<PAGE>


--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000

                                       OR

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

               FOR THE TRANSITION PERIOD FROM              TO

                         COMMISSION FILE NUMBER 1-10584

                         FRONTIER INSURANCE GROUP, INC.
             (Exact name of Registrant as specified in its charter)

                DELAWARE                                         14-1681606
     (State or other jurisdiction of                          (I.R.S. Employer
     Incorporation or organization)                          Identification No.)

195 LAKE LOUISE MARIE ROAD, ROCK HILL, NEW YORK                  12775-8000
    (Address of principal executive offices)                     (Zip Code)

       Registrant's telephone number, including area code: (914) 796-2100

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 12 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.

            (x) Yes                                  ( ) No

The aggregate number of shares of the Registrant's Common Stock. $.01 par value,
outstanding on August 16, 2000 was 33,718,755.

--------------------------------------------------------------------------------




<PAGE>


                         FRONTIER INSURANCE GROUP, INC.
                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                                  Page

<S>                                                                                             <C>
     Item 1.  Consolidated Financial Statements

              Consolidated Balance Sheets at June 30, 2000 (Unaudited)
              and December 31, 1999.......................................................       3-4

              Consolidated Statements of Operations and Comprehensive Income (Loss)
              (Unaudited) for the Three Months and Six Months Ended June 30, 2000
              and 1999....................................................................         5

              Consolidated Statements of Cash Flows (Unaudited) for the Six Months
              Ended June 30, 2000 and 1999................................................         6

              Notes to the Consolidated Financial Statements (Unaudited)..................      7-12

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations.........................................     13-22

     Item 3.  Quantitative and Qualitative Disclosures About Market Risk..................        22

PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings...........................................................        23

     Item 2.  Changes in Securities.......................................................        23

     Item 3.  Defaults upon Senior Securities.............................................        23

     Item 4.  Submission of Matters to a Vote of Security Holders.........................        23

     Item 5.  Other information...........................................................        23

     Item 6.  Exhibits and Reports on Form 8-K............................................        23

     Signatures...........................................................................        24
</TABLE>

                                       2



<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS

                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                          (DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                 JUNE 30,               DECEMBER 31,
                                                                                   2000                     1999
                                                                               -----------              ------------
                                                                               (Unaudited)
<S>                                                                            <C>                       <C>
ASSETS
Investments:
   Fixed maturity securities, available for sale                               $  938,635                $1,161,655
   Equity securities, available for sale                                           73,026                    79,712
   Limited investment partnerships                                                 44,029                    43,085
   Equity investees                                                                15,976                    16,968
   Real estate and mortgage loans                                                   7,952                     8,016
   Short-term investments                                                          29,784                   105,244
                                                                               ----------                ----------
Total investments                                                              $1,109,402                 1,414,680
Cash                                                                               24,516                    43,219
Premiums and agents' balances receivable, less allowances
    for doubtful accounts (2000--$6,721; 1999--$9,864)                            139,938                   183,589
Reinsurance recoverables on:
    Paid losses and loss adjustment expenses                                       47,886                    45,025
    Unpaid losses and loss adjustment expenses                                    466,124                   473,633
Prepaid reinsurance premiums                                                       60,071                   176,607
Accrued investment income                                                          14,242                    16,848
Federal income taxes recoverable                                                    9,266                       647
Deferred policy acquisition costs                                                  52,354                   129,746
Deferred federal income taxes                                                       6,998                    10,565
Property, furniture, equipment and software                                        49,433                    57,987
Intangible assets                                                                  11,365                    44,217
Other assets                                                                       39,142                    38,774
                                                                               ----------                ----------
TOTAL ASSETS                                                                   $2,030,737                $2,635,537
                                                                               ==========                ==========
</TABLE>

See notes to the consolidated financial statements.

                                       3



<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
              (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                  JUNE 30,              DECEMBER 31,
                                                                                    2000                    1999
                                                                                 ----------             ------------
                                                                                (Unaudited)
<S>                                                                              <C>                     <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Policy liabilities:
   Unpaid losses                                                                 $  939,154              $  982,123
   Unpaid loss adjustment expenses                                                  342,713                 331,187
   Unearned premiums                                                                263,299                 649,736
                                                                                 ----------              ----------
Total policy liabilities                                                          1,545,166               1,963,046

Funds withheld under reinsurance contracts                                          123,276                 137,894
Bank debt                                                                            67,800                 142,800
Reinsurance balances payable                                                         44,066                  65,103
Other liabilities                                                                    66,581                  80,796
                                                                                 ----------              ----------
TOTAL LIABILITIES                                                                 1,846,889               2,389,639

Guaranteed preferred beneficial interest in Company's
   convertible subordinated debentures                                              167,441                 167,345

Shareholders' equity:
Preferred Stock, par  value $.01 per share
   (shares authorized and unissued: 1,000,000)                                          --                     --
Common Stock, par value $.01 per share
   (shares authorized: 150,000,000;
    shares issued: 37,646,663)                                                          376                     376
Additional paid-in capital                                                          450,886                 450,886
Accumulated other comprehensive loss, net of tax                                    (12,997)                (18,617)
Deficit                                                                            (382,002)               (314,431)
                                                                                 ----------              ----------
                                                                                     56,263                 118,214
Treasury Stock--at cost (2000-3,927,908 shares;
   1999-3,830,570 shares)                                                           (39,856)                (39,661)
                                                                                 ----------              ----------
TOTAL SHAREHOLDERS' EQUITY                                                           16,407                  78,553
                                                                                 ----------              ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                       $2,030,737              $2,635,537
                                                                                 ==========              ==========
Book value per share                                                             $     0.49              $     2.32
                                                                                 ==========              ==========
</TABLE>

See notes to the consolidated financial statements.


                                       4




<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

                                   (UNAUDITED)
                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED              SIX MONTHS ENDED
                                                          JUNE 30,                        JUNE 30,
                                                 -------------------------       -------------------------
                                                    2000            1999            2000            1999
                                                 ---------       ---------       ---------       ---------
<S>                                              <C>             <C>             <C>             <C>
REVENUES
Premiums earned                                   $130,808        $137,922        $281,512        $278,177

Net investment income                               16,261          19,164          32,061          38,694
Net realized capital gains (losses)                 (2,341)          2,307           1,304           3,722
                                                  --------        --------        --------        --------
   Total net investment income                      13,920          21,471          33,365          42,416
                                                  --------        --------        --------        --------
Total revenues                                     144,728         159,393         314,877         320,593

EXPENSES
Losses                                              82,938          54,915         160,299         112,702
Loss adjustment expenses                            36,650          23,863          67,048          48,594
Amortization of policy acquisition costs            35,398          32,178          73,910          61,796
Underwriting and other expenses                     27,218          19,276          45,202          39,897
Restructuring related charges                        4,864            --            10,060            --
ManagedComp termination fee                           --              --             4,500            --
Other corporate expenses                             7,297             675          11,284           1,435
Minority interest in income of consolidated
   subsidiary trust                                  2,779           2,720           5,522           5,487
Interest expense                                     1,515           1,972           3,324           3,277
                                                  --------        --------        --------        --------
   Total expenses                                  198,659         135,599         381,149         273,188
                                                  --------        --------        --------        --------
   Income (loss) before income taxes               (53,931)         23,794         (66,272)         47,405

Provision for income taxes:
   State                                               (25)            446             202             773
   Federal                                              60           6,992           1,097          13,856
                                                  --------        --------        --------        --------
Total income tax expense (benefit)                      35           7,438           1,299          14,629
                                                  --------        --------        --------        --------
   NET INCOME (LOSS)                               (53,966)         16,356         (67,571)         32,776
Other comprehensive gain (loss), net of tax          1,275         (14,597)          5,620         (26,151)
                                                  --------        --------        --------        --------
   TOTAL COMPREHENSIVE INCOME (LOSS)              $(52,691)       $  1,759        $(61,951)       $  6,625
                                                  ========        ========        ========        ========

Earnings (loss) per common share:
   Basic                                          $  (1.60)       $    .47        $  (2.00)       $    .92
                                                  --------        --------        --------        --------
   Diluted                                        $  (1.60)       $    .42        $  (2.00)       $    .83
                                                  --------        --------        --------        --------

Weighted average common shares outstanding:
   Basic                                            33,719          34,726          33,755          35,618
   Diluted                                          33,719          42,956          33,755          43,819

Cash dividends declared per common share          $   --          $    .07        $   --          $    .14
                                                  ========        ========        ========        ========
</TABLE>

See notes to the consolidated financial statements.

