Washington, D.C. 20549

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



|For the Quarter Ended
September 30, 1999 | Commission File Number
0-6478
|---------------------------------------- | -----------------------------

FOREMOST CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in Its Charter)



|Michigan
(State or Other Jurisdiction of
Incorporation or Organization)           | 38-1863522
(I.R.S. Employer
Identification No.)
|--------------------------------------------------------------------------------- | -----------------------------------------------
|5600 Beech Tree Lane
Caledonia, Michigan
(Address of Principal Executive Offices) | 49316
(Zip Code)                               

Mailing address:
P.O. Box 2450, Grand Rapids, Michigan 49501

Registrant's Telephone Number, Including Area Code
(616) 942-3000

Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to
such filing requirements for the past 90 days.           
Yes        X        
No _____

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.

|Class                         | Outstanding at
September 30, 1999
|----------------------------- | ---------------------------------
|Common Stock, $1.00 par value | 26,615,201 shares                

---

---

FOREMOST CORPORATION OF AMERICA

INDEX

|         |                                                                                                 | Page No.
|-------- | ----------------------------------------------------------------------------------------------- | --------
|Part I.  | Financial Information:                                                                          |         
|         |                                                                                                 |         
|Item 1.  | Financial Statements:                                                                           |         
|         |                                                                                                 |         
|         | Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998                          | 1-2     
|         |                                                                                                 |         
|         | Consolidated Statements of Income -
Nine Months Ended September 30, 1999 and 1998               | 3-4     
|         |                                                                                                 |         
|         | Consolidated Condensed Statements of Cash Flows
-
Nine Months Ended September 30, 1999 and 1998 | 5       
|         |                                                                                                 |         
|         | Condensed Notes to Consolidated Financial Statements                                            | 6-8     
|         |                                                                                                 |         
|Item 2.  | Management's Discussion and Analysis of Financial
Condition                                     |         
|         | and Results of Operations                                                                       | 9-13    
|         |                                                                                                 |         
|Item 3.  | Quantitative and Qualitative Disclosures About
Market Risk                                      | 14-15   
|         |                                                                                                 |         
|         |                                                                                                 |         
|Part II. | Other Information:                                                                              |         
|         |                                                                                                 |         
|Item 1.  | Legal Proceedings                                                                               | 16-17   
|         |                                                                                                 |         
|Item 6.  | Exhibits and Reports on Form 8-K                                                                | 17-19   
|         |                                                                                                 |         
|         | Signatures                                                                                      | 20      

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FOREMOST CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS



|                                                 | September 30,                     |  | December 31, 
|------------------------------------------------ | --------------------------------- |  | -------------
|                                                 | 1999                              |  | 1998         
|                                                 | (In thousands, except share data)
|Assets:                                          |                                   |  |              
|Investments-                                     |                                   |  |              
|Fixed
maturities held to maturity                | $         
501                    |  | $         947
|Securities
available for sale:                   |                                   |  |              
|Fixed maturities                                 | 388,918                           |  | 356,776      
|Equity securities                                | 62,382                            |  | 79,936       
|Mortgage
loans and land contracts on real estate | 3,072                             |  | 5,867        
|Investment
real estate                           | 14,231                            |  | 13,228       
|Short-term
investments                           | 29,008                            |  | 36,907       
|Total investments                                | 498,112                           |  | 493,661      
|                                                 |                                   |  |              
|Cash                                             | 1,219                             |  | 2,227        
|Accrued investment
income                        | 6,435                             |  | 5,966        
|Premiums receivable                              | 85,192                            |  | 76,808       
|Due from reinsurance
companies                   | 25,563                            |  | 23,914       
|Other receivables                                | 587                               |  | 1,573        
|Prepaid policy acquisition
costs                 | 78,792                            |  | 75,689       
|Prepaid reinsurance
premiums                     | 692                               |  | 977          
|Real estate and equipment                        | 57,184                            |  | 54,565       
|Other assets                                     | 17,303                            |  | 17,816       
|Total assets                                     | $ 771,079                         |  | $ 753,196    
|                                                 |                                   |  |              
|Liabilities:                                     |                                   |  |              
|Unearned premium                                 | $ 273,541                         |  | $ 250,959    
|Insurance losses and
loss adjustment expenses    | 87,336                            |  | 84,128       
|Accounts payable and
accrued expenses            | 38,723                            |  | 34,045       
|Notes and other obligations
payable              | 83,950                            |  | 89,853       
|Income taxes                                     | 4,710                             |  | 16,274       
|Other liabilities                                | 14,017                            |  | 13,782       
|Total liabilities                                | 502,277                           |  | 489,041      

