               -              -              -                -    (1,753,804)            -
                                         ------------  ------------  --------------  --------------- -------------  ------------
Balance, June 30, 2001                   $11,560,970   $ 22,744,662              -   $    5,767,728  $113,083,886   ($4,561,688)
                                         ============  ============  ==============  =============== =============  ============
</TABLE>

                                        6
<PAGE>
<TABLE>
<CAPTION>
                                              CAPITOL TRANSAMERICA CORPORATION
                                            CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                              Year-to-date
                                                                               --------------------------------------------
                                                                                 June 30,      December 31,     June 30,
                                                                                   2001            2000           2000
                                                                               -------------  --------------  -------------
<S>                                                                            <C>            <C>             <C>
Cash flows (used for) provided by operating activities:
- -------------------------------------------------------
     Net Income                                                                   ($313,582)  $  14,453,317   $  9,072,630
     Adjustments to reconcile net income to net cash provided by (used
          for) operating activities:
               Depreciation                                                         611,836       1,215,024        583,576
               Realized investment gains                                          1,748,074     (11,805,350)    (3,978,978)
               Change in:
                    Deferred insurance acquisition costs                         (1,297,914)     (1,082,183)    (1,415,929)
                    Unearned premiums                                             8,001,991       6,133,329      6,085,884
                    Accrued investment income                                      (112,697)        (25,565)        93,853
                    Receivables from agents, insureds and others                 (5,868,748)     (3,545,963)    (5,501,169)
                    Balances due to/from reinsurers                                 471,630         149,564        310,137
                    Reinsurance recoverable on paid and unpaid losses             1,380,257         683,248     (1,440,802)
                    Funds held by ceding reinsurers                                       -          (7,000)             -
                    Income taxes payable/recoverable                             (2,242,033)        618,777      1,077,957
                    Deferred income taxes                                           (68,790)       (598,340)        77,202
                    Due to/from securities brokers                                3,388,025      (3,545,389)    (6,148,710)
                    Prepaid reinsurance premiums                                   (590,699)       (426,390)      (270,393)
                    Other assets                                                    212,529        (707,858)      (705,913)
                    Reserve for losses and loss adjustment expenses                (580,019)        724,781        601,443
                    Accounts payable                                                495,129       3,324,905      1,341,607
                    Accrued premium taxes                                           (10,180)        388,764        103,061
                                                                               -------------  --------------  -------------
                         Net cash provided by (used for) operating activities     5,224,809       5,947,671       (114,544)
                                                                               -------------  --------------  -------------

Cash flows provided by (used for) investing activities:
- ------------------------------------------------------
     Proceeds from sales of available-for-sale securities                        15,521,460      26,278,568     12,995,673
     Purchases of available-for-sale securities                                 (18,663,376)    (26,716,842)   (10,588,065)
     Maturities of available-for-sale securities                                  1,380,745       4,053,867      2,179,652
     Purchases of depreciable assets                                               (254,654)       (782,511)      (599,088)
                                                                               -------------  --------------  -------------
                         Net cash (used for) provided by investing activities    (2,015,825)      2,833,082      3,988,172
                                                                               -------------  --------------  -------------

Cash flows (used for) provided by financing activities:
- ------------------------------------------------------
     Cash dividends paid                                                         (1,753,804)     (3,111,938)    (1,564,641)
     Stock options exercised                                                         13,777          45,273         76,285
     Net cost of purchase of treasury stock                                        (540,926)     (3,152,895)    (2,343,954)
                                                                               -------------  --------------  -------------
                         Net cash used for financing activities                  (2,280,953)     (6,219,560)    (3,832,310)
                                                                               -------------  --------------  -------------

Net increase in cash                                                                928,031       2,561,193         41,318
Cash, beginning of period                                                         3,641,628       1,080,435      1,080,435
                                                                               -------------  --------------  -------------
Cash, end of period                                                            $  4,569,659   $   3,641,628   $  1,121,753
                                                                               =============  ==============  =============

Cash paid during the period for:
     Income taxes                                                              $  1,499,021   $   4,856,364   $  3,429,748
                                                                               =============  ==============  =============
</TABLE>


                                        7
<PAGE>
                        CAPITOL TRANSAMERICA CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

(1)     Basis  of  Presentation
        -----------------------
        The  condensed  financial  statements  included  herein  of  Capitol
        Transamerica  Corporation  (the  "Company"), other than the Consolidated
        Balance  Sheet  at  December 31, 2000, and the Consolidated Statement of
        Shareholders'  Investment  and  Comprehensive  Income  (Loss)  and  the
        Consolidated  Statement of Cash Flows as of December 31, 2000, 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 accounting principles generally
        accepted in the United States 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 2000 annual
        report  on  Form  10-K.

