<PAGE>
 

<PAGE>



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




                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-Q/A-1


            [x] Quarterly Report Pursuant to Section 13 or 15(d) of
                     the Securities Exchange Act of 1934
                For the quarterly period ended June 30, 1996
                                       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 0-15022

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

<TABLE>
<S>                                                    <C>

                     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)

</TABLE>

       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 9,1996 was 14,429,729.



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



                               Page 1 of 20 pages



<PAGE>

<PAGE>



                         FRONTIER INSURANCE GROUP, INC.







                                      INDEX
<TABLE>
<CAPTION>

                                                                                            PAGE

<S>                                                                                        <C>
PART I-   FINANCIAL INFORMATION

    Item 1.     Consolidated Financial Statements

                Consolidated Balance Sheets at
                June 30, 1996 (Unaudited) and December 31, 1995........................      3-4

                Consolidated Statements of Income (Unaudited) for
                the Three Months and Six Months  Ended June 30, 1996 and 1995..........        5

                Consolidated Statements of Cash Flows (Unaudited)
                for the Six Months Ended June 30, 1996 and 1995........................        6

                Notes to Consolidated Financial Statements (Unaudited).................      7-9

    Item 2.     Management's Discussion and Analysis of
                Financial Condition and Results of Operations..........................    10-17


`PART II-  OTHER INFORMATION

    Item 1.     Legal Proceedings......................................................       18

    Item 2.     Changes in Securities..................................................       18

    Item 3.     Defaults upon Senior Securities........................................       18

    Item 4.     Submission of Matters to a Vote of Security Holders....................       18

    Item 5.     Other Information......................................................       18

    Item 6.     Exhibits and Reports on Form 8-K.......................................       19

    Signature   .......................................................................       20

</TABLE>

                                               -2-


<PAGE>

<PAGE>



PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                                    June 30,        December 31,
                                                                      1996              1995
                                                                      ----              ----
                                                                   (Unaudited)
<S>                                                                   <C>              <C>
Investments:
 Securities, Available for sale--at fair 
      value Fixed maturities (amortized cost:
      1996--571,783; 1995--$510,056)                                  $569,122         $521,402
    Equity securities-(cost 1996--$29,133
       1995--$20,132);                                                  30,266           21,024
    Short-term investments--at principal
        balances, which approximate fair value                          32,908            7,353
 Investment in limited liability corporation                             3,290            2,935
                                                                      --------         --------
        TOTAL INVESTMENTS                                              635,586          552,714

Cash
Agents' balances due, less                                               2,046            5,115
    allowances for doubtful accounts
    (1996--$3,537; 1995--$3,346)                                        32,563           25,779
Premiums receivable from insureds,
    less allowances for doubtful accounts
    (1996--$18; 1995--$105)                                             25,702           24,177
Deferred federal income tax benefits                                    33,024           23,627
Accrued investment income                                                7,689            7,458
Deferred policy acquisition costs                                       21,650           18,797
Net reinsurance recoverables
    less allowances for possible uncollectible
     amounts (1996--$182; 1995--$115)                                  143,826           76,955
Data processing equipment and software--at cost,
    less accumulated depreciation and amortization
    (1996--$2,515; 1995--$2,259)                                         1,479            1,434
Insurance renewal and claims adjusting rights and
    other intangible assets, less accumulated
    amortization (1996--$2,804; 1995--$2,370)                            2,641           3,082
Home office building and equipment--
    at cost, less accumulated depreciation
    (1996--$5,995;  1995--$5,031)                                       28,446           28,043
Federal income taxes recoverable                                           398              217
Other assets                                                            15,109            5,950
                                                                      --------         --------
        TOTAL ASSETS                                                  $950,159         $773,348
                                                                      ========         ========
</TABLE>

See notes to consolidated financial statements (unaudited).