                                       5



<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                           JUNE 30,
                                                                                  -------------------------
                                                                                     2000            1999
                                                                                  ---------       ---------
<S>                                                                               <C>             <C>
OPERATING ACTIVITIES
   Net income (loss)                                                              $ (67,571)      $  32,776
   Adjustments to reconcile net income (loss) to net cash provided
     by (used in) operating activities:
         Increase (decrease) in policy liabilities                                  (51,644)         44,767
         Increase in reinsurance balances                                           (30,393)        (33,607)
         Increase in agents' balances and premiums receivable                        22,584         (40,764)
         Decrease (increase) in deferred policy acquisition costs                    12,379         (18,947)
         Increase in accrued investment income                                       (1,148)           (895)
         Deferred federal income tax expense                                           --            11,566
         Depreciation and amortization                                               18,439          10,586
         Realized capital gains (losses)                                              1,034          (3,722)
         Other                                                                       21,403          50,803
                                                                                  ---------       ---------
              NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                   (74,917)         52,563

INVESTING ACTIVITIES
   Proceeds from sales of fixed maturity securities                                 135,756          34,534
   Proceeds from calls, paydowns and maturities of fixed maturity securities         40,109          70,380
   Proceeds from sales of equity securities                                          12,273          23,897
   Proceeds from sales of limited partnership investments                            10,150            --
   Proceeds from cancellation of interest rate swap                                   1,560            --
   Proceeds from sales of wholly-owned subsidiaries, net of cash transferred
      and selling expenses                                                          150,289            --
   Purchases of fixed maturity securities                                          (212,409)       (217,669)
   Purchases of equity securities                                                   (12,441)        (29,783)
   Purchases of limited partnership investments                                     (11,089)
   Purchases of property, furniture, equipment and software                          (1,470)        (13,947)
   Fees paid and funds loaned to ManagedComp Holdings, Inc. in connection
      with termination of proposed acquisition                                       (8,500)           --
   Purchases of intangible assets                                                      (538)        (13,025)
   Short-term investments, net                                                       27,363          90,784
   Other, net                                                                           356          (5,419)
                                                                                  ---------       ---------
              NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES                   131,409         (60,248)

FINANCING ACTIVITIES
   Proceeds from bank borrowings                                                       --            35,300
   Repayment of bank borrowings                                                     (75,000)           --
   Cash dividends paid                                                                 --            (5,027)
   Issuance of Common Stock                                                            --               461
   Purchases of Treasury Stock, net                                                    (195)        (25,781)
                                                                                  ---------       ---------
              NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                   (75,195)          4,953
                                                                                  ---------       ---------
              DECREASE IN CASH                                                      (18,703)         (2,732)
              CASH AT BEGINNING OF YEAR                                              43,219          28,335
                                                                                  ---------       ---------
              CASH AT END OF PERIOD                                               $  24,516       $  25,603
                                                                                  =========       =========
</TABLE>

See notes to consolidated financial statements

                                       6



<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with the instructions to Form 10-Q and Article 10 of
     Regulation S-X and, accordingly, do not include all of the information and
     footnotes required by generally accepted accounting principles for complete
     financial statements and should be read in conjunction with the
     consolidated financial statements and notes thereto included in the
     Company's Annual Report on Form 10-K for the year ended December 31, 1999.
     In the opinion of management, all adjustments (consisting of only normal,
     recurring accruals) considered necessary for a fair presentation have been
     included. Certain amounts in the 1999 financial statements have been
     reclassified to conform to the 2000 presentation. All share and per share
     information presented in the accompanying financial statements and these
     notes thereto have been adjusted to give effect to stock dividends and
     stock splits. Operating results for the six-month period ended June 30,
     2000 are not necessarily indicative of the results that may be expected for
     the year ending December 31, 2000. Also, refer to "Management's Discussion
     and Analysis of Financial Condition and Results of Operations" for
     disclosures regarding the Company's reportable segments.

2.   EARNINGS PER COMMON SHARE

     The following table sets forth the computation of basic and diluted
     earnings (loss) per common share (amounts in thousands, except per share
     data):

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                                JUNE 30,                    JUNE 30,
                                                                        ----------------------      ----------------------
                                                                          2000           1999         2000           1999
                                                                        --------       -------      --------       -------
<S>                                                                     <C>            <C>          <C>            <C>
NUMERATOR:
Net income (loss)                                                       $(53,966)      $16,356      $(67,571)      $32,776
                                                                        ========       =======      ========       =======
Numerator for basic earnings (loss) per share--income (loss)
    available to common shareholders                                    $(53,966)      $16,356      $(67,571)      $32,776

Effect of dilutive securities:
    Minority interest in income of consolidated subsidiary trust            --           1,768          --           3,567
                                                                        --------       -------      --------       -------
    Numerator for diluted earnings (loss) per share--income (loss)
        available to common shareholders after assumed conversions      $(53,966)      $18,124      $(67,571)      $36,343
                                                                        ========       =======      ========       =======
DENOMINATOR:
Denominator for basic earnings (loss) per share--weighted average
    shares                                                                33,719        34,726        33,755        35,618
Effect of dilutive securities:
    Convertible Trust Originated Preferred Securities                       --           8,094          --           8,094
    Employee stock options                                                  --             136          --             107
                                                                        --------       -------      --------       -------
Dilutive potential common shares                                            --           8,230          --           8,201
                                                                        --------       -------      --------       -------
Denominator for diluted earnings (loss) per share--adjusted
    weighted average shares and assumed conversions                       33,719        42,956        33,755        43,819
                                                                        ========       =======      ========       =======
Earnings (loss) per common share:
    Basic                                                               $  (1.60)      $   .47      $  (2.00)      $   .92
                                                                        ========       =======      ========       =======
    Diluted                                                             $  (1.60)      $   .42      $  (2.00)      $   .83
                                                                        ========       =======      ========       =======
</TABLE>

                                       7



<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                   (UNAUDITED)

3.   SALES OF SUBSIDIARIES

     Effective January 1, 2000, the Company sold Lyndon Insurance Group, Inc.
     ("Lyndon") to Protective Life Insurance Company for $163.5 million in cash,
     subject to certain purchase price adjustments. After legal and advisory
     fees, other selling costs and estimated purchase price adjustments, the
     Company recognized a gain of approximately $1.2 million, which is included
     in net realized capital gains in the accompanying consolidated statements
     of operations.

     Following is a summary of Lyndon's revenues and expenses included in the
     accompanying statements of operations (in thousands, except for per
     share data):

<TABLE>
<CAPTION>
                                        THREE MONTHS ENDED  SIX MONTHS ENDED
                                           JUNE 30, 1999      JUNE 30, 1999
                                           -------------      -------------
<S>                                           <C>                <C>
Premiums earned                               $18,268            $37,324
Net investment income                           3,945              7,832
Realized gains                                    319                340
                                              -------            -------
   Total revenues                              22,532             45,496

Losses                                          9,003             19,109
LAE                                             1,313              2,460
Amortization of policy acquisition costs        3,055              6,476
Underwriting and other expense                  4,879              8,403
                                              -------            -------
   Total expenses                              18,250             36,448
                                              -------            -------
      Income before income taxes                4,282              9,048
Provision for income taxes                      1,278              2,747
                                              -------            -------
   Net income                                 $ 3,004            $ 6,301
                                              =======            =======

Earnings per common share:
   Basic                                      $   .09            $   .18
                                              -------            -------
   Diluted                                    $   .07            $   .14
                                              =======            =======
</TABLE>




     Effective June 1, 2000, the Company sold Regency Insurance Company
     ("Regency") to Tomoka Re Holdings, Inc. for approximately $6.7 million in
     cash. After transaction costs, the Company recognized a loss of
     approximately $2.3 million, which is included in net realized capital gains
     in the accompanying consolidated statements of operations. Regency's
     operations were not material to the consolidated financial statements. For
     the three and six-months ended June 30, 1999, Regency recognized net income
     of approximately $120,000 and $155,000, respectively. For the two and
     five-months ended May 31, 2000, Regency recognized net losses of
     approximately $900,000 and $1.4 million, respectively.

     Following is a summary of the assets and liabilities related to Lyndon
     and Regency which are included in the accompanying consolidated balance
     sheet at December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                              LYNDON        REGENCY        TOTAL
                                              ------        -------        -----
<S>                                          <C>            <C>           <C>
ASSETS
  Invested assets                            $306,420       $10,651       $317,071
  Other assets                                214,817        37,119        251,936
                                             --------       -------       --------
                                             $521,237       $47,770       $569,007
                                             ========       =======       ========

LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities:
  Unpaid losses and LAE                      $ 46,168       $14,542       $ 60,710
  Unearned premiums                           286,178        19,154        305,332
  Other liabilities                            38,139         3,739         41,878
                                             --------       -------       --------
Total liabilities                             370,485        37,435        407,920
Shareholder's equity                          150,752        10,335        161,087
                                             --------       -------       --------
Total liabilities and shareholder's equity   $521,237       $47,770       $569,007
                                             ========       =======       ========
</TABLE>

     In June 2000, the Company closed its wholly-owned subsidiary, OneStop.Com,
     Inc. ("OneStop"), an e-commerce entity created during the second quarter of
     1999 to market products and services to affinity groups via the internet.