---

FOREMOST CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS (Continued)



|                                             | September 30,                     |  | December 31,
|-------------------------------------------- | --------------------------------- |  | ------------
|                                             | 1999                              |  | 1998        
|                                             | (In thousands, except share data)
|Shareholders' Equity:                        |                                   |  |             
|Preferred
stock, no par value - 10,000,000   |                                   |  |             
|shares authorized, no shares issued          | --                                |  | --          
|Common
stock, $1 par - 70,000,000 shares     |                                   |  |             
|authorized; 26,615,201 and 27,166,240 shares |                                   |  |             
|issued and outstanding in 1999 and 1998,     |                                   |  |             
|respectively                                 | 26,615                            |  | 27,166      
|Additional
paid-in capital                   | 82,868                            |  | 83,205      
|Unrealized
appreciation of securities        |                                   |  |             
|available for sale, net of applicable taxes  | (1,675)                           |  | 10,262      
|Retained
earnings                            | 160,999                           |  | 143,527     
|Restricted
stock -- deferred compensation    | (5)                               |  | (5)         
|                                             |                                   |  |             
|Total shareholders' equity                   | 268,802                           |  | 264,155     
|                                             |                                   |  |             
|Total liabilities and shareholders' equity   | $    771,079                      |  | $    753,196

See accompanying condensed notes to consolidated financial statements.

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FOREMOST CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME



|                                                                                                   | Three Months
Ended September 30,      |  | Nine Months
Ended September 30,
|-------------------------------------------------------------------------------------------------- | ------------------------------------- |  | -------------------------------
|                                                                                                   | 1999                                  |  | 1998                           
|                                                                                                   | (In thousands, except per share data)
|Income:                                                                                            |                                       |  |                                
|Property
and casualty premium earned                                                               | $ 112,948                             |  | $ 109,673                      
|Net investment
income                                                                              | 6,642                                 |  | 6,129                          
|Realized
gains                                                                                     | 1,060                                 |  | 1,828                          
|Other                                                                                              | 925                                   |  | 503                            
|                                                                                                   |                                       |  |                                
|Total income                                                                                       | 121,575                               |  | 118,133                        
|                                                                                                   |                                       |  |                                
|Expense:                                                                                           |                                       |  |                                
|Insurance
losses and loss expenses                                                                 | 73,541                                |  | 63,064                         
|Amortization
of prepaid policy                                                                     |                                       |  |                                
|acquisition costs                                                                                  | 33,574                                |  | 31,981                         
|Operating                                                                                          | 4,794                                 |  | 4,989                          
|Interest                                                                                           | 1,496                                 |  | 1,760                          
|Total expense                                                                                      | 113,405                               |  | 101,794                        
|                                                                                                   |                                       |  |                                
|Income
before taxes                                                                                | 8,170                                 |  | 16,339                         
|Income
tax provision                                                                               | (895)                                 |  | (4,492)                        
|                                                                                                   |                                       |  |                                
|Net income before extraordinary item                                                               | 7,275                                 |  | 11,847                         
|                                                                                                   |                                       |  |                                
|Extraordinary
loss on early extinguishment
     of debt (net of $1,782 of federal income
     tax) | --                                    |  | --                             
|                                                                                                   |                                       |  |                                
|Consolidated net income                                                                            | $   7,275                             |  | $   11,847                     
|                                                                                                   |                                       |  |                                
|Per share of common stock:                                                                         |                                       |  |                                
|Net income
before extraordinary item                                                               | $     0.27                            |  | $       0.43                   
|Extraordinary
loss -- net of tax benefit                                                           | --                                    |  | $           --                 
|                                                                                                   |                                       |  |                                
|Net income                                                                                         | $     0.27                            |  | $       0.43                   
|                                                                                                   |                                       |  |                                
|Average shares outstanding                                                                         | 26,615                                |  | 27,240                         
|                                                                                                   |                                       |  |                                
|Cash dividends per share                                                                           | $     0.09                            |  | $       0.09                   

---

FOREMOST CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME (Continued)



|                                         | Three Months
Ended September 30,      |  | Nine Months
Ended September 30,
|---------------------------------------- | ------------------------------------- |  | -------------------------------
|                                         | 1999                                  |  | 1998                           
|                                         | (In thousands, except per share data)
|Per share of common stock -- diluted     |                                       |  |                                
|Net income
before extraordinary item     | $    0.27                             |  | $    0.43                      
|Extraordinary
loss -- net of tax benefit | --                                    |  | $        --                    
|                                         |                                       |  |                                
|Net income                               | $    0.27                             |  | $    0.43                      
|                                         |                                       |  |                                
|Average shares outstanding               | 27,180                                |  | 27,753                         

See accompanying condensed notes to consolidated financial statements.