(2)     Earnings  Per  Share
        --------------------
        Basic  earnings  per  share  is  computed  by dividing net income by the
        weighted  average  number  of  shares  of  stock  outstanding during the
        period. Diluted earnings 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  earnings  per  share  (EPS):
<TABLE>
<CAPTION>
                                                                  June 30,    December 31,    June 30,
                                                                    2001          2000          2000
                                                                 -----------  -------------  -----------
<S>                                                              <C>          <C>            <C>
  Numerator:
  ----------
      Consolidated net (loss) income                              ($313,582)  $  14,453,317  $ 9,072,630
                                                                 ===========  =============  ===========
  Denominator:
  ------------
      Basic EPS - weighted average shares of common stock        10,957,829      11,124,074   11,224,260
      Effect of dilutive securities - unexercised stock options           -          34,388       31,147
                                                                 -----------  -------------  -----------
      Diluted EPS - weighted average shares of common
             stock and unexercised stock options                 10,957,829      11,158,462   11,255,407
                                                                 ===========  =============  ===========
</TABLE>
        The effect of dilutive securities was excluded from the diluted loss per
        common share computation for the six months ended June 30, 2001, because
        the Company had a net loss in this period and their inclusion would have
        been  anti-dilutive.

(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  Taxes
        -------------
        Deferred  income  taxes  reflect  the  net  tax  effect  of  temporary
        differences  between  the carrying amounts of assets and liabilities for
        financial  statement  purposes  and  the  corresponding amounts used for
        income  tax  reporting.

                                        8
<PAGE>
(5)     Common  Stock  Options
        ----------------------
        There  were 2,203 options exercised during the six months ended June 30,
        2001  compared  to  19,196 options exercised during the six months ended
        June 30, 2000. For further information regarding stock options, refer to
        Note 6 of the Notes to the Consolidated Financial Statements included in
        the  Company's  2000  annual  report.

(6)     Dividends
        ---------

        2001
        ----
        On  May  30,  2001,  a  cash  dividend of $.08 per share was declared to
        shareholders of record June 8, 2001 and paid June 28, 2001 in the amount
        of  $875,593.

        On  February 27, 2001, a cash dividend of $.08 per share was declared to
        shareholders  of  record  March  9,  2001 and paid March 23, 2001 in the
        amount  of  $878,211.

        2000
        ----
        On  November 21, 2000, a cash dividend of $.07 per share was declared to
        shareholders  of  record  December 8, 2000 and paid December 20, 2000 in
        the  amount  of  $773,304.

        On  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.

(7)     Investments
        -----------
        The  Company's  fixed maturities and equity securities are classified as
        available-for-sale  and,  accordingly,  are  carried at fair value, with
        unrealized  gains  (losses)  reported  as  a  separate  component of the
        shareholders'  investment, net of taxes. The cost of fixed maturities is
        adjusted  for the 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
        Consolidated  Statement  of  Income  to  carrying  values equal to their
        estimated  fair  values.

        Investment  real  estate  is  carried  at  cost,  net  of  accumulated
        depreciation  of $1,845,294, $1,595,693 and $1,378,314 at June 30, 2001,
        December  31,  2000  and  June  30,  2000,  respectively. Real estate is
        depreciated  over  the  useful  life  of  the  asset.

        The  cost  of  investments  sold  is  determined  under  the  specific
        identification  method.

(8)     Contingent  Liabilities
        -----------------------
        The  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. Management's opinion is that
        such  lawsuits  are  a  result of 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
<PAGE>
(9)     Industry  Segment  Disclosures
        ------------------------------

        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) reinsurance
        assumed operations. These segments constitute 100% of the operations of
        the Company. Data for each segment as required for interim reporting
        follows in the table below. In analyzing this information, keep the
        following discussion in mind. The reconciliation items to get to the
        consolidated GAAP basis come from two sources: investment income on
        capital and surplus and intercompany eliminations (management fees for
        intercompany services provided and dividend income on stock held by
        affiliates). Specifically, revenues are adjusted for investment income
        from capital and surplus, and intercompany eliminations for management
        fees from intercompany service agreements and intercompany dividends.
        Pre-tax profit is adjusted for the net effect of the amounts in revenues
        along with intercompany eliminations for management fees from expense
        items (loss adjustment and underwriting expenses).