                                       8



<PAGE>


     OneStop recognized net losses of approximately $122,000 for the three and
     six-months ended June 30, 1999, and approximately $3.2 million and $10.7
     million for the three and six-months ended June 30, 2000, respectively.
     Such losses, excluding a $3.7 million impairment charge and approximately
     $756,000 in severance costs incurred during the second quarter and
     classified as restructuring related charges in the accompanying statements
     of operations, are included in other corporate expenses in the accompanying
     consolidated statements of operations.

     On July 11, 2000, the Company sold OneStop to SolutionsAmerica, Inc.
     ("SolutionsAmerica") (see Note 11 Subsequent Events).

4.   COMPREHENSIVE INCOME

     The components of comprehensive income (loss) are as follows (in
     thousands):

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                            JUNE 30,                           JUNE 30,
                                                  --------------------------          --------------------------
                                                    2000              1999              2000              1999
                                                  --------          --------          --------          --------
<S>                                               <C>               <C>               <C>               <C>
Net income (loss)                                 $(53,966)         $ 16,356          $(67,571)         $ 32,776
Other comprehensive income (loss):
    Unrealized gains (losses), net of tax            1,275           (14,597)            5,620           (26,151)
                                                  --------          --------          --------          --------
      Total comprehensive income (loss)           $(52,691)         $  1,759          $(61,951)         $  6,625
                                                  ========          ========          ========          ========
</TABLE>

     Accumulated other comprehensive loss consists of unrealized losses of $13
     and $18.6 million, net of related deferred federal income tax, as of June
     30, 2000 and December 31, 1999, respectively.

5.   REINSURANCE

     The effect of reinsurance on premiums written and earned is as follows (in
     thousands):

<TABLE>
<CAPTION>
                      THREE MONTHS ENDED JUNE 30,                             SIX MONTHS ENDED JUNE 30,
           --------------------------------------------------     ---------------------------------------------------
                    2000                       1999                        2000                        1999
                  PREMIUMS                   PREMIUMS                    PREMIUMS                    PREMIUMS
           ----------------------     -----------------------     -----------------------     -----------------------
           Written       Earned       Written        Earned       Written        Earned       Written        Earned
           --------     ---------     ---------     ---------     ---------     ---------     ---------     ---------
<S>        <C>          <C>           <C>           <C>           <C>           <C>           <C>           <C>
Direct     $ 80,091      $164,168      $252,308      $201,910      $256,134     $ 356,917     $ 456,472     $ 394,588
Assumed      35,604        24,000         5,185        10,158        53,964        33,983        17,672        20,287
Ceded       (27,061)      (57,360)      (81,703)      (74,146)      (72,078)     (109,388)     (153,408)     (136,698)
           --------      --------      --------      --------      --------     ---------     ---------     ---------
Net        $ 88,634      $130,808      $175,790      $137,922      $238,020     $ 281,512     $ 320,736     $ 278,177
           ========      ========      ========      ========      ========     =========     =========     =========
</TABLE>


     The effect of reinsurance ceded decreased (increased) incurred loss and
     loss adjustment expense ("LAE") as follows (in thousands):

<TABLE>
<CAPTION>
                   THREE MONTHS ENDED JUNE 30,  SIX MONTHS ENDED JUNE 30,
                   ---------------------------  -------------------------
                        2000          1999         2000         1999
                        ----          ----         ----         ----
<S>                  <C>            <C>          <C>          <C>
Incurred losses       $30,009       $50,031      $65,237      $89,472
Incurred LAE           (1,016)       10,553        5,647       16,808
</TABLE>

                                       9



<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     Commutation of Unicover Agreement

     During the first quarter of 2000, the Company rescinded a reinsurance
     agreement with Reliance Insurance Company related to certain workers'
     compensation programs placed through Unicover Managers. As a result of the
     recission, the Company reversed approximately $12.3 million and $10.3
     million of previously ceded premiums written and earned, respectively.
     Additionally, the Company reversed approximately $4.9 million of ceded
     commission income and approximately $8.1 million of ceded incurred losses
     and LAE. Also, the Company received a cancellation fee of approximately
     $3.7 million, which is reflected in underwriting and other expenses in the
     accompanying consolidated statements of operations.

6.   CREDIT FACILITY AND DEBT COVENANTS

     The Company is in violation of certain financial covenants under the terms
     of the credit facility with a group of five banks, the head of which is
     Deutsche Bank A.G., New York Branch ("Deutsche Bank"). These violations
     permit Deutsche Bank to elect to accelerate repayment of amounts
     outstanding under the credit facility and exercise their rights with
     respect to the stock and ownership interests pledged as collateral.

     In addition, the Company is in violation of certain financial
     cross-covenants included in agreements underlying the guarantees by the
     Company of the bank loan to Douglass/Frontier LLC and amounts borrowed
     under the officer loan program. These violations permit the lender to
     accelerate repayment of amounts borrowed, which would likely result in a
     demand for payment from the Company.

     The Company is currently negotiating revisions to its financial covenants.

7.   RELATED PARTY TRANSACTIONS

     As previously disclosed in the Company's Form 10-K, at December 31, 1999,
     the Company maintained a 60% interest in Metro Partners, Inc. ("Metro
     Partners"). Metro Partners, organized in 1998 by an executive vice
     president and a director of the Company, provides administrative services
     to insurance agents and brokers. During the first quarter of 2000, the
     Company purchased Emmis Holdings, a holding company which owned 30% of
     Metro Partners for approximately $97,000, thus increasing the Company's
     ownership in Metro Partners to 90%. The purchase price for the additional
     30% interest exceeded the related net tangible assets by approximately
     $750,000, which amount was immediately written off and is reflected in
     other corporate expenses in the accompanying consolidated statements of
     operations.

     On June 15, 2000, the Company entered into a restructuring agreement (the
     "Agreement") related to its ownership interest in Metro Partners. In
     exchange for its 90% ownership interest, the Company received 1,040 shares
     of non-voting, non-convertible 8% cumulative preferred stock, and a five
     year warrant to purchase up to 15% of Metro Partner's common stock at a
     purchase price of $5 per share. The preferred stock is redeemable at the
     option of Metro Partners at a price of $5,000 per share, plus accrued
     dividends. At least 50% of cumulative dividends are required to be paid in
     cash each year commencing on June 15, 2001. In addition, the Agreement
     provides for mandatory redemptions of the preferred stock equal to ten
     percent of the net cash proceeds received at the closing of any equity
     financing secured by MetroPartners.

     The Company is carrying its investment in the preferred stock at
     approximately $530,000 representing the carrying value of its ownership
     interest in Metro Partners at the date of the restructuring agreement.
     No value was assigned to the warrant.

     Net operating losses recognized by Metro Partners for the three and
     six-months ended June 30, 2000, and included in other corporate expenses
     in the accompanying consolidated statements of operations amounted to
     approximately $100,000 and $1 million, respectively.

                                       10



<PAGE>


                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                   (UNAUDITED)

8.   RESTRUCTURING RELATED CHARGES

     As part of its Corrective Action Plan ("CAP") implemented during the first
     quarter of 2000, the Company has decided to reduce staffing levels,
     including closing or selling several of its underwriting operations.

     During the first quarter of 2000, the Company incurred severance costs of
     approximately $2.7 million related to the termination of approximately 117
     employees. In addition, goodwill of approximately $2.5 million related to
     the closure of a small underwriting operation within the Environmental,
     Excess and Surplus Lines Division was written off. During the second
     quarter of 2000, the Company incurred severance costs of approximately $1.2
     million related to the termination of approximately 194 employees.

     Restructuring related charges also include a write-down of approximately
     $3.7 million for certain assets held for sale at June 30, 2000 related to
     closure of OneStop during the second quarter (see to Note 3 - Sales of
     Subsidiaries).

     Following is a summary of the accrued severance costs included in other
     liabilities in the accompanying balance sheet:

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED         SIX MONTHS ENDED
                                      -------------------------------  ----------------
                                      MARCH 31, 2000    JUNE 30, 2000    JUNE 30, 2000
                                      --------------    -------------  ----------------
<S>                                       <C>              <C>              <C>
Balance at beginning of period            $ --            $ 2,071          $  --
    Provision for severance costs          2,687            1,164            3,851
    Severance benefits paid                 (616)          (2,532)          (3,148)
                                           ------         -------           -------
Balance at end of period                  $2,071          $   703          $   703
                                          ======          =======          =======
</TABLE>

     The Company expects additional restructuring and related severance costs
     will be incurred throughout the remainder of 2000 as it continues to
     implement its expense reduction and cost containment initiatives.

9.   IMPAIRMENT OF INTANGIBLE ASSETS

     In April 2000, the Company's insurance subsidiaries were downgraded to C++
     ("Marginal") by A.M. Best, Inc. ("A.M. Best"). In July 2000, the Surety
     Bond Branch of the United States Treasury removed Frontier Insurance
     Company ("Frontier") and Frontier Pacific Insurance Company ("Frontier
     Pacific") from its listing of insurance companies deemed acceptable for the
     purpose of writing certain bonds ("T-Listing"), primarily subdivision,
     customs and miscellaneous guarantee bonds.