                                               -3-


<PAGE>

<PAGE>



                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS--Continued


                             LIABILITIES AND CAPITAL
              (dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                    June 30,        December 31,
                                                                      1996              1995
                                                                      ----              ----
                                                                   (Unaudited)
<S>                                                                  <C>               <C>     
LIABILITIES
  Policy liabilities:
    Unpaid losses                                                    $407,890          $309,164
    Unpaid loss adjustment expenses                                    85,931            58,272
    Unearned premiums                                                 128,418           107,282
                                                                    ---------         ---------
         TOTAL POLICY LIABILITIES                                     622,239           474,718

  Note payable                                                         29,200            25,000
  Funds withheld under reinsurance contract                            43,648            28,226
   Cash dividend payable to shareholders                                1,886             1,568
       Other liabilities                                               16,184            14,103
                                                                    ---------         ---------
          TOTAL LIABILITIES                                           713,157           543,615


COMMITMENTS AND CONTINGENT LIABILITIES

CAPITAL--
    Preferred Stock, par value $.01
       per share; authorized and
       unissued--1,000,000 shares
    Common Stock, par value $.01 per share;
       authorized--20,000,000 shares; issued
       (1996--14,384,761 shares; 1995--14,368,751  shares)                144               130
    Additional paid-in capital                                        213,442           167,587
    Net unrealized appreciation/(depreciation)
       of investments in available-for-sale securities                   (993)            7,955
    Retained earnings                                                  25,197            54,849
                                                                    ---------         ---------
       SUBTOTAL                                                       237,790           230,521
    Less:  Treasury stock--at cost (1996-45,540 shares;
       1995--45,540 shares)                                              (788)             (788)
                                                                   ----------        ----------
                 TOTAL CAPITAL                                        237,002           229,733
                                                                      -------           -------

                 TOTAL LIABILITIES AND CAPITAL                       $950,159          $773,348
                                                                     ========          ========

    Book Value per share                                               $16.48            $15.99
                                                                       ======            ======
</TABLE>



See notes to consolidated financial statements (unaudited).





                                               -4-


<PAGE>

<PAGE>



                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>

                                                   Three Months                   Six Months
                                                   Ended June 30,               Ended June 30,
                                                  ----------------            -----------------
                                            1996             1995        1996            1995
                                           ------          --------     ------           -----
<S>                                         <C>             <C>         <C>            <C>     
REVENUES
   Premiums written                         $84,966         $64,112      $159,826       $121,370
   Premiums ceded                           (13,343)        (10,216)      (26,474)       (19,304)
                                           ---------       ---------   -----------    -----------
   NET PREMIUMS WRITTEN                      71,623          53,896       133,352        102,066
   Increase in unearned premiums             (5,475)         (7,456)       (8,910)        (9,872)
                                           ---------       ---------   -----------    -----------
         NET PREMIUMS EARNED                 66,148          46,440       124,442         92,194
   Net Investment income                      8,588           7,178        16,374         13,415
   Net realized capital gains (losses)          614             256         1,305           (500)
                                           ---------       ---------   -----------    -----------
        TOTAL NET INVESTMENT INCOME           9,202           7,434        17,679         13,415
   Gross claims adjusting income                 12              39            37             75
                                           ---------       ---------   -----------    -----------
        TOTAL REVENUES                       75,362          53,913       142,158        105,684

EXPENSES
  Losses                                     30,404          22,407        56,916         43,900
  Loss adjustment expenses                    9,797           6,006        18,728         12,948
  Amortization of policy acquisition costs   15,330           9,913        27,711         19,602
  Underwriting and other expenses             5,847           5,122        11,638          9,715
   Interest Expense                             439                           880
                                           ---------       ---------   -----------    -----------
    TOTAL EXPENSE                            61,817          43,448       115,873         86,165

INCOME BEFORE INCOME TAXES                   13,545          10,465        26,285         19,519

INCOME TAXES
  State                                         432             309           547            260
  Federal                                     3,344           2,371         6,705          4,588
                                           ---------       ---------   -----------    -----------
         TOTAL INCOME TAXES                   3,776           2,680         7,252          4,848
                                           ---------       ---------   -----------    -----------