<TABLE>
<CAPTION>
                                                               Year-to-date
                                               -------------------------------------------
                                                 June 30,      December 31,     June 30,
                                                   2001            2000           2000
                                               -------------  --------------  ------------
<S>                                            <C>            <C>             <C>
    Total Revenues:
        Property & Casualty                    $ 39,027,798   $  75,198,171   $35,528,425
        Fidelity & Surety                         9,643,259      21,472,270     9,977,597
        Reinsurance Assumed                         181,225       1,008,654       402,468
                                               -------------  --------------  ------------
              Subtotal                         $ 48,852,282   $  97,679,095   $45,908,490
        Reconciliation to Consolidated GAAP:
            Capital & Surplus                     1,905,380      12,036,436     4,852,785
            Inter-company adjustments               (74,733)       (207,069)      (41,833)
                                               -------------  --------------  ------------
    Total Consolidated Revenues                $ 50,682,929   $ 109,508,462   $50,719,442
                                               =============  ==============  ============

    Before-tax (Loss) Profit:
        Property & Casualty                       ($816,455)  $   4,627,311   $ 3,900,792
        Fidelity & Surety                        (2,478,114)       (548,495)    2,513,113
        Reinsurance Assumed                          75,743       2,374,163     1,239,430
                                               -------------  --------------  ------------
              Subtotal                          ($3,218,826)  $   6,452,979   $ 7,653,335
        Reconciliation to Consolidated GAAP:
            Capital & Surplus                     1,905,380      12,036,436     4,852,785
            Inter-company adjustments               188,928         828,846       435,438
                                               -------------  --------------  ------------
    Consolidated Net (Loss) Income Before Tax   ($1,124,518)  $  19,318,261   $12,941,558
                                               =============  ==============  ============
</TABLE>

                                       10
<PAGE>
      MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
                                   OPERATIONS

OVERVIEW
--------
Capitol  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 81% of the business written while the fidelity-surety
segment  accounts  for  approximately  19%  of  the  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,  with  the  down  side  of  the  cycles being characterized by
inadequate  rates,  underwriting losses and 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.  However,  on  the positive side, the industry appears to be
hardening,  with  rate  increases  slowly  being  implemented.

Adequate  premium  rates  continue  to  be  a  concern  for  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  RESULTS
------------------
Total revenues decreased slightly for the sixth months ended June 30, 2001
compared to the same period in 2000 and increased by approximately $406,000 for
the three months ended June 30, 2001 compared to the same period in 2000.
Underwriting income decreased by approximately $8.8 million for the six months
ended June 30, 2001 compared to the same period in 2000 and decreased by
approximately $5.6 million for three months ended June 30, 2001 compared to the
same period in 2000. These decreases were primarily due to increases in the
Company's loss and loss adjustment expenses of $11.5 million and $7.1 million,
respectively, for the six and three month periods ended June 30, 2001. For the
six months ended June 30, 2001, net income decreased to a loss of approximately
$314,000 compared to net income of approximately $9.1 million for the same
period in 2000. For the three months ended June 30, 2001, net income decreased
to a loss of approximately $2.2 million compared to net income of approximately
$3.4 million for the same period in 2000. A more detailed analysis of the
Company's results of operations follows.

Premiums written are earned and recognized as revenues after a reduction for
reinsurance ceded and after establishing a provision for the pro rata unearned
portion of the premiums written. The following table illustrates the premiums
for the six and three month periods ended June 30, 2001 compared to the same
periods in 2000.
<TABLE>
<CAPTION>
                              Six Months Ended      Six Months Ended      Three Months Ended     Three Months Ended
                                  June 30,              June 30,             June 30, 2001          June 30, 2000
                                    2001                  2000
   ------------------------ --------------------- ---------------------- ---------------------- ----------------------
<S>                                  <C>                    <C>                  <C>                    <C>
   Gross Premiums Written            $61,883,716            $51,758,281          $34,310,461            $28,393,322
   Reinsurance Ceded                   7,152,124              3,862,142            3,968,484              2,445,143
   ------------------------ --------------------- ---------------------- ---------------------- ----------------------
   Net Premiums Written              $54,731,592            $47,896,139          $30,341,977            $25,948,179
   ======================== ===================== ====================== ====================== ======================
   Net Premiums Earned               $47,320,300            $42,080,648          $24,477,487            $21,414,099
   ======================== ===================== ====================== ====================== ======================
   Net Unearned Premium
    Reserve                          $53,589,577            $45,540,141          $53,589,577            $45,540,141
   ======================== ===================== ====================== ====================== ======================
</TABLE>
                                       11
<PAGE>
In 1998 and 1999, the Company established new underwriting standards. With new
underwriting standards in place, the Company began to increase the gross
premiums written in late 1999 and throughout 2000. For the six months ended June
30, 2001, the Company increased its gross premiums written across all of its
product lines by 20.5% compared to the same period in 2000. Approximately 8% of
this increase is attributable to rate increases with the remainder being due to
volume increases. The Company reduced its gross premiums written in the
fidelity-surety bond market by approximately 5% due almost entirely to decreases
in volume. The Company increased its gross premiums written in the
property-casualty market by approximately 27%, of which 10% of the increase in
premiums was due to rate increases with the remainder coming from volume
increases.