     Primarily due to the downgrade by A.M. Best and the loss of Frontier's and
     Frontier Pacific's T-Listing, during the second quarter of 2000 the Company
     wrote off approximately $2.7 million and $7.4 million of intangible assets
     related to previous acquisitions of certain insurance agencies and renewal
     rights in its Environmental, Excess and Surplus Lines Division and
     Surety Division, respectively. The Company determined that the expected
     undiscounted cash flows related to the business to be generated by the
     acquired agencies or renewal rights would not be sufficient to support
     the valuation of the related intangible asset. The total $10.1 million
     impairment charge is included in underwriting and other expenses in
     the accompanying consolidated statements of operations.

                                       11



<PAGE>


10.  OFFICER LOAN PROGRAM

     In December 1998, the Company initiated a program to facilitate the
     purchase of its Common Stock by key management executives. Under the
     program, a financial institution loaned funds to the executive for such
     purchase and the shares were pledged with the financial institution as
     collateral for the loan by the executive, who is be responsible for its
     repayment and payment of the related interest. The amount borrowed by the
     executive is guaranteed by the Company. At June 30, 2000, the total amount
     borrowed by current and former executives and guaranteed by the Company was
     approximately $4.5 million.

11.  SUBSEQUENT EVENTS

     On July 17, 2000, the Company sold OneStop to SolutionsAmerica, a privately
     owned development stage e-commerce entity, in exchange for one million
     shares of SolutionsAmerica common stock, representing an approximate 10%
     ownership interest in SolutionsAmerica.

     On August 4, 2000, the Company sold to Gulf Insurance Company ("Gulf") the
     renewal rights to policies related to its environmental, excess and
     surplus lines casualty business and certain classes of surety business
     (collectively, the "Business"). Under the agreement, Gulf is obligated to
     pay the Company 30% of the insurance premiums for the renewal term from
     policies written by Gulf or its affiliates with respect to the Business
     (and, in certain limited instances, with respect to new policies) and an
     additional 5% of the premiums, if any, in excess of $50 million. Gulf made
     a non-refundable advance payment of $8.4 million at the closing against
     these obligations and is obligated to make an additional non-refundable
     advance payment of $3.6 million in November 2000, provided that the
     Company has complied with its obligations to promptly refund premiums to
     customers of the Business that replace their Frontier policies with
     policies written by Gulf.

     On August 9, 2000, Frontier entered into an Agreement to Grant an Option to
     Purchase Aggregate Reinsurance (the "Option Agreement") with National
     Indemnity Company ("National"). Under the Option Agreement, Frontier has
     the right, but not the obligation, to purchase reinsurance from National
     Indemnity covering approximately $515 million of loss and LAE reserves for
     accident years 1999 and prior. The reinsurance arrangement would also
     provide for an adverse development cover for up to $300 million in
     additional loss and LAE reserves. The reinsurance premium for the proposed
     coverage would be approximately $505 million and Frontier would also pay
     the accrued interest on such amount from July 1, 2000 until the date a
     reinsurance agreement is executed. As consideration for the option, which
     expires on September 27, 2000, Frontier paid $15 million which amount would
     be applied to the reinsurance premium if Frontier exercises the Option.
     The proposed reinsurance arrangement would be accounted for on a
     retrospective basis and is subject to approval by certain of the Company's
     existing reinsurers and regulatory authorities.

                                       12




<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This Quarterly Report, on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 which are not historical facts, and
involve risks and uncertainties that could cause actual results to differ
materially from those expected and projected. Such risks and uncertainties
include the following: recent rating agency downgrades, lack of liquidity,
regulatory agency oversight, the need to renegotiate financial covenants under
which the Company is in violation, general economic conditions and conditions
specific to the property and casualty insurance industry, including its cyclical
nature, regulatory changes and conditions, rating agency policies and practices,
competitive factors, claims development and the impact thereof on loss reserves
and the Company's reserving policies, the adequacy of the Company's reinsurance
programs, developments in the securities markets and the impact on the Company's
investment portfolio, changes in generally accepted accounting principles and
the risk factors set forth in the Company's other Securities and Exchange
Commission filings. Accordingly, there can be no assurance that the actual
results will conform to the forward-looking statements in this Quarterly Report.

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
Quarterly Report and with the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.

REPORTABLE SEGMENTS

The Company currently writes in excess of 150 insurance programs through six
reportable segments: Professional Liability (previously the Health Care
segment); Surety; Alternative Risk; Specialty Programs; Environmental, Excess
and Surplus Lines; and Personal and Credit-Related. The Company's reportable
segments are divisions that offer different types of coverages and are managed
separately because of the specialized nature of the related products
underwritten.

During the second quarter of 2000, the Company changed the structure of its
operating segments. The change in segments involved the reclassification of the
Company's health and human services business from the Health Care Division
(renamed the Professional Liability Division) to the Specialty Programs
Division, and the reclassification of the Company's errors and omissions and
director and officer liability business from the Specialty Division to the
Professional Liability Division. All information for the Company's reportable
segments has been restated to reflect the change in segment composition.

The following is a summary of premiums earned by segment (in thousands):

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED           SIX MONTHS ENDED
                                                          JUNE 30,                     JUNE 30,
                                                 ------------------------      ----------------------
                                                    2000           1999          2000          1999
                                                 ---------       --------      --------      --------
<S>                                              <C>             <C>           <C>           <C>
NET PREMIUMS EARNED BY SEGMENT:
Professional Liability                           $ 23,493       $ 27,483      $ 50,655      $ 57,119
Surety (1)                                         26,974         22,812        57,426        45,887
Alternative Risk                                    6,182          6,601        25,386        14,005
Specialty Programs                                 52,437         44,097       104,518        84,046
Environmental, Excess and Surplus Lines (1)        14,864         13,907        29,290        30,829
Personal and Credit Related(2):
  Lyndon                                             --           18,268          --          37,324
  Other                                             6,858          4,754        14,237         8,967
                                                 --------       --------      --------      --------
     Total                                       $130,808       $137,922      $281,512      $278,177
                                                 =========      ========      ========      ========
</TABLE>

The following is a summary of profit (loss) by segment (in thousands):

                                       13



<PAGE>


<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED             SIX MONTHS ENDED
                                                           JUNE 30,                      JUNE 30,
                                                   -----------------------       -----------------------
                                                     2000           1999           2000           1999
                                                   --------       --------       --------       --------
<S>                                                <C>            <C>            <C>            <C>
SEGMENT PROFIT (LOSS):
  Professional Liability                           $ (7,328)       $(1,679)      $(14,613)       $(3,935)
  Surety (1)                                        (10,058)         3,664        (10,417)         7,449
  Alternative Risk                                    3,526          4,306          6,708          5,659
  Specialty Programs                                (30,285)          (112)       (47,087)         1,924
  Environmental, Excess and Surplus Lines (1)        (6,085)         2,544         (3,276)         4,360
  Personal and Credit Related: (2)
    Lyndon                                             --             (504)          --              362
    Other                                            (1,578)          (503)        (1,870)          (631)
                                                   --------        -------       --------        -------
Total segment profit (loss)                        $(51,808)         7,689        (70,555)        15,188

Reconciling items:
    Total net investment income                      13,920         21,471         33,365         42,416
    Interest expense                                 (4,294)        (4,692)        (8,846)        (8,764)
    Other corporate (expenses) income, net          (11,749)          (674)       (20,236)        (1,435)
                                                   --------        -------       --------        -------
Consolidated income (loss) before taxes            $(53,931)       $23,794       $(66,272)       $47,405
                                                   ========        =======       ========        =======
</TABLE>

(1)  In August 2000, the Company sold the renewal rights to certain classes of
     business written through these segments (see Note 11 of the notes of the
     consolidated financial statements.

(2)  Effective January 1, 2000 the Company sold Lyndon Insurance Group, Inc.
     ("Lyndon") through which the majority of business in this segment was
     written in 1999. Effective June 1, 2000 the Company sold Regency Insurance
     Company through which the majority of business in this segment has been
     written in 2000.