---

FOREMOST CORPORATION OF AMERICA
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS



|                                                   | Nine Months Ended
September 30,
|-------------------------------------------------- | -------------------------------
|                                                   | 1999                           
|                                                   | (In thousands)                 
|Operating Activities:                              |                                
|Net cash from operating activities                 | $    47,183                    
|                                                   |                                
|Investing Activities:                              |                                
|Purchases of securities                            | (162,034)                      
|Purchases of real estate and equipment             | (9,508)                        
|Sales of securities                                | 93,128                         
|Maturities of securities and receipts              |                                
|from repayments of loans                           | 44,135                         
|Sales of real estate and equipment                 | 3,267                          
|(Increase) Decrease in short-term investments      | 7,899                          
|                                                   |                                
|Net cash for investing activities                  | (23,113)                       
|                                                   |                                
|Financing Activities:                              |                                
|Prepayment of mortgage                             | --                             
|Extraordinary loss on early extinguishment of debt | --                             
|Repayment of debt                                  | (12,403)                       
|Proceeds from borrowings                           | 6,500                          
|Reacquisition of common stock                      | (11,305)                       
|Dividends paid                                     | (7,220)                        
|Exercise of stock options: Receipts                | 893                            
|Exercise of stock options: Repurchases             | (1,543)                        
|                                                   |                                
|Net cash for financing activities                  | (25,078)                       
|                                                   |                                
|Cash increase (decrease)                           | (1,008)                        
|Cash at beginning of year                          | 2,227                          
|                                                   |                                
|Cash at end of period                              | $      1,219                   

See accompanying condensed notes to consolidated financial statements.

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FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | The notes to the consolidated financial statements
are condensed and do not contain all information required by generally
accepted accounting principles to be included in a full set of financial
statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | All information is unaudited; however, in the
opinion of management, all adjustments (consisting only of normal recurring
accruals) have been made which are necessary to present fairly the results
shown. All significant intercompany balances and transactions have been
eliminated in consolidation. Interim results are not necessarily indicative
of the results to be expected in any other period.                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | During the first quarter of 1998, the Company
adopted Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income," which requires that all components of comprehensive
income and total comprehensive income be reported on one of the following:
a statement of income and comprehensive income, a statement of comprehensive
income or a statement of shareholders' equity. Comprehensive income is
comprised of net income and all changes to shareholders' equity, except
those due to investments by owners (changes in paid in capital) and distributions
to owners (dividends). For interim reporting purposes, SFAS 130 requires
disclosure of total comprehensive income.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Comprehensive income and its components consist
of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                                                 | For the Three Months Ended
September 30,
|------------------------------------------------ | ----------------------------------------
|                                                 | 1999                                    
|                                                 | (In thousands)                          
|                                                 |                                         
|Net income                                       | $ 7,275                                 
|Other comprehensive income, net
of taxes:        |                                         
|Change
in unrealized appreciation of investments | (4,569)                                 
|Comprehensive income                             | $ 2,706                                 

---

FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|                                                 | For the Nine Months Ended
September 30,
|------------------------------------------------ | ---------------------------------------
|                                                 | 1999                                   
|                                                 | (In thousands)                         
|                                                 |                                        
|Net income                                       | $ 34,816                               
|Other comprehensive income, net
of taxes:        |                                        
|Change
in unrealized appreciation of investments | (11,937)                               
|Comprehensive income                             | $ 22,879                               

|4. | Earnings per share amounts are
computed based on the weighted average number of common shares outstanding
during each quarter. The reconciliation of basic to diluted earnings per
share amounts is as follows:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  | For the Three Months Ended
September 30, 1999
|----------------- | ---------------------------------------------
|                  | Net Income                                   
|                  | (In thousands, except per share amounts)     
|                  |                                              
|Basic EPS         | $ 7,275                                      
|O/S Stock Options | --                                           
|Diluted EPS       | $ 7,275                                      

|                  | For the Three Months Ended
September 30, 1998
|----------------- | ---------------------------------------------
|                  | Net Income                                   
|                  | (In thousands, except per share amounts)     
|                  |                                              
|Basic EPS         | $ 11,847                                     
|O/S Stock Options | --                                           
|Diluted EPS       | $ 11,847                                     

---

FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



|                  | For the Nine Months Ended
September 30, 1999
|----------------- | --------------------------------------------
|                  | Net Income                                  
|                  | (In thousands, except per share amounts)    
|                  |                                             
|Basic EPS         | $ 34,816                                    
|O/S Stock Options | --                                          
|Diluted EPS       | $ 34,816                                    

|                  | For the Nine Months Ended
September 30, 1998
|----------------- | --------------------------------------------
|                  | Net Income                                  
|                  | (In thousands, except per share amounts)    
|                  |                                             
|Basic EPS         | $ 29,212                                    
|O/S Stock Options | --                                          
|Diluted EPS       | $ 29,212                                    

|5. | On October 19, 1999, the Company announced that
it had entered into an Agreement and Plan of Merger, dated as of October
18, 1999, among the Company, Spartan Parent Corp., a newly formed Delaware
corporation, and Spartan Acquisition Co., a Michigan corporation and wholly
owned subsidiary of Spartan Parent Corp. Spartan Parent Corp. is owned
by Farmers Insurance Exchange, Fire Insurance Exchange and Truck Insurance
Exchange, which are managed by Farmers Group, Inc. Farmers Group, Inc.
is a member of the Zurich Financial Services Group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Under the terms of the merger agreement, each
outstanding share of the Company's common stock will be exchanged for $29.25
in cash, or approximately $812 million on a fully diluted basis. The merger
agreement provides for the merger of Spartan Acquisition Co. with and into
the Company, with the effect that following completion of the merger the
Company will be a wholly owned subsidiary of Spartan Parent Co. Accordingly,
the merger will convert the Company from a listed public corporation to
a privately owned corporation. Completion of the merger is subject to customary
closing conditions, including approval by the Company's shareholders and
the receipt of regulatory and other approvals. The Company filed a Current
Report on Form 8-K with the Securities and Exchange Commission on October
19, 1999 regarding the signing of the agreement and plan of merger. Approval
of the proposed merger by the Company's shareholders will be solicited
through a proxy statement to be mailed to shareholders. The Company expects
that the merger will be completed in the first quarter of 2000.