For the three months ended June 30, 2001, the Company increased its gross
premiums written across all of its lines by 21% compared to the same period in
2000. Approximately 10% is attributable to rate increases with the remainder
being due to volume increases. The Company reduced its gross premiums written in
the fidelity-surety bond market by approximately 4% due primarily to decreases
in volume. The Company increased its gross premiums written in the
property-casualty market by approximately 25%, of which 12% of the increase in
premiums was due to rate increases with the remainder coming from volume
increases.

For the six months ended June 30, 2001, the fidelity-surety loss and loss
adjustment expense ratio was 69.8% of net premiums earned compared to 27.1% for
the same period in 2000. For the three months ended June 30, 2001, the
fidelity-surety loss and loss adjustment expense ratio was 75.9% of net premiums
earned compared to 39.7% for the same period in 2000. These increases were due
to two factors. First, the ratios for the six and three month periods ended June
30, 2000 were low compared to the Company's history of approximately 55% of net
premiums earned, and, second, claims from one specific bonded contractor
accounted for approximately 50% and 50%, respectively, of the fidelity-surety
losses and loss adjustment expenses for the six and three month periods ended
June 30, 2001. To prevent additional losses, the Company has stopped writing new
bonds with this contractor as well as canceling the agent responsible for the
production of this and other unprofitable business. Had the fidelity-surety
losses discussed above occurred consistent with the Company's historical claim
levels, the Company's fidelity-surety loss and loss adjustment expense ratio for
the six and three month periods ended June 30, 2001 would have been 55% and 55%,
respectively, and the overall loss and loss adjustment expense ratio would have
been 53% and 53%, respectively.

For the six months ended June 30, 2001, the property-casualty loss and loss
adjustment expense ratio was 63.0% of net premiums earned compared to 59.4% of
net premiums earned for the same period in 2000. For the three months ended June
30, 2001, the property-casualty loss and loss adjustment expense ratio was 72.4%
of net premiums earned compared to 68.0% of net premiums earned for the same
period in 2000. These increases were due to losses resulting from Midwest storms
and large fires. The storm losses increased the property-casualty loss and loss
adjustment expense ratio from 3.8% of total net premiums earned for the six
month period ended June 30, 2000 to 9.1% of total net premiums earned for the
same period in 2001. While the Company cannot control the immediate impact of
storm losses, it is looking at the trends of storm losses as well as employing
loss control efforts to try to minimize the effects of these types of losses.
The large fire losses increased the property-casualty loss and loss adjustment
expense ratio from 18.2% of total net premiums earned for the six month period
ended June 30, 2000 to 19.0% of total net premiums earned for the same period in
2001. Specifically, for the six months ended June 30, 2001, the Company has had
30 fire claims with over $150,000 in incurred losses compared to only 15 such
cases in 2000. The Company is utilizing increased loss control efforts relating
to fire losses, especially in the restaurant and tavern markets, where the
losses tend to be higher due to arson. Specifically, the Company is focusing its
efforts to review hazard reports and current client financial statements. Had
the property-casualty losses discussed above occurred consistent with the
Company's historical claim levels, the Company's property-casualty loss and loss
adjustment expense ratio for the six and three month periods ended June 30, 2001
would have been 52.5% and 52.5%, respectively, and the overall loss and loss
adjustment expense ratio would have been 53% and 53%, respectively.

                                       12
<PAGE>
Operating expenses remained relatively constant for the six months ended June
30, 2001 compared to the same period in 2000 increasing slightly from a ratio of
37.0% to 37.9%. The deferred acquisition costs reduced the operating expenses
2.7% of net earned premiums for the six months ended June 30, 2001 compared to a
reduction of 3.4% of net earned premiums for the six months ended June 30, 2000.
This reduction is due primarily to two factors. First, the increase in deferred
acquisition costs, which is a reduction of operating expenses, was $118,015 less
for the six months ended June 30, 2001 compared to the same period last year.
Second, the net earned premiums grew by over $5 million compared to the same
period in 2000.