The following table sets forth the Company's combined ratio calculated on
statutory basis ("Statutory Combined Ratio") and on the basis of generally
accepted accounting principles ("GAAP Combined Ratio") for the periods
indicated:

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED      SIX MONTHS ENDED
                                                             JUNE 30,              JUNE 30,
                                                       ------------------      ----------------
                                                         2000       1999        2000      1999
                                                        -----       ----       -----      ----
<S>                                                      <C>        <C>         <C>       <C>
STATUTORY COMBINED RATIO:
Losses                                                   65.7%      40.2%       64.2%     40.9%
Loss adjustment expenses ("LAE")                         27.9       18.6        23.7      18.7
Underwriting and other operating expenses                50.4       33.2        46.2      34.4
                                                        -----       ----       -----      ----
    Total combined ratio                                144.0%      92.0%      134.1%     94.0%
                                                        =====       ====       =====      ====
GAAP COMBINED RATIO
Losses                                                   63.4%      39.8%       56.9%     40.5%
LAE                                                      28.0       17.3        23.8      17.5
Underwriting and other operating expenses                57.2       37.8        51.5      37.1
                                                        -----       ----       -----      ----
    Total combined ratio                                148.6%      94.9%      132.2%     95.1%
                                                        =====       ====       =====      ====
</TABLE>

SEGMENT RESULTS

Overall, segment results for the quarter and six months ended June 30, 2000
reflect the fact that loss reserves at June 30, 1999 proved to be significantly
deficient based on the results of an in-depth actuarial study completed during
the third quarter of 1999. In addition, during the second quarter of 2000, the
Company increased overall reserves by approximately $24 million.

During the second quarter of 2000, the Professional Liability Division results
were negatively impacted by an increase in reserves of approximately $6 million.
This increase was primarily related to medical malpractice and workers'
compensation business produced through Western Indemnity Insurance Company.

The Surety Division results were negatively impacted by an increase in reserves
of approximately $10 million. Such increase was primarily due to one large
self-insured workers' compensation bond claim for approximately $7 million.

The results for the Alternative Risk Division reflect a net benefit of
approximately $1 million, related to the recession of the Unicover agreement in
the first quarter of 2000.

Specialty Program results were especially negatively impacted by a short-term
auto rental program written through a business unit which was closed during the
first quarter of 2000. During the second quarter of 2000, reserves relating to
this program were increased by approximately $4.2 million, which resulted in
loss and LAE ratios of 90% and 35%, respectively. Additionally, prior accident
years reserves were increased by approximately $4 million due to adverse
development in a discontinued apartment owners program.

In addition to the higher loss and LAE expenses, results for the Environmental,
Excess and Surplus Lines and Surety Divisions reflect the write-off of
intangible assets of approximately $5.2 million and $7.4 million, respectively,
during the year 2000. Severance costs of approximately $3.1 million are also
included in the 2000 results.

Finally, overall expense levels in 2000, as compared to 1999, excluding the
effects of impairment, severance costs, and the Lyndon disposition, are higher
in that certain costs are not declining in direct proportion to the decrease of
earned premiums as a result of recent rating agency downgrades.

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

NET PREMIUMS EARNED

The $7.1 million or 5.2% decrease in net premiums earned during the three months
ended June 30, 2000 compared to the same period in 1999 was primarily
attributable to the sale of Lyndon, and planned decreases in unprofitable
programs within the Professional Liability Division. The decreases in these
divisions were offset by the growth in premiums earned within the Surety and
Specialty Programs Divisions. The growth in

                                       14



<PAGE>


premiums earned for these two divisions does not reflect the full negative
impact on premium written that the recent rating agency downgrade and the loss
of Frontier's and Frontier Pacific's T-Listing is expected to have.

Net premiums earned for the Professional Liability Division decreased 15% from
$27.5 million during the three-month period ended June 30, 1999 to $23.5
million for the same period in 2000. Beginning in 1998, the Company began taking
various actions to improve the results of its medical malpractice business,
including exiting certain high risk classes, terminating agents, increasing
rates, and implementing more stringent underwriting guidelines for both new
and renewal business. These actions contributed to an approximate $6.2
million decrease in premiums earned in the second quarter of 2000 from the
second quarter of 1999. This decrease was slightly offset by the growth in
a workers' compensation program for health care facilities written through one
managing general agent which had an increase of $2.2 million in the second
quarter of 2000 from the same period in 1999.

Net premiums earned for the Surety Division increased 18.2% from $22.8 million
during the three-month period ended June 30, 1999 to $27 million for the same
period in 2000 due to the acquisition of several bond agencies and geographic
expansion throughout 1999. Growth occurred primarily in the contract and license
and permit bond programs, which increased approximately $1.1 million and $1.7
million, respectively. Also, a miscellaneous performance bond program that the
Company began writing in May of 1999 contributed an additional $1.3 million of
earned premiums for the second quarter of 2000.

Net premiums earned for the Alternative Risk and Environmental, Excess and
Surplus Lines Division remained relatively flat in the second quarter of 2000
compared to the second quarter of 1999.

The $8.3 million increase in net premiums earned in the Specialty Programs
Division during the second quarter of 2000 from the comparable 1999 quarter
was primarily attributable to the Company's focus on certain specialty sectors
of the commercial auto market. Most notably, the Company began a short-term
auto rental program in March of 1999 that generated an approximate $3.2
million increase in net premiums earned for the second quarter of 2000 over the
same period in 1999. A variety of smaller commercial auto related programs
generated an additional increase of $2.4 million in net premiums earned in the
second quarter of 2000 over the 1999 second quarter. In addition, a California
workers' compensation program introduced in March of 1999 generated an
approximate increase of $2.5 million in net premiums earned in the second
quarter of 2000. Growth in smaller programs including a summer camp program,
an elevator contractor program, and an auto dealer program was offset by a
decrease in net premiums earned in the health and human services programs.
This decrease is the result of lower retention of such business under a new
reinsurance contract and loss of business due to competitive pricing conditions
in the market.

The 70.2% decrease in net premiums earned for the Personal and Credit-Related
Division was primarily due to the sale of Lyndon. This decrease was slightly
offset by growth in the remaining programs in the Division, specifically an
increase of approximately $2.8 million in a mobile homeowners program which
the Company began writing through one managing general agent in 1999. On
May 31, 2000, the Company sold Regency Insurance Company, the subsidiary through
which the mobile homeowners program was written (see Note 3 of the notes to
the consolidated financial statements).

NET INVESTMENT INCOME

Net investment income decreased from $19.2 million in the second quarter of 1999
to $16.3 million in the second quarter of 2000 primarily due to the sale of
Lyndon. During the second quarter of 1999, Lyndon accounted for approximately
$3.9 million of net investment income. Excluding Lyndon, net investment income
for the second quarter of 2000 increased 6.8% over the comparable period in
1999. The increase was primarily the result of a change in investment mix from
tax exempt securities to higher yielding taxable securities and the capital
infusion of $80 million into Frontier Insurance Company.

During the second quarter of 2000, the Company realized a net capital loss of
$2.3 million, compared to a net realized capital gain of $2.3 million in the
second quarter of 1999, primarily due to the capital loss resulting from the
sale of Regency Insurance Company.

                                       15



<PAGE>


LOSSES AND LAE

The overall GAAP loss and LAE ratio increased from 57.1% in the second quarter
of 1999 to 91.4% in the second quarter of 2000 due to approximately $24 million
in adverse reserve development during the second quarter of 2000, and the fact
that reserve levels at June 30, 1999 proved to be significantly deficient based
on the results of an in-depth actuarial study completed during the third quarter
of 1999.

Approximately $6 million of the increase related to accident year 1999 medical
malpractice and workers' compensation business written through Western Indemnity
Insurance Company and included in the Professional Liability Division. Adverse
development in the Specialty Programs Division of approximately $4.2 million and
$4 million related to a short-term auto rental program and a discontinued
apartment owners prorgam, respectively. The remaining $10 million of adverse
development was in the Suerty Division and was primarily related to one
self-insured workers' compensation bond claim for approximately $7 million.

Excluding the $24 million in adverse development, the loss and LAE ratio
remained consistent with the GAAP loss and LAE ratio during the first quarter
of 2000.

AMORTIZATION OF POLICY ACQUISITION COSTS

For the three months ended June 30, 2000, amortization of policy acquisition
costs represented 27.1% of net premiums earned compared to 23.3% (24.3%
excluding Lyndon) for the comparable 1999 period. The increase, excluding
Lyndon, was primarily due to the Company's increased use of its cut-through
reinsurance agreements  and, to a lesser extent, a change in business mix
with increases in segments, such as surety, which produce business with higher
commission rates.

As a result of recent rating agency downgrades, effective December 1, 1999, the
Company entered into cut-through reinsurance agreements with "A" rated insurance
companies, Clarendon Insurance Group ("Clarendon"), and for surety business, a
subsidiary of NAC Reinsurance Corporation ("NAC Re"). These cut-through
arrangements effectively provide assurance to the Company's insureds that
Clarendon or NAC Re will pay claims in the event of the Company's insolvency.
For the three months ended June 30, 2000, the Company incurred cut-through fees
of approximately $2.4 million.

UNDERWRITING AND OTHER EXPENSES

Underwriting and other expenses as a percentage of net premiums earned increased
from 14.0% (12.1% excluding Lyndon) in 1999 second quarter to 20.1% during the
comparable 2000 period. Excluding Lyndon, this increase was almost
entirely due to a write-off of approximately $2.7 million and $7.4 million of
intangible assets related to previously acquired insurance agencies and renewal
rights in the Environmental, Excess and Surplus Lines Division and Surety
Division, respectively. For additional disclosure regarding these asset write
downs refer to Note 9 of the Notes to the Consolidated Financial Statements -
Impairment of Intangible Assets.