         NET INCOME                          $9,769          $7,785       $19,033        $14,671
                                           ========          ======       =======        =======

PER SHARE DATA
  Operating Income                             $.65            $.53         $1.27          $1.05
  Net realized capital gains/(losses)           .03             .01           .06           (.02)
                                              -----           -----       -------        --------
         NET INCOME                            $.68            $.54         $1.33          $1.03
                                               ====            ====         =====          =====

WEIGHTED AVERAGE SHARES OUTSTANDING          14,380          14,313        14,351         14,306
                                             ======          ======        ======         ======
</TABLE>


See notes to consolidated financial statements (unaudited).


                                               -5-


<PAGE>

<PAGE>



                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                         Six Months
                                                                        Ended June 30,
                                                                       ----------------
                                                                    1996            1995
                                                                    ----            ----
<S>                                                               <C>             <C>
OPERATING ACTIVITIES
  Net income                                                       $19,033        $ 14,671
  Adjustments to reconcile net income to net cash provided
     by operating activities:
        Increase in policy liabilities                             147,521          32,175
        Increase (decrease) in federal income taxes                 (9,578)          1,848
        Decrease (increase) in reinsurance balances                (51,449)         (4,476)
        (Increase) decrease in agents' balances and
          premiums receivable                                       (8,309)         (6,181)
        Change in deferred policy acquisition costs                 (2,853)         (2,181)
        Decrease (increase) in accrued investment income              (231)           (531)
        Depreciation and amortization                                  926           1,824
        Realized capital (gains) losses                              1,305            (500)
        Other                                                       (3,360)         (1,950)
                                                                 ---------       ---------
          NET CASH PROVIDED BY OPERATING ACTIVITIES                 93,005          34,699

INVESTING ACTIVITIES
  Sales of equity securities                                        16,449           4,952
  Sales of available for sale securities                            76,147          21,991
  Calls, maturities and paydowns of fixed maturities                81,598          52,732
  Purchases of securities                                         (246,462)       (146.484)
  Net( purchases) sales of short-term investments                  (25,555)         16,553
  Purchase of home office building and equipment                    (1,267)         (1,118)
  Purchase of data processing equipment and software                  (301)           (237)
                                                                 ---------       ---------
 NET CASH (USED IN)  INVESTING ACTIVITIES                          (99,391)        (51,611)


FINANCING ACTIVITIES
  Issuance of note payable                                           4,200          25,000
  Cash dividends paid                                               (1,579)         (3,124)
  Issuance of Common Stock                                             696             309
                                                                ----------     -----------
          NET CASH (USED IN)  FINANCING ACTIVITIES                   3,317          22,185

          INCREASE (DECREASE) IN CASH                               (3,069)          5,273
CASH AT BEGINNING OF PERIOD                                          5,115           6,362
                                                                 ---------       ---------

CASH AT END OF PERIOD                                               $2,046         $11,635
                                                                    ======         =======
</TABLE>

See notes to consolidated financial statements (unaudited).


                                               -6-


<PAGE>

<PAGE>



                 FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   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, 1995.
     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 1995  financial  statements  have  been
     reclassified to conform to the 1996  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,
     1996 are not necessarily indicative of the results that may be expected for
     the year ending December 31, 1996.

2.   Earnings  per share  information  is  presented  on the  basis of  weighted
     average shares outstanding for the period.

3.   Dividends  have been  declared  by the Board of  Directors  and paid by the
     Company  during  the  periods  presented  in  the  accompanying   financial
     statements, as follows:
<TABLE>
<CAPTION>

    Declaration    Record       Payment             Type of              Cash         Number of
         Date        Date          Date              Dividend             Paid     Shares Issued
    -----------    ------       -------             ---------            -----     -------------
<S>                <C>          <C>            <C>                      <C>        <C>
    03/16/95       03/31/95     04/20/95       $.12 per share cash      $1,561           N/A
    05/18/95       06/30/95     07/20/95       $.12 per share cash      $1,567           N/A
    08/17/95       09/29/95     10/19/95       $.12 per share cash      $1,567           N/A
    11/16/95       12/29/95     01/18/96       $.12 per share cash      $1,568           N/A
    03/28/96       04/08/96     04/30/96       $.12 per share cash      $1,573           N/A
    05/23/96       06/28/96     07/19/96       10% stock                    11(1)     1,311,178
    05/23/96       06/28/96     07/19/96       $.13 per share cash      $1,875           N/A
</TABLE>

    (1) Cash in lieu of fractional shares.