The deferred acquisition costs reduced the operating expenses 4.0% of net earned
premiums for the three months ended June 30, 2001 compared to a reduction of
4.6% of net earned premiums for the three months ended June 30, 2000. This
reduction is due primarily to two factors. First, the increase in deferred
acquisition costs, which is a reduction of operating expenses, was $6,877 less
for the three months ended June 30, 2001 compared to the same period last year.
Second, the premiums grew by over $3 million compared to the same period in
2000.

The Company regularly reviews its calculation of deferred acquisition costs to
ensure that the portion of underwriting expenses that should be deferred
appropriately matches the premiums that have yet to be earned. As a result of
this analysis, the Company determined that the amount of resources, such as
salaries and rent, allocable to the premiums yet to be earned needed to be
adjusted downward because the amount of resources used to produce this business
compared to the prior year is less when taken in conjunction with the resources
used for the remainder of the Company's operations. This downward adjustment,
when coupled with the higher premiums, caused the lower ratios applicable to the
deferred acquisition costs described above.

The Company's operating results from underwriting operations can be measured by
the GAAP combined loss, loss adjustment expense and operating expense ratios.
Under GAAP, the loss, loss adjustment expenses and operating expenses are all
stated as a ratio of net premiums earned. The combined ratio is useful because
it shows the operating profitability of the Company excluding income from
investment-related activities. Alternately stated, it shows the profitability of
the insurance operations.

A combined ratio greater than 100% means the Company's insurance operations are
operating at a loss, which the Company believes is typical on average for the
insurance industry in recent years. This, however, does not mean the Company is
losing money, because investment income and realized investment gains are also
included in the determination of net income. Conversely, if the Company's
combined ratio is less than 100%, the insurance operations are operating at a
gain. The combined ratio should not be considered in isolation from or as a
substitute for net income, cash flows from operating activities or other
combined income or cash flow data prepared in accordance with GAAP or as a
measure of overall profitability or liquidity. The following table depicts the
Company's combined ratios for the six and three month periods ended June 30,
2001 compared to the same period in 2000 broken down into its loss and operating
expense components on a GAAP basis:
<TABLE>
<CAPTION>
                              Six Months Ended        Six Months Ended        Three Months Ended     Three Months Ended
                                  June 30,                June 30,                 June 30,               June 30,
                                    2001                    2000                     2001                   2000
-------------------------- ----------------------- ------------------------ ----------------------- ---------------------
<S>                                   <C>                     <C>                      <C>                    <C>
Loss & Loss Adjustment                71.0%                   52.4%                     87.2%                  66.3%
Exp.
Operating Expenses                    37.9%                   37.0%                     38.1%                  36.4%
-------------------------- ----------------------- ------------------------ ----------------------- ---------------------
Combined Ratio                       108.9%                   89.4%                    125.3%                 102.7%
========================== ======================= ======================== ======================= =====================
</TABLE>

Investment income has been increasing due to the Company concentrating on
investing in the fixed maturities market, most notably in tax-exempt municipal
bonds. The relationship of the increase in investment in fixed maturities and
net investment income is illustrated below:

<TABLE>
<CAPTION>
                              Six Months Ended        Six Months Ended        Three Months Ended     Three Months Ended
                                  June 30,                June 30,                 June 30,               June 30,
                                    2001                    2000                     2001                   2000
-------------------------- ----------------------- ------------------------ ----------------------- ---------------------
<S>                             <C>                    <C>                      <C>                   <C>
Fixed Maturities (at            $95,968,405            $78,629,014               $95,968,405            $78,629,014
amortized cost)
-------------------------- ----------------------- ------------------------ ----------------------- ---------------------
Net Investment Income        $ 4,843,119             $ 4,502,403                 $2,389,388              $2,243,802
========================== ======================= ======================== ======================= =====================
</TABLE>

                                    13
<PAGE>
The Company sells investments, and, thus, realizes investment gains, when it is
advantageous to the Company within the marketplace. The investment gains
realized, or market value of the investments sold compared to the Company's cost
of those investments, fluctuates with both the market conditions when the
investment is sold and the Company's management of its portfolio. Additionally,
under FASB Statement 115, the Company absorbed $8.2 million and $6.2 million,
respectively, in realized losses for the six and three month periods ended June
30, 2001 for "other-than-temporary" market value adjustments for certain
securities held in its portfolio. No such adjustments were made during the first
half of 2000. Management continues to monitor its investment portfolio for other
securities that could potentially fall into this category in the future. Had the
FASB 115 losses not occurred, the Company's realized gains would have amounted
to $6.5 million for the first six months of 2001 compared to $4.0 million for
the same time period in 2000.