---

Item 2.  Management's Discussion and Analysis of Financial Condition
and Results of Operations

On October 18,
1999, the Company and Spartan Parent Corp., a newly formed Delaware corporation
which is owned by three insurance exchanges that are managed by Farmers
Group, Inc., entered into an agreement regarding the acquisition of the
Company by merger. Under the terms of the agreement and plan of merger,
each outstanding share of the Company's common stock will be exchanged
for $29.25 in cash, or approximately $812 million on a fully diluted basis.
Completion of the merger is subject to a number of conditions, including
approval by the Company's shareholders and receipt of all necessary regulatory
and other approvals. Both companies continue to work toward the completion
of the sale and it is anticipated that it will close in the first quarter
of 2000.

Results of Operations

Net income for
Foremost Corporation of America (the "Company") for the third quarter was
$.27 per share, including $.03 per share in realized gains. This compares
to net income of $.43 per share, including $.04 per share in realized gains,
during the same quarter of 1998. Net income for the first nine months was
$1.28 per share, which compares to net income, before an extraordinary
item, of $1.16 per share for the first nine months of 1998. Realized gains
of $.12 per share in 1999 and $.13 per share in 1998 are included in the
nine months results.

Results from
lawsuit settlements, recorded in the first nine months of 1999, include
a $6.75 million pre-tax settlement received in the first quarter from the
settlement with First USA Bank and a second quarter charge of $5.8 million
pre-tax for the settlement and payment by the Company of a verdict in Iowa.

Foremost property
and casualty group's combined ratio for the third quarter of 1999 was 99.8%
compared to 91.9% for the same period last year. Due mainly to Hurricane
Floyd, third quarter catastrophe losses accounted for 6.6 points of the
increase in the combined ratio in the third quarter compared to the same
quarter of last year. The 1999 combined ratio for the first nine months
was 93.4%, which compares with 93.5% for the first nine months of 1998.

---

Written premium
by major product line is as follows:

|                     | For the Three Months Ended
September 30,1999
|-------------------- | --------------------------------------------
|                     | 1999                                        
|                     | (In thousands)                              
|                     |                                             
|Mobile Home          | $   98,418                                  
|Recreational Vehicle | 11,355                                      
|Automobile -- Direct | 4,182                                       
|Automobile -- Agency | 1,219                                       
|Basics               | 2,316                                       
|Homeowners           | 1,269                                       
|Other                | 820                                         
|Total                | $ 119,579                                   

|                     | For the Nine Months Ended
September 30, 1999
|-------------------- | --------------------------------------------
|                     | 1999                                        
|                     | (In thousands)                              
|                     |                                             
|Mobile Home          | $ 289,677                                   
|Recreational Vehicle | 40,046                                      
|Automobile -- Direct | 11,623                                      
|Automobile -- Agency | 4,792                                       
|Basics               | 6,663                                       
|Homeowners           | 2,698                                       
|Other                | 2,341                                       
|Total                | $ 357,840                                   

The Company's
written premium has increased 4.2% for the first nine months of 1999 compared
to the same period last year. Mobile home written premium had solid growth
increasing $9.7 million for the first nine months of 1999 compared to the
first nine months of 1998. Direct response automobile written premium for
the first nine months of 1999 nearly doubled from the same period last
year when the Company wrote $6 million compared to $11.6 million in 1999.

After-tax investment
income contributed $.21 per share in the third quarter of 1999 compared
to $.18 per share in the third quarter of 1998. For the first nine months
of 1999, after-tax investment income contributed $.59 per share compared
to $.55 per share for the same period last year. The majority of the increase
can be attributed to the positive cash flow from operations during the
first nine months of 1999 and the shift of equity securities to fixed maturities
(see below).

---

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)

Financial Position

The principal
sources of cash for the first nine months of 1999 were approximately $137.3
million from sales and maturities of investments and $47.2 million from
operations. The Company also borrowed an additional $6.5 million from its
line of credit, but repaid approximately $12.4 million of its debt. The
primary uses of cash were approximately $171.5 million for the purchases
of securities, real estate and equipment, $12.8 million to purchase treasury
stock and $7.2 million to pay dividends to shareholders. The Company had
$30.2 million in cash and other liquid assets at September 30, 1999.