OTHER CORPORATE EXPENSES

Other corporate expenses include expenses of the parent company and directly
owned non-insurance subsidiaries, reduced by other miscellaneous income. For the
three months ended June 30, 2000, other corporate expenses increased
approximately $6.6 million to $7.3 million from the comparable 1999 period.
During the second quarter of 1999, the Company created an e-commerce entity,
OneStop.Com ("OneStop"). OneStop was designed to be a business to business,
direct marketing company which offered pertinent, value-added products, services
and information to affinity groups via the internet. For the three months ended
June 30, 2000 and 1999, OneStop incurred losses included in other corporate
expenses of $3.7 million and $0.1 million, respectively. During the second
quarter of 2000 the Company ceased its OneStop operations and subsequently sold
OneStop to SolutionsAmerica, Inc. (See Notes 3 and 11 of Notes to the
Consolidated Financial Statements - Sale of Subsidiaries and Subsequent Events,
respectively).

Additionally, the results for the second quarter of 2000 included approximately
$1 million in losses resulting from the operations of Metro Partners, Inc.
("Metro Partners"). On June 15, 2000 the Company exchanged its ownership
interest in Metro Partners for non-voting, non-convertible, 8%, cumulative
preferred stock (see Note 7 of the Notes to the Consolidated Financial
Statements -

                                       16



<PAGE>


Related Party Transactions). The balance of the increase in other corporate
expenses related to several other non-insurance companies and parent company
expenses, none of which are individually significant.

RESTRUCTURING RELATED CHARGES

As part of its Corrective Action Plan ("CAP") implemented during the first
quarter of 2000, the Company recognized approximately $4.9 million of
restructuring related charges during the three months ended June 30, 2000. For
additional disclosure regarding the restructuring related charges see Note 8 of
the Notes to the Consolidated Financial Statements - Restructuring Related
Charges.

INTEREST EXPENSE

The decrease in interest expense for the three months ended June 30, 2000 was
due primarily to the repayment of principal amounts outstanding on the Deutsche
Bank credit facility of $75 million on January 21, 2000. Such decrease was
partially offset by increased interest rates related to the credit facility.

INCOME TAXES

Despite reporting a loss before taxes of approximately $53.9 million, the
Company has an estimated current tax expense of $60,000 primarily as a result of
the alternative minimum tax ("AMT"). Deferred tax benefits resulting from the
Company's operating losses generated during the quarter were entirely offset
by an increase in the deferred tax valuation allowance.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

NET PREMIUMS EARNED

Net premiums earned during the six months ended June 30, 2000 increased $3.3
million or 1.2% over the same period in 1999. The $3.3 million increase in net
premiums earned during the six months ended June 30, 2000 compared to the same
period in 1999 was primarily due to growth in premiums earned in the Surety
and Specialty Programs Divisions, offset by the decrease attributable to the
sale of Lyndon, and planned decreases in unprofitable programs within the
Professional Liability Division.

Net premiums earned in the Professional Liability Division decreased 11.3% from
$57.1 million during the six month period ending June 30, 1999 to $50.7 million
for the same period in 2000. In 1998, the Company put into place a corrective
action plan to improve the results of its medical malpractice business,
which included exiting certain high risk classes, terminating agents,
increasing rates, and implementing more stringent underwriting guidelines for
both new and renewal business. These actions contributed to an approximate $10
million decrease in premiums earned during the six months ended June 30, 2000
compared to the same period in 1999. The decrease was slightly offset by
the growth of a workers' compensation program for health care facilities written
through one managing general agent which increased $3.7 million during
the six months ended June 30, 2000 from the same period in 1999.

The $11.4 million increase in net premiums earned in the Alternative Risk
Division during the six months ended June 30, 2000 compared to the same
period in 1999 was primarily attributable to the effect of the Unicover
recission which took place during the first quarter of 2000 (see note 5 of
notes to the consolidated financial statements).

The $1.5 million decrease in net premiums earned in the Environmental, Excess,
and Surplus Lines Division resulted from the inability to renew business during
the first quarter of 2000 due to rating agency downgrades, which particularly
negatively affected the California contractors' liability and environmental and
pollution liability programs. Net premiums earned for the second quarter of 2000
were consistent with the same period in 1999 since fronting arrangements, which
became available late in the first quarter, made it possible to renew some
business that would have otherwise been lost during the second quarter.

Net premiums earned for the Surety Division increased 25.1% from $45.9 million
during the six-month period ended June 30, 1999 to $57.4 million for the same
period in 2000 due to the acquisition of several bond agencies and geographic
expansion through out the 1999 year.

                                       17



<PAGE>


Growth occurred primarily in the contract and license and permit bond programs
with increases of approximately $2.7 million, and $3.6 million respectively. In
addition, a miscellaneous performance bond program which the Company began
writing in May of 1999 contributed an additional $3 million of earned premiums
for the six-month period ended June 30, 2000.

The $20.5 million increase in net premiums earned in the Specialty Programs
Division was primarily attributable to the Company's focus on certain specialty
sectors of the commercial auto market. Most notably, the Company began a short
term auto rental program in March of 1999 that generated an approximate $7
million increase in net premiums earned for the six-month period ended June 30,
2000 over the same period in 1999. A variety of smaller commercial auto related
programs generated an additional increase of $6.2 million in net premiums earned
for the six-month period ended June 30, 2000. In addition, a California
workers' compensation program introduced in March of 1999 generated an
approximate increase of $7.2 million in net premiums earned for the six-month
period ending June 30, 2000. Growth in smaller programs including a summer camp
program, an elevator contractor program, and an auto dealer program was offset
by a decrease in net premiums earned in the health and human services programs.
This decrease is the result of lower retention of such business under a new
reinsurance contract and loss of business due to competitive pricing conditions
in the market.

The 69.2% decrease in net premiums earned for the Personal and Credit-Related
Division during the six months ended June 30, 2000 from the comparable 1999
period was primarily due to the sale of Lyndon. This decrease was slightly
offset by growth in the remaining programs in the division, specifically an
increase of approximately $3.5 million in a mobile homeowners program which
the Company began writing through one managing general agent in 1999.

NET INVESTMENT INCOME

Net investment income decreased from $38.7 million in the first half of 1999
to $32.1 million in the first half of 2000 primarily due to the sale of
Lyndon. During the second quarter of 1999, Lyndon accounted for approximately
$7.8 million of net investment income. Excluding Lyndon, net investment income
for the first half of 2000 increased approximately $600,000 over the comparable
period in 1999. The increase was primarily the result of a change in investment
mix from tax exempt securities to higher yielding taxable securities and the
capital infusion of $80 million into Frontier Insurance Company.

Net realized capital gains of $1.3 million for the six-months ended June 30,
2000, reflect gains of $1.6 million and $1.2 million realized as a result of the
cancellation of an interest swap and the sale of Lyndon, respectively, offset by
a realized loss of approximately $2.3 million on the sale of Regency.

LOSSES AND LAE

The overall GAAP loss and LAE ratio increased from 58.0% for the six-months
ended June 30, 1999 to 80.7% for the six-months ended June 30, 2000 due to
approximately $24 million in adverse reserve development during the second
quarter of 2000, and the fact that reserve levels at June 30, 1999 proved to be
significantly deficient based on the results of an in-depth actuarial study
completed during the third quarter of 1999.

Approximately $6 million of the increase related to accident year 1999 medical
malpractice and workers' compensation business written through Western Indemnity
Insurance Company and included in the Professional Liability Division. Adverse
development in the Specialty Programs Division of approximately $4.2 million and
$4 million related to a short-term auto rental program and a discontinued
apartment owners prorgam, respectively. The remaining $10 million of adverse
development was in the Suerty Division and was primarily related to one
self-insured workers' compensation bond claim for approximately $7 million.

AMORTIZATION OF POLICY ACQUISITION COSTS

For the six months ended June 30, 2000, amortization of policy acquisition costs
represented 26.3% of net premiums earned compared to 22.2% (22.9% excluding
Lyndon) for the comparable 1999 period. The increase, excluding Lyndon was
primarily due to the Company's increased use of cut-through reinsurance
agreements, contingent commissions in the Personal and Credit-Related Division,
prior year premium tax refunds, and, as explained in the results for the second
quarter, a change in business mix to certain programs with higher commission
rates.

                                       18



<PAGE>


As a result of recent rating agency downgrades, effective December 1, 1999, the
Company entered into cut-through reinsurance agreements with "A" rated insurance
companies, Clarendon Insurance Group ("Clarendon"), and for surety business, a
subsidiary of NAC Reinsurance Corporation ("NAC Re"). These cut-through
arrangements effectively provide assurance to the Company's insureds that
Clarendon or NAC Re will pay claims in the event of the Company's insolvency.
For the six months ended June 30, 2000, the Company incurred cut-through fees of
approximately $4.2 million.