The Company's income tax expense has decreased from an expense of $3.9 million
for the first six months of 2000 to a 2001 year-to-date benefit of $0.8 million
for two reasons. First, income from underwriting operations has decreased, and,
second, the Company's increased investment in municipal bonds has decreased the
amount of taxable income.

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
severe  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  management  believes  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.
<TABLE>
<CAPTION>
                                                       June 30,      December 31,     June 30,
  Investments                                            2001            2000           2000
---------------------------------------------------  -------------  --------------  -------------
<S>                                                  <C>            <C>             <C>
       Invested Assets                               $240,574,024   $ 232,367,776   $214,703,864
       Net Investment Income                            4,843,119       9,163,062      4,502,403
       Percent of Return to Average Carrying Value            4.2%            4.0%           4.0%
       Realized (Losses) Gains                         (1,748,074)     11,805,350      3,978,978
       Change in Unrealized Gains (Losses)              5,490,224       4,239,902     (1,666,813)
---------------------------------------------------  -------------  --------------  -------------
</TABLE>
The  net  unrealized  gain  of  $5.8  million  for  the first six months of 2001
consists  of  a  $0.4  million  unrealized  loss  on fixed maturities and a $6.2
million  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 will provide an
even  greater  opportunity  to  invest and build shareholder value over the long
term,  as  evidenced  by the recent increases in the Company's unrealized gains.

For the six months ended June 30, 2001, net investment income increased from
$4.5 million to $4.8 million, or 7.6%, over the same period last year. The
Company holds a large percentage of equity investments, which results in a
comparatively lower rate of return on invested assets than other
property-casualty insurance companies.

                                       14
<PAGE>
Please see the Operating Results section for a discussion of the losses absorbed
in 2001 for "other-than-temporary" investment losses under FASB Statement 115.

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 the discounting of claims reserves for
tax  purposes.  Deferred taxes are also provided on unrealized gains and losses.
Also  of  note is that the Company's effective income tax rate tends to be lower
than  most  companies  because  of  the  high concentration of investment income
related  to  tax-free  municipal  bonds.

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  at 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  $77.4  million  at  June 30, 2001, compared to $77.9
million  at  June 30, 2000. These reserves remain relatively constant due to the
Company  having a high level of loss and loss adjustment expense payments during
the  first  half  of 2001 compared to the first half of last year, $42.9 million
compared  to $36.7 million. Management continues to closely monitor the loss and
loss  adjustment expense reserves to assure adequate recognition of the ultimate
liability  for  claims  and  claims expenses. Management recognizes that this is
especially  important  in  light  of today's climate whereby the Company has had
increased  premium  volume  and larger than expected contract bond losses in the
Florida  and  Texas  markets.


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,  and  maturities  and  sales  of  investments. Because cash inflows from
premiums are received in advance of the cash outflows required to settle claims,
the  Company accumulates funds, which it invests pending liquidity requirements.
Therefore,  investments  represent  the majority (81.2%, 82.0% and 79.5% at June
30,  2001,  December  31, 2000 and June 30, 2000, respectively) 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  requirements.

SEGMENT INFORMATION
-------------------
The Company has three business segments, which are segregated based on the types
of products and services provided. These segments are (1) property and casualty,
(2) fidelity and surety and (3) reinsurance assumed operations. These segments
constitute 100% of the operations of the Company. The Company maintains and
monitors its segment information on a statutory basis. Financial data by
segment, including a reconciliation to consolidated GAAP basis is in footnote 9
to the Financial Statements for the six month periods ended June 30, 2001 and
2000 and the year ended December 31, 2000.

The property and casualty segment provides specialty commercial coverages for
beauty and barber shops, bowling alleys, contractors/manufacturers, day care
centers, restaurants, detective/guard agencies, golf courses and taverns. This
segment also provides nurses professional, deer hunters and sportsmen's
accident, and special event coverages. The fidelity and surety segment offers a
full range of surety and fidelity bonds, including contractor's payment and
performance bonds, license/permit bonds, fiduciary and judicial bonds, as well
as commercial fidelity bonds. The reinsurance assumed segment consists of active
reinsurance assumed and discontinued reinsurance assumed. The Company's
discontinued reinsurance assumed business involved providing reinsurance
coverage by assuming a portion of the risks underwritten by other insurance
companies and risk pools, including asbestos and environmental risks. Although
the Company withdrew from this reinsurance business in 1976, liability remains
for losses on policies written during the period in which it participated as a
reinsurer.