Total invested
assets on a cost basis increased 4.8%, or $28.8 million during the first
nine months of 1999. The unrealized gain in securities available for sale
declined $11.9 million net of tax in the first nine months of 1999, of
which $3.2 million, net of tax, represents realized gains taken from the
sale of securities. The reason for the shift in investments from equity
securities to fixed maturities is the concern that there is more risk in
owning certain large cap common stocks, with high multiples, at this time
than the potential for reward. Also by investing in current return securities,
the Company has the expectation that it will be able to maintain or grow
its investment income. The Company will continue its strategy of allocating
a portion of invested assets to total return investing as opportunities
present themselves.

The Company continued
to manage its capital base and leverage ratios by repurchasing $12.8 million
of its common stock during the first nine months of 1999, under a previously
announced repurchase plan. In the first nine months of 1999 the Company
repurchased 665,695 of its shares. Since the inception of this repurchase
plan in February 1994, the Company has purchased 6,730,067 shares.

On June 24, 1999,
the Company restructured the interest rate swap on the $30 million of the
term loan that is amortizing. The interest rate was lowered from 5.705%
to 5.09% plus credit spread and the term was shortened by three years to
terminate in May 2001. The starting notional amount was $25 million.

Recent Accounting Pronoucements

FASB Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities requires
all derivatives to be recognized in financial statements and to be measured
at fair value. Gains and losses resulting from changes in fair value would
be included in income, or in comprehensive income, depending on whether
the instrument qualifies for hedge accounting and the type of hedging instrument
involved. This new standard will become effective in 2001 and, because
the Company has not typically entered into derivative contracts either
to hedge existing risks or for speculative purposes, is not expected to
have a material effect on its financial statements.

---

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)

Year 2000 Readiness Disclosure

The Year 2000
issue is the result of computer programs being written using two digits
to define the applicable year instead of four. The problem exists when
time sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. By nature, the insurance industry is highly
dependent upon computer systems because of significant transaction volumes
and date dependencies for many of its applications. The Company has completed
a comprehensive review of its computer programs to identify the systems
that would be affected by the Year 2000 problem. The Company has a comprehensive
written plan, which regularly is updated and monitored by technical personnel.
Management regularly reviews plan status. The Company also has hired an
outside consulting firm to assist in this conversion process and has completed
99% of the Year 2000 modification of its mainframe computer applications.
The Company performed a Year 2000 test of its systems and applications
during June 1999. The test results were positive and all errors discovered
were remediated and tested. The procedures used by these consultants for
the Year 2000 conversion effort have been certified by Information Technology
Association of America "ITAA." The ITAA 2000 Certification Program evaluates
the consultant's processes and methods used to develop new software or
convert existing software to meet the date-related needs of the next century.

The Company also
has identified the non-IT systems that have Year 2000 issues and has a
plan to assess, remediate and test, if necessary, these systems. The Company
will continue to assess the impact of the Year 2000 issue on the remainder
of its computer-based systems and applications throughout the remainder
of 1999.

Management also
has reviewed its Year 2000 exposure to third party customers, distributors,
suppliers and banking institutions. The Company is in the process of evaluating
the Year 2000 readiness of third parties. Significant third parties with
which the Company interfaces with regard to the Year 2000 problem include,
among others, agents, technology vendors, financial institutions, as well
as service providers and companies that provide utility infrastructure
(power, natural gas, delivery services, telecommunications). Unreadiness
by these third parties would expose the Company to the potential for loss
and impairment of business processes and activities. The Company is assessing
these risks through bilateral efforts and is considering the need for contingency
plans intended to address perceived risks. The Company cannot predict what
effect the failure of a third party to address, in a timely manner, the
Year 2000 problem would have on the Company. However, the extent to which
the computer operations, utility infrastructures and other systems of the
Company's important third parties are adversely affected could, in turn,
affect the Company's ability to operate or communicate with such third
parties and could materially affect the Company's results of operations
in any period or periods.

In connection
with the Year 2000 issue, the Company spent approximately $1.8 million
before 1997, $3.8 million in 1997 and $4.3 million in 1998. The Company
expects to spend approximately $2.8 million in 1999. These costs primarily
will consist of professional fees paid to third party providers of remedial
services. It is the Company's policy to expense all costs associated with
these systems changes. The Company also may invest in new or upgraded technology,
which has definable value lasting beyond 2000. In these instances, where
Year 2000

---

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)

compliance  is
merely ancillary, the Company may capitalize and depreciate such an asset
over its estimated useful life.

Based on currently
available information, management does not presently anticipate that the
costs to address the Year 2000 issues will have a material adverse impact
on the Company's financial condition, results of operations or liquidity.

The costs of
the project and the date on which the Company believes it will complete
the Year 2000 modifications are based on management's best estimates. There
can be no guarantee that these estimates will be achieved and actual results
could differ from those anticipated. Specific factors that might cause
differences include, but are not limited to, the ability of other companies
on which the Company's systems rely to modify or convert their systems
to be Year 2000 ready, the ability to locate and correct all relevant computer
codes, the ability of all third parties who have business relationships
with the Company to continue their businesses without interruption and
similar uncertainties. As a result, the Company is in the process of evaluating
the need for contingency plans that will address possible internal and
external scenarios that might have an adverse effect on the Company. Management
anticipates that all necessary contingency plans will be completed during
1999.