During the second quarter of 1999, the Company's Personal and Credit-Related
Division entered into a contingent commission agreement with the managing
general agent producing the Company's Florida mobile homeowners business.
During the six-month ended June 30, 2000, the Company recognized contingent
commission expense of approximately $1.7 million. Pursuant to the terms of
this agreement, no amount of expense was recorded during the 1999 six-month
period.

During the six months ended June 30, 2000, the Company recorded premium tax
refunds related to prior years of approximately $1 million. The 1999 period
reflected premium tax refunds of approximately $4.8 million.

UNDERWRITING AND OTHER EXPENSES

Underwriting and other expenses as a percentage of net premiums earned increased
from 13.8% (13.1% excluding Lyndon) during the six-month 1999 period to 16.1%
during the comparable 2000 period. Excluding Lyndon, as a percentage of net
premiums earned, underwriting and other expenses increased from 13.1% in 1999
to 16.1% during the 2000 period. This increase was primarily due to a write-off
of approximately $2.7 million and $7.4 million of intangible assets related
to previously acquired insurance agencies and renewal rights in the
Environmental, Excess and Surplus Lines Division and Surety Division,
respectively. For additional disclosure regarding these asset write downs
refer to Note 9 of the Notes to the Consolidated Financial Statements -
Impairment of Intangible Assets.

OTHER CORPORATE EXPENSES

Other corporate expenses include expenses of the parent company and directly
owned non-insurance subsidiaries, reduced by other miscellaneous income. For the
six months ended June 30, 2000, other corporate expenses were $11.3 million
compared to $1.4 million for the 1999 period.

For the six months ended June 30, 2000 and 1999, OneStop incurred losses
included in other corporate expenses of $6.9 million and $0.1 million,
respectively. During the second quarter of 2000 the Company ceased its OneStop
operations and subsequently sold OneStop to SolutionsAmerica, Inc. (See Notes 3
and 11 of Notes to the Consolidated Financial Statements - Sale of Subsidiaries
and Subsequent Events, respectively).

Additionally, the 2000 six-month period included approximately $1.8 million
resulting from the operations of Metro Partners including a write down of
goodwill of approximately $0.8 million. On June 15, 2000, the Company exchanged
its ownership interest in Metro Partners for non-voting, non-convertible, 8%,
cumulative preferred stock (see Note 7 of the Notes to the Consolidated
Financial Statements - Related Party Transactions). The balance of the increase
in other corporate expenses related to several other non-insurance companies and
parent company expenses, none of which are individually significant.

RESTRUCTURING RELATED CHARGES

As part of its CAP implemented during the first quarter of 2000, the Company has
recognized approximately $10.1 million of restructuring related charges during
the six months ended June 30, 2000. For additional disclosure regarding the
restructuring related charges see Note 8 of the Notes to the Consolidated
Financial Statements - Restructuring Related Charges.

MANAGEDCOMP TERMINATION FEE

During September 1999, the Company entered into a definitive agreement to
purchase ManagedComp Holdings, Inc. ("ManagedComp"), a managed care workers'
compensation service company. However, on February 10, 2000, the Company
announced that it had terminated the purchase of ManagedComp. Under the terms of
the termination agreement, the Company agreed to pay a termination fee of $4.5
million, extend the due date of a previously issued promissory note, and provide
certain underwriting facilities to ManagedComp.

                                       19



<PAGE>


INTEREST EXPENSE

The increase in interest expense for the six months ended June 30, 2000 is due
primarily to increased interest rates related to the Company's Deutsche Bank
credit facility. Additionally, in connection with a principal repayment of $75
million on January 21, 2000, the Company incurred increased commitment and
refinancing fees. Such decrease is partially offset by lower principal amounts
outstanding as a result of the January 21, 2000 repayment.

INCOME TAXES

Despite reporting a loss before taxes of approximately $66.3 million, the
Company has estimated current tax expense of approximately $1.1 million as a
result of the alternative minimum tax ("AMT") primarily due to limitations
related to the utilization of net operating losses. The Company has estimated
federal taxable income for the six-months ended June 30, 2000 due to the sale of
Lyndon, which sale closed January 20, 2000. Although the AMT expense is
available as a credit in future years to offset future regular tax expense,
management currently believes it is more likely than not that the AMT credit
will not be realized in the near future and during the second quarter has
increased the valuation allowance for the deferred tax assets by an amount equal
to the AMT credit.

LIQUIDITY AND CAPITAL RESOURCES

Negative cash flows from operations of approximately $74.9 million for the first
six-months of 2000 were primarily related to an overall acceleration of claim
settlements within the medical malpractice and commercial automobile lines of
business, and the settlement of one surety performance bond for approximately $8
million.

The Company used the proceeds from the sale of Lyndon, which closed during the
first quarter, to repay $75 million in bank debt and contribute $80 million to
Frontier Insurance Company ("Frontier") in order to strengthen Frontier's
capital and surplus.

On June 1, 2000, the Company received net proceeds of approximately $6.7 million
from the sale of Regency Insurance Company ("Regency") (see Note 3 - Sales of
Subsidiaries of the notes to the consolidated financial statements). The
proceeds of this sale will be used to meet cash flow needs at the parent company
level.

On August 4, 2000, the Company sold certain renewal rights related to United
Capitol Insurance Company's environmental book of business and Frontier and
Frontier Pacific Insurance Company's surety books of business. The Company
received a non-refundable advance payment of $8.4 million, with an additional
non-refundable advance payment of $3.6 million due in November 2000 (see Note 11
- Subsequent Events of the notes to the consolidated financial statements).
After transaction costs, the net proceeds will be allocated to the individual
insurance subsidiaries based on their proportionate share of the business
underlying the renewal rights sold and will not be available for use at the
holding company level.

The net proceeds from the sales of Regency and the renewal rights underlying the
environmental and surety books of business were significantly less than
management's initial expectations. Further, management does not expect sales
proceeds from remaining assets (most notably, Western Indemnity Insurance
Company) to be sufficient to provide the funds needed to increase the statutory
capital and surplus of Frontier to a level acceptable by insurance regulatory
authorities. As an alternative, Frontier has entered into an agreement with
National Indemnity Insurance, under which it may obtain aggregate stop loss
reinsurance coverage for up to $815 million, thus reducing regulatory
concerns over its ability to honor policyholder obligations (see Note 11
Subsequent Events, of the notes to the consolidated financial statements).

Although cash flow at the holding company level is expected to be sufficient to
meet required interest payments on the Company's credit facility, the Company
remains in violation of certain debt covenants (see Note 6 - Credit Facility and
Debt Covenants, of the notes to the consolidated financial statements) and it is
unlikely that the Company will be able to liquidate the remaining $67.8 million
principal balance by the maturity date of December 31, 2001.

LITIGATION WITH THE STATE OF NEW YORK

Over the past decade, the Company has been engaged in litigation with the State
of New York as to whether physician medical school faculty members at the State
University of New York ("SUNY") engaged in the clinical practice of medicine at
a SUNY medical school facility, corollary to such physicians' faculty
activities, were within the scope of their employment by SUNY, and thereby
protected against malpractice claims arising out of such activity by the State,

                                       20



<PAGE>


or by the Company under its medical malpractice policies insuring the SUNY
physicians. As a result of favorable judicial decisions in the New York Court of
Claims (the "Court of Claims") which were ultimately affirmed by the State's
highest court, the Court of Appeals, the Company recorded subrogation
recoverables for claims previously paid and reserves established with respect to
such malpractice claims of approximately $19 million on December 31, 1995 and
$13 million on June 30, 1996.

In September 1998, the Company and the State reached an agreement with respect
to the 83 cases currently being litigated in the Court of Claims pursuant to
which the Company received $15 million.

In addition to the action in the Court of Claims, the Company was pursuing
litigation in the New York Supreme Court (the "Supreme Court") that would
require the State to defend SUNY faculty members. The Supreme Court litigation
differed from the Court of Claims litigation in that the Company was not
attempting to recover funds spent on the settlement of claims. In 1997, the
Company received an adverse determination on its action in the Supreme Court.

In December 1999, on a procedural motion in the Court of Claims, the Court
linked the 1997 adverse decision on the duty to defend litigation to the
Company's right to reimbursement and ruled that the Supreme Court decision would
govern the future outcome of any cases in the Court of Claims. Although the
Company is continuing to seek recovery from the State in the Court of Claims,
the December 1999 ruling may have a significant adverse impact on the Company's
ability to recover amounts paid by the Company on behalf of SUNY physicians. At
June 30, 2000 the amount of subrogation recoverables recorded by the Company
related to the SUNY litigation was approximately $1 million.