The Operating Results section discussed the premium growth as well as the loss
and loss adjustment expenses for the fidelity-surety and property-casualty lines
of business. The reinsurance assumed business had a net underwriting loss of
$58,000. Discontinued reinsurance assumed had an underwriting loss of $124,000
for the six months ended June 30, 2001, compared to underwriting income of
$810,000 for the same period in 2000. Discontinued reinsurance assumed had an
underwriting loss of $64,000 for the three months ended June 30, 2001, compared
to underwriting loss of $60,000 for the same period in 2000. For the six months
ended June 30, 2001, the Company decreased IBNR reserves by $1 million after
consultation with the independent actuary retained by the Company to assess the
adequacy of these reserves. Had the Company not decreased these reserves, the
Company would have had an underwriting loss of $190,000, which is consistent
with the amounts reported in 2000. In addition to the discontinued reinsurance
assumed, the Company is involved in active reinsurance assumed business, which
has a minimal effect on the overall underwriting operations of the Company,
contributing underwriting income of $66,000 and $43,000 for the six months ended
June 30, 2001 and June 30, 2000, respectively. The active reinsurance assumed
contributed underwriting income of $31,000 and $36,000 for the three months
ended June 30, 2001 and June 30, 2000, respectively.

                                       15
<PAGE>
Commissions and other underwriting expenses are allocated to the lines of
business based on premium volume and weighted average salaries by full-time
equivalent employees.

Investment income is allocated by line of business and capital and surplus based
on a complex formula that incorporates premium volume, reserves and surplus to
allocate among the different lines of business as well as to capital and
surplus.

Income taxes are allocated to the lines of business based on the effective tax
rates for the different items affecting income-investment income (dividends,
interest and capital gains) and underwriting income.

STATUTORY UNDERWRITING RESULTS
------------------------------

The financial statements of the insurance subsidiaries have been prepared in
accordance with accounting principles prescribed or permitted by insurance
regulatory authorities (statutory basis), which differ in certain respects from
accounting principles generally accepted in the United States. The Company's
underwriting results can be measured by the combined loss and expense ratios 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. See the Operating Results section for a discussion on the
significance of the combined ratios'. The following table depicts the Company's
two subsidiary insurance companies combined ratios on a statutory basis.

<TABLE>
<CAPTION>
                          Six Months Ended     Six Months Ended     Three Months Ended   Three Months Ended
                              June 30,             June 30,              June 30,             June 30,
                                2001                 2000                  2001                 2000
----------------------- --------------------- -------------------- --------------------- --------------------
<S>                               <C>               <C>                    <C>               <C>
Loss & Loss                        71.1%             52.6%                  87.3%              66.5%
Adjustment Exp.
Underwriting Expense               34.6%             35.0%                  32.9%              33.2%
----------------------- --------------------- -------------------- --------------------- --------------------
Combined Ratio                    105.7%             87.6%                 120.2%              99.7%
======================= ===================== ==================== ===================== ====================
</TABLE>

The Company's combined ratios on a statutory basis continue to compare very
favorably with the industry average on a statutory basis, as indicated below.

<TABLE>
<CAPTION>
                          Six Months Ended     Six Months Ended     Three Months Ended   Three Months Ended
Combined Ratio                June 30,             June 30,              June 30,             June 30,
                                2001                 2000                  2001                 2000
----------------------- --------------------- -------------------- --------------------- --------------------
<S>                               <C>                    <C>                  <C>                   <C>
Company                           105.7%                 87.6%                 120.2%                99.7%
Industry*                         106.2%                110.2%                 N/A                   N/A
----------------------- --------------------- -------------------- --------------------- --------------------
*Year-to-date 2001 industry average is for the 1st quarter of 2001, the most recently available
data. Industry data is not available for the three month periods ended June 30, 2001 and 2000,
respectively. The industry data is based upon the press release published by Insurance Services
Offices, Inc. entitled "Property/Casualty Industry's Net Income and Surplus Drop in First Quarter
Despite Surging Premium Growth" dated as of June 25, 2001.
</TABLE>


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 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.