This Year 2000
Readiness Disclosure is based upon and partially repeats information provided
by the Company's outside consultants and others regarding the Year 2000
readiness of the Company and its customers, suppliers, financial institutions
and other parties. Although the Company believes this information to be
accurate, it has not independently verified such information.

Forward-Looking Statements

All statements,
other than statements of historical fact, contained in this Form 10-Q report
are forward-looking statements. Forward-looking statements generally are
accompanied by words such as "anticipate," "believe," "estimate," "project,"
"expect" or similar statements. Such forward-looking information involves
important known and unknown risks and 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 such forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, no assurance can be given that such expectations will prove
correct. Factors that could cause the Company's results to differ materially
from the results discussed in such forward-looking statements include competition
from other insurance companies, the general economic conditions, the effects
of governmental regulation, the effects of the Year 2000 on the Company's
business and the effects of weather-related catastrophes. All forward-looking
statements are expressly qualified in their entirety by the cautionary
statements in this paragraph and current and potential shareholders are
cautioned not to place undue reliance on the forward-looking statements
made in this report.

---

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The investment
portfolios of the Company are managed with the objective of maximizing
after-tax investment income and total return, while minimizing credit and
market risks to provide support for the insurance operations and overall
results of the Company. When developing the investment strategies for the
Company, management considers many factors including underwriting results,
tax impacts, regulatory requirements, fluctuations in interest rates and
other market risks. Investment decisions are managed by investment professionals
based on guidelines established by management and approved by the board
of directors.

Market risk represents
the potential for loss due to changes in the fair value of financial instruments
caused primarily by fluctuations in interest rates and equity prices. The
Company mitigates these risks by managing the maturity of their financial
instruments to provide adequate funding for the payout of their property
and casualty reserves.

The only change
in the quantitative information since year-end 1998 was the restructuring
of the interest rate swap. On June 24, 1999, the Company restructured the
interest rate swap on the $30 million of the term loan that is amortizing.
The interest rate was lowered from 5.705% to 5.09% plus credit spread and
the term was shortened by three years to terminate in May 2001. The starting
notional amount was $25 million. The following table presents the maturities
of long-term debt with the corresponding interest rate swaps on this debt.
Since the interest rate swaps effectively fix the interest rate on the
notional amount of debt, changes in interest rates have no current effect
on the interest expense recorded by the Company. Further quantitative information
can be found in Item 7A "Quantitative and Qualitative Disclosures About
Market Risk" in the Company's Form 10-K for the year ended December 31,
1998.

As of September 30, 1999:

|                           |  | Remainder of 1999 |  | 2000    |  | 2001    |  | 2002    |  | 2003    |  | Thereafter
|-------------------------- |  | ----------------- |  | ------- |  | ------- |  | ------- |  | ------- |  | ----------
|LIABILITIES
(In thousands) |  |                   |  |         |  |         |  |         |  |         |  |           
|                           |  |                   |  |         |  |         |  |         |  |         |  |           
|Long-term debt             |  | $ 1,250           |  | $ 5,000 |  | $ 5,000 |  | $ 5,000 |  | $13,000 |  | $ 52,500  

---

Average interest rate is a floating rate that is fixed by the swaps
below:

|                                   |  | Remainder of 1999 |  | 2000     |  | 2001     |  | 2002     |  | 2003 |  | Thereafter
|---------------------------------- |  | ----------------- |  | -------- |  | -------- |  | -------- |  | ---- |  | ----------
|INTEREST
RATE SWAPS
(In thousands) |  |                   |  |          |  |          |  |          |  |      |  |           
|                                   |  |                   |  |          |  |          |  |          |  |      |  |           
|Notional Amount                    |  | $ 1,250           |  | $ 13,000 |  | $ 17,500 |  | $ 50,000 |  | $ -- |  | $ --      

Pay Variable/Receive Fixed:
   Average Receive Fixed Interest Rate - 6.05% plus weighted
average credit spread of 0.578%

Duration is used
by management to estimate the value change in the Company's fixed income
securities. Price volatility and duration are directly related. Duration
is the present value of all future cash flows to be received. The duration
of the Company's fixed income portfolio as of September 30, 1999 was four
years and the market value was $389.4 million. Therefore, a 1% increase
in interest rates would equate to a decrease in market value of approximately
$15 million or 4%. Conversely, a 1% decline in interest rates would equate
to an increase in market value of approximately $15 million. Other factors
such as spread changes, call features, special redemption features and
prepayment changes will all affect the duration of the portfolio. While
duration is expressed in years, it is regarded as a percent change.

Equity price
risk is the potential loss due to changes in the value of equity securities.
Equities have more price variability than fixed securities. Historically,
equities have provided higher returns over a long period of time. As of
September 30, 1999, the Company's investment in equity securities had a
market value of $62.4 million. A 10% change in the portfolio's equity prices
would impact their value by approximately $6.2 million. All equity securities
are marketable.