SHAREHOLDER LITIGATION

Following the Company's November 5, 1994 announcement of its third-quarter
financial results, the Company was served with seven purported class actions
alleging violations of federal securities laws by the Company and, in some
cases, by certain of its officers and directors. In September 1995, a pre-trial
order was signed which consolidated all actions in the Eastern District of New
York, appointed three law firms as co-lead counsel for the plaintiffs and set
forth a timetable for class certification, motion practice and discovery. In
November 1995, plaintiffs served a consolidated amended complaint alleging
violations by the Company of Section 10(b) of the Securities Exchange Act of
1934 and Rule 10(b)(5) thereunder, seeking to impose controlling person
liability on certain of the Company's officers and directors, and further
alleging insider sales, all premised on negative financial information that
should have been publicly disclosed earlier. Plaintiffs seek an unspecified
amount in damages to be proven at trial, reasonable attorney fees and expert
witness costs. In April 1997, the Court certified the class. Plaintiffs have
subpoenaed documents and deposed outside auditors and analysts. Plaintiffs have
also taken depositions from current or former officers, directors and employees
of the Company.

In June 1999, plaintiffs were granted permission to amend their complaint and
reopen discovery to take additional depositions and request additional
documents. The additional depositions have been taken. In February 2000, the
plaintiffs made an additional motion to amend their complaint to have the class
period, which presently runs from February 10, 1994 through November 8, 1994,
extended to November 15, 1999. The motion also seeks to add an additional
plaintiff and defendant. Plaintiffs also seek to allege that increases in
reserves taken by the Company in various reporting periods subsequent to
November 1994 evidence an ongoing fraud. The Court has not ruled on this motion.

In July 2000, the Company was served with a purported class action complaint
alleging violations of federal securities laws by the Company and, in some
cases, by certain of its officers and directors. The complaint relates to
various statements and actions by the Company and certain officers and directors
for the period from August 5, 1997 to April 14, 2000, and alleges that the
Company, during this period, omitted and/or misrepresented material facts with
respect to its earnings, profits and business practices.

The Company believes the suits are without merit, has retained special legal
counsel to contest the suits vigorously and believes that the Company's exposure
to liability, if any, thereunder would not have a material adverse effect on the
Company's financial condition or results of operations.

RATING AGENCIES

                                       21



<PAGE>


In April 2000, the Company's insurance subsidiaries were downgraded to C++
("Marginal") by A.M. Best Company, Inc. ("A.M. Best"). In July 2000, the Surety
Bond Branch of the United States Treasury removed Frontier Insurance Company
and Frontier Pacific Insurance Company from its listing of insurance companies
deemed acceptable for the purpose of writing certain bonds, primarily
subdivision, customs and miscellaneous bonds. These materially adversely
affected the Company's operations.

CHANGE IN CERTIFYING ACCOUNTANTS

In December 1999, the Securities and Exchange Commission ("SEC") adopted new
rules designed to improve disclosure relating to the composition and practices
of audit committees and to enhance the reliability and credibility of financial
statements for public companies. Among other things, the new rules require that,
effective for fiscal quarters ending on or after March 15, 2000, companies'
interim financial statements be reviewed by independent auditors before
companies file their Form 10-Q with the SEC.

However, on May 1, 2000, Ernst & Young LLP ("E&Y"), the Company's independent
accountants, notified the Company of E&Y's decision to decline to stand for
reelection as the Company's auditors for 2000 and the Company's Board of
Directors is in the process of selecting successor independent accountants. As
such, the accompanying consolidated financial statements included in this Form
10-Q have not been reviewed by independent accountants.

THE YEAR 2000

In prior filings, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of its information technology ("IT") systems. As a result of those
planning and implementation efforts, the Company experienced no significant
disruptions in mission critical IT systems and believes those systems
successfully responded to the Year 2000 date change.

Costs incurred in connection with remediating the Company's systems, amounted to
approximately $3 million. The Company is not aware of any material problems
resulting from Year 2000 issues, either with its internal systems, or the
products and services of third parties. The Company will continue to monitor its
mission critical computer applications and those of its suppliers and vendors
throughout the year 2000 to ensure that any latent Year 2000 matters that may
arise are addressed promptly.

The Company also conducted a comprehensive review of its underwriting guidelines
and obtained regulatory approval from most jurisdictions to add an endorsement
to commercial property and casualty policies to clarify that coverage is not
afforded losses resulting from Year 2000 noncompliance by insureds. This
endorsement was added to the majority of commercial policies issued or renewed
in 1999. Underwriting policies and protocols were developed to address
nonapproving jurisdictions and business situations that cannot be endorsed. To
date, Year 2000 claims reported to the Company have been minimal. For these
reasons, the Company believes its exposure to Year 2000 claims will not be
material to its operations or financial condition. However, due to social and
legal trends, it is impossible to predict what, if any, exposure insurance
companies generally may have relating to Year 2000 claims.

ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's investment portfolio is subject to market risk arising from
potential changes in value in various securities held within the portfolio.
Market risk comprises many factors, such as interest rate risk, liquidity risk,
prepayment risk, credit risk and equity price risk. Analytical tools and
monitoring systems are in place to assess these market risks. The market risks
which most affect the Company's investment portfolio are interest rate risk
associated with investments held in fixed maturities and equity price risk
associated with investments held in equity securities. As of June 30, 2000, the
market risk exposures have not materially changed from December 31, 1999.

                                       22



<PAGE>


PART II - OTHER INFORMATION

Item 1. Legal Proceedings

        In July 2000, the Company was served with a purported class action
        complaint alleging violations of federal securities laws by the Company
        and, in some cases, by certain of its officers and directors. The
        complaint relates to various statements and actions by the Company and
        certain officers and directors for the period from August 5, 1997 to
        April 14, 2000, and alleges that the Company, during this period,
        omitted and/or misrepresented material facts with respect to its
        earnings, profits and business practices.

        The Company believes the suits are without merit, has retained special
        legal counsel to contest the suits vigorously and believes that the
        Company's exposure to liability, if any, thereunder would not have a
        material adverse effect on the Company's financial condition or
        results of operations.


Item 2. Changes in Securities

        Not applicable.


Item 3. Defaults upon Senior Securities

        The Company is in violation of certain financial covenants under the
        terms of the credit facility with a group of five banks, the head of
        which is Deutsche Bank A.G., New York Branch ("Deutsche Bank"). These
        violations permit Deutsche Bank to elect to accelerate repayment of
        amounts outstanding under the credit facility and exercise their rights
        with respect to the stock and ownership interest pledged as collateral.
        In addition, the Company is in violation of certain financial
        cross-covenants included in agreements underlying the guarantees by the
        Company of the bank loan to Douglass/Frontier LLC and amounts borrowed
        under the officer loan program. These violations permit the lender to
        accelerate repayment of amounts borrowed, which would likely result in a
        demand for payment from the Company.

        The Company is currently negotiating revisions to its financial
        covenants.

Item 4. Submission of Matters to a Vote of Security Holders

        On June 14, 2000, the stockholders of the Company held their annual
        meeting at the Company's headquarters in Rock Hill, New York. The
        holders of 32,415,561 shares, or 96.1% of the Company's Common Stock
        outstanding, were present or represented by proxy and, accordingly, a
        quorum was present. The matters were voted upon as follows:

        a. The following persons were elected directors of the Company:

<TABLE>
<CAPTION>
                                            Votes For              Votes Against
                                            ---------              -------------
<S>                                         <C>                     <C>
           Jerry E. Goldress                31,182,640              1,232,921
           Harry W.  Rhulen                 31,194,891              1,220,670
           Peter L. Rhulen                  31,203,472              1,212,089
           Suzanne Rhulen Loughlin          31,200,022              1,215,539
           Lawrence E. O'Brien              31,186,551              1,229,010
           Douglas C. Moat                  31,186,551              1,229,010
           Ronald L. Bornhuetter            31,204,980              1,210,581
</TABLE>

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

        a. Exhibits

           Exhibit 10.24 - Transfer and Purchase Agreement by and among Frontier
           Insurance Group, Inc., SDIA, Inc., Frontier Insurance Company, United
           Capitol Insurance Company, Frontier Pacific Insurance Company and
           Gulf Insurance Company.

           Exhibit 27- Financial Data Schedule

           Reports on Form 8-K
           None.

                                       23



<PAGE>


                                   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.

DATE:  August 18, 2000                Frontier Insurance Group, Inc.
                             ------------------------------------------------
                                               (Registrant)

                          By:             /s/ Patrick W. Kenny
                             ------------------------------------------------
                                              Patrick W. Kenny
                               Executive Vice President - Treasurer and Chief
                                             Financial Officer
                                      (Principal Financial Officer and
                                          Duly Authorized Officer)

                          By:            /s/ Jeffrey C. Gordon
                             ------------------------------------------------
                                             Jeffrey C. Gordon
                                        Vice President - Controller
                                     (Principal Accounting Officer and
                                          Duly Authorized Officer)

                                       24