                                       16
<PAGE>
<TABLE>
<CAPTION>
                              INSURANCE SUBSIDIARY FINANCIAL STATEMENTS
                     STATUTORY BASIS AS REPORTED TO STATE REGULATORY AUTHORITIES


CAPITOL INDEMNITY CORPORATION
- -----------------------------                             June 30,      December 31,     June 30,
BALANCE SHEETS                                              2001            2000           2000
- ------------------------------------------------------  -------------  --------------  -------------
<S>                                                     <C>            <C>             <C>
ASSETS
     Cash and Invested Assets                           $232,742,823   $ 220,326,616   $203,180,898
     Other Assets                                         31,522,366      24,911,537     31,428,022
- ------------------------------------------------------  -------------  --------------  -------------
     Total Assets                                       $264,265,189   $ 245,238,153   $234,608,920
======================================================  =============  ==============  =============
LIABILITIES
     Reserves for Losses and Loss Adjustment Expenses   $ 80,768,518   $  80,127,074   $ 77,492,685
     Unearned Premiums                                    51,284,861      43,873,569     43,982,121
     Other Liabilities                                    13,082,942      13,320,126     16,665,793
- ------------------------------------------------------  -------------  --------------  -------------
     Total Liabilities                                   145,136,321     137,320,769    138,140,599
- ------------------------------------------------------  -------------  --------------  -------------
SURPLUS AS REGARDS POLICYHOLDERS
     Shareholders' Equity                                119,128,868     107,917,384     96,468,321
- ------------------------------------------------------  -------------  --------------  -------------
     Total Liabilities and Capital                      $264,265,189   $ 245,238,153   $234,608,920
======================================================  =============  ==============  =============
STATEMENTS OF INCOME
     Premiums Earned                                    $ 47,320,300   $  88,184,842   $ 42,080,648
     Underwriting Deductions                              52,288,300      90,802,716     39,231,150
- ------------------------------------------------------  -------------  --------------  -------------
     Net Underwriting Gain (Loss)                         (4,968,000)     (2,617,874)     2,849,498
- ------------------------------------------------------  -------------  --------------  -------------
     Investment Income Including Sales                     2,504,194      20,845,091      8,264,815
     Other Income                                            287,492         396,399        156,818
     Dividends to Policyholders                              468,582         489,085              -
     Income Tax Expense                                     (979,435)      5,131,195      3,508,842
- ------------------------------------------------------  -------------  --------------  -------------
     Net Income                                          ($1,665,461)  $  13,003,336   $  7,762,289
======================================================  =============  ==============  =============

CAPITOL SPECIALTY INSURANCE CORPORATION
- ---------------------------------------
BALANCE SHEETS
- --------------
ASSETS
     Cash and Invested Assets                           $  4,213,821   $   4,474,294   $  4,325,909
     Other Assets                                            135,313         201,378        213,128
- ------------------------------------------------------  -------------  --------------  -------------
     Total Assets                                       $  4,349,134   $   4,675,672   $  4,539,037
======================================================  =============  ==============  =============
LIABILITIES
     Liabilities Other Than For Insurance Obligations          7,709           7,709          7,713
- ------------------------------------------------------  -------------  --------------  -------------
     Total Liabilities                                         7,709           7,709          7,713
- ------------------------------------------------------  -------------  --------------  -------------
SURPLUS AS REGARDS POLICYHOLDERS
     Shareholders' Equity                                  4,341,425       4,667,963      4,531,324
- ------------------------------------------------------  -------------  --------------  -------------
     Total Liabilities and Capital                      $  4,349,134   $   4,675,672   $  4,539,037
======================================================  =============  ==============  =============
STATEMENTS OF INCOME
     Underwriting Deductions                                   3,375           6,278          3,645
- ------------------------------------------------------  -------------  --------------  -------------
     Net Underwriting Gain                                    (3,375)         (6,278)        (3,645)
- ------------------------------------------------------  -------------  --------------  -------------
     Investment Income Including Sales                       102,213         249,300        130,373
     Income Tax Expense                                        7,761          10,634         12,541
- ------------------------------------------------------  -------------  --------------  -------------
     Net Income                                         $     91,077   $     232,388   $    114,187
======================================================  =============  ==============  =============
</TABLE>


                                       17

<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant to the requirements of Sections 13 or 15(d) of the Securities and
Exchange Act of 1934, the Company has duly caused this amendment to report to be
signed on its behalf by the undersigned thereunto duly authorized on the 7th
day of December, 2001.


CAPITOL TRANSAMERICA CORPORATION


By:  /s/  George  A.  Fait
   ---------------------------------------------
   George A. Fait
   Chairman of the Board and President


By:  /s/  Paul J. Breitnauer
   ---------------------------------------------
   Paul J. Breitnauer
   Vice President and Treasurer



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