All of the above
risks are monitored on an ongoing basis. Management's need to react to
significant changes in interest rates and equity prices is minimized by
the fact that the annual maturities of investments and cash flow from insurance
operations are sufficient to meet the cash flow requirements of the business.
Therefore, management has the ability to wait out these changes.

---

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

The Company and
its subsidiaries routinely are engaged in litigation as plaintiff and defendant
in the normal course of business. In the opinion of management the following
proceedings are not expected to have a material adverse effect on the Company's
consolidated financial position, cash flow or operating results.

In April 1996,
national class actions were filed by the same group of plaintiffs' attorneys
in Wisconsin, Illinois and Florida state courts against the Company and
certain other defendants alleging misrepresentations in connection with
the sale of force-placed collateral protection insurance. The complaints
sought unspecified compensatory and punitive damages. The Wisconsin case
was conditionally class certified by the Wisconsin state court, before
service of the complaint. On June 22, 1998, the Circuit Court of Waupaca
County, Wisconsin, issued an Order vacating the class certification dismissing
all claims against the Company in the Wisconsin action, without prejudice.
The case filed in the Circuit Court of the Sixth Judicial Circuit, Champaign
County, Illinois, was dismissed by stipulation without prejudice on April
6, 1999. The action filed in the Circuit Court of the Eleventh Judicial
Circuit in and for Dade County, Florida, has been stayed. The Company will
defend this remaining case, if the stay is terminated, and believes that
the case lacks merit. The Company has not established a specific reserve
for these related actions, because the amount of the Company's liability
exposure, if any, cannot be reasonably estimated.

In November 1995,
an Iowa jury returned a verdict of $688,000 in compensatory damages and
$8 million in punitive damages against Foremost Insurance Company and other
affiliated companies in a diversity action filed in the United States District
Court for the Northern District of Iowa, Central Division, for alleged
fraud, breach of contract and misappropriation of trade secrets in the
termination of an agent's contract. The Company filed post judgement motions
for a judgment notwithstanding the jury verdict, a new trial and remittitur.
On July 3, 1997, the trial court set aside the $8 million punitive damage
verdict, but denied the Company's other post-trial motions. In December
of 1997, the court conducted a new trial to determine whether punitive
damages were warranted and, on January 21, 1998, the court awarded $4 million
in punitive damages. The Company filed an appeal with the United States
Court of Appeals for the Eighth Circuit, however, in May 1999, the Court
of Appeals affirmed the lower court. In July 1999, the Company paid approximately
$5.8 million to satisfy the judgement, including interest on the punitive
damages, from the date of the January 1998 judgement to the date of payment
of the damages. Plaintiffs have filed a motion seeking pre-judgment interest
on the punitive damage award from the original November 1995 judgment until
the date of payment. The Company believes that because the trial court
set aside the original punitive damages award and granted a new trial on
all punitive damages issues, the appropriate date from which to calculate
interest on punitive damages is the January 1998 date. The parties have
filed briefs on this issue and the Company believes case law supports its
position. If plaintiffs prevail on their motion, the additional interest
payment would be approximately $500,000. The Company has not established
a specific reserve for the additional interest payment.

---

In August 1999,
the Company was named as a defendant in an action in the State Circuit
Court of Jefferson County, Mississippi purportedly filed on behalf of Foremost
policyholders. The complaint, which seeks both compensatory and punitive
damages, challenges the Company's sale of mobile home insurance containing
coverage for adjacent structures as part of the package of coverages included
in its standard policy. The complaint alleges that the Company and its
Mississippi agents failed to disclose information about the adjacent structures
coverage. The Company denies the allegations and intends vigorously to
defend the suit. The Company has removed the case to the United States
District Court for the Southern District of Mississippi. Plaintiffs have
filed a petition seeking to remand the case back to the state court. There
has been no ruling by the federal court on plaintiffs' remand motion. The
Company believes that the case lacks merit. The Company has not established
a specific reserve for this case because the amount of the Company's liability
exposure, if any, cannot be reasonably estimated.

Item 6.   Exhibits and Reports on Form 8-K

(a)        

List of Exhibits. The following documents are filed as exhibits
to this report on Form 10-Q:

|Exhibit Number | Description of Exhibit
|-------------- | ----------------------
|               |                       
|               | 2.1                   
|               |                       
|               | 3.1                   
|               |                       
|               | 3.2                   
|               |                       
|               | 4.1                   
|               |                       
|               | 4.2                   
|               |                       
|               | 4.3                   
|               |                       
|               | 4.4                   
|               |                       
|               | 4.5                   
|               |                       

---

| | 4.6  |  | Bylaws. See Exhibit 3.2 above.                                                                                                                                                                                                                                              
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.1 |  | Company's Annual Incentive Plan, restated January
1, 1998.* Incorporated by reference to Exhibit 10.1 of the Company's Annual
Report on Form 10-K for the year ending December 31, 1998, dated March
16, 1999.                                                              
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.2 |  | Company's Long-Term Incentive Plan dated December
8, 1994, as amended December 5, 1996.* Incorporated by reference to the
Company's Annual Report on Form 10-K for the year ending December 31, 1997,
dated March 17, 1997.                                                 
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.3 |  | Company's Retirement Supplement Plan, as amended
effective January 1, 1994.* Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, dated
February 24, 1994.                                                           
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.4 |  | Company's Non-Qualified Stock Option Plan, dated
February 23, 1995.* Incorporated by reference to the Company's Annual Report
on Form 10-K for the year ending December 31, 1994, dated February 23,
1995.                                                                  
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.5 |  | Amended and Restated Agreement made as of the
1st day of January 1998 between the Company and the American Association
of Retired Persons. Incorporated by reference to the Company's Annual Report
on Form 10-K for the year ending December 31, 1997, dated March 6, 1998.
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.6 |  | Director's Deferred Compensation Plan, as amended
effective January 1, 1994.* Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, dated
February 24, 1994.                                                          
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.7 |  | Executive Deferred Compensation Plan, as amended
effective January 1, 1994.* Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, dated
February 24, 1994.                                                           
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.8 |  | Employment Agreements dated as of January 1,
1990 between the Company and certain of its employees.* Incorporated by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1989, dated February 22, 1990.                                   
| |      |  |                                                                                                                                                                                                                                                                             
| | 10.9 |  | Directors' Restricted Stock Plan, dated December
8, 1994.* Incorporated by reference to the Company's Annual Report on Form
10-K for the year ending December 31, 1994, dated February 23, 1995.                                                                            
| |      |  |                                                                                                                                                                                                                                                                             

---

| | 10.10 |  | Stock Option Plan of 1998.* Incorporated by
reference to the Company's Definitive Proxy Statement filed on March 25,
1998.                            
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |  |                                                                                                                                                       
| | 10.11 |  | Form of Indemnity Agreement for directors and
officers. Incorporated by reference to the Company's Definitive Proxy Statement
filed on March 25, 1998.
| |       |  |                                                                                                                                                       
| | 27    |  | Financial Data Schedule.                                                                                                                              

* Management contract or compensatory plan or arrangement.

(b)        

Reports on 8-K. There were no reports filed on Form 8-K for the
quarter ended September 30, 1999.

---

SIGNATURES

Pursuant 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.

|                       | FOREMOST CORPORATION OF AMERICA
(Registrant)                                                                
|---------------------- | ------------------------------------------------------------------------------------------------------------
|                       |                                                                                                             
|Date: November 1, 1999 | /s/ F. Robert Woudstra
F. Robert Woudstra
Its: Chief Operating Officer and Chief Financial
          Officer
|                       |                                                                                                             
|                       |                                                                                                             
|Date: November 1, 1999 | /s/ Paul D. Yared
Paul D. Yared
Its: Senior Vice President, Secretary and
          General Counsel         

---



|Exhibit Number | Description of Exhibit
|-------------- | ----------------------
|               |                       
|               | 2.1                   
|               |                       
|               | 3.1                   
|               |                       
|               | 3.2                   
|               |                       
|               | 4.1                   
|               |                       
|               | 4.2                   
|               |                       
|               | 4.3                   
|               |                       
|               | 4.4                   
|               |                       
|               | 4.5                   
|               |                       
|               | 4.6                   
|               |                       
|               | 10.1                  
|               |                       
|               | 10.2                  
|               |                       
|               | 10.3                  
|               |                       

---

| | 10.4  |  | Company's Non-Qualified Stock Option Plan, dated
February 23, 1995.* Incorporated by reference to the Company's Annual Report
on Form 10-K for the year ending December 31, 1994, dated February 23,
1995.                                                                  
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.5  |  | Amended and Restated Agreement made as of the
1st day of January 1998 between the Company and the American Association
of Retired Persons. Incorporated by reference to the Company's Annual Report
on Form 10-K for the year ending December 31, 1997, dated March 6, 1998.
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.6  |  | Director's Deferred Compensation Plan, as amended
effective January 1, 1994.* Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, dated
February 24, 1994.                                                          
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.7  |  | Executive Deferred Compensation Plan, as amended
effective January 1, 1994.* Incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, dated
February 24, 1994.                                                           
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.8  |  | Employment Agreements dated as of January 1,
1990 between the Company and certain of its employees.* Incorporated by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1989, dated February 22, 1990.                                   
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.9  |  | Directors' Restricted Stock Plan, dated December
8, 1994.* Incorporated by reference to the Company's Annual Report on Form
10-K for the year ending December 31, 1994, dated February 23, 1995.                                                                            
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.10 |  | Stock Option Plan of 1998.* Incorporated by
reference to the Company's Definitive Proxy Statement filed on March 25,
1998.                                                                                                                                                  
| |       |  |                                                                                                                                                                                                                                                                             
| | 10.11 |  | Form of Indemnity Agreement for directors and
officers. Incorporated by reference to the Company's Definitive Proxy Statement
filed on March 25, 1998.                                                                                                                      
| |       |  |                                                                                                                                                                                                                                                                             
| | 27    |  | Financial Data Schedule.                                                                                                                                                                                                                                                    

* Management contract or compensatory plan or arrangement.

---