4.   At June 30, 1996,  options to purchase  366,912 shares of Common Stock,  at
     per share exercise prices ranging from $11.63 to $28.98,  were outstanding,
     compared  to options to purchase  366,300  shares of Common  Stock,  at per
     share exercise prices ranging from $7.15 to $27.57, outstanding at June 30,
     1995 under the  Company's  stock  option  plans (the  "Plans").  Options to
     purchase  205,225 and 130,900  shares of Common Stock were  exercisable  at
     June 30, 1996 and June 30, 1995, respectively, under the Plans.

     During 1993,  the Company  granted the President and Chairman of the Board,
     and a Vice  President,  separate  stock  options  outside  of the  Plans to
     purchase 412,500 and 74,250 shares,  respectively,  of the Company's Common
     Stock at $45.45 per share at any time  through  December  31,  1999,  which
     options were outstanding at June 30, 1996.

     The number of shares  subject to options  and the per share  option  prices
     have been  adjusted to reflect  stock  dividends.  Exercisable  options are
     nondilutive to earnings per share presented in the  accompanying  financial
     statements.

                                       -7-


<PAGE>

<PAGE>



Item 1.    Notes to Consolidated Financial Statements (Unaudited)--Continued


5.   Contingent reinsurance commissions are accounted for on an earned basis and
     are accrued,  in accordance  with the terms of the  applicable  reinsurance
     agreement,  based on the estimated level of profitability  relating to such
     reinsured  business.  During the three months ended June 30, 1996 and 1995,
     such earned commissions accrued were $(10,000) and $(47,000), respectively.
     During the six months ended June 30, 1996 and 1995, such earned commissions
     accrued  were  $(102,000)  and  $(233,000),   respectively.  The  estimated
     profitability  of the  reinsured  business is  continually  reviewed and as
     adjustments  become  necessary,  such  adjustments are reflected in current
     operations.

6.   Claims  adjusting  income is  accounted  for on an  accrual  basis,  before
     deducting the related expenses. During the three months ended June 30, 1996
     and 1995,  claims adjusting  expenses  included with underwriting and other
     expenses  amounted to $18,000  and  $67,000,  respectively.  During the six
     months ended June 30, 1996 and 1995,  claims  adjusting  expenses  included
     with  underwriting  and other  expenses  amounted to $62,000 and  $121,000,
     respectively.

7.   The  components  of  the  net  reinsurance  recoverables  balances  in  the
     accompanying balance sheets were as follows:

<TABLE>
<CAPTION>

                                               June 30, 1996                 December 31, 1995
                                               -------------                 -----------------
                                                               (in thousands)
<S>                                              <C>                             <C>     
    Ceded paid losses recoverable                   $6,862                        $  2,639
    Ceded unpaid losses and LAE                    126,691                          73,043
    Ceded unearned premiums                         13,461                           5,541
    Ceded reinsurance payable                       (3,188)                         (4,268)
                                                  --------                        --------

         TOTAL                                    $143,826                         $76,955
                                                  ========                         =======
</TABLE>


    The reinsurance ceded components of the amounts relating to the accompanying
    income statements were as follows:

<TABLE>
<CAPTION>
                                                               Six Months Ended June 30,
                                                               -------------------------
                                                             1996                    1995
                                                             ----                    ----
                                                                    (in thousands)
<S>                                                       <C>                        <C>    
    Ceded premiums earned                                    $26,023                 $19,138
    Ceded incurred losses                                    $19,691                 $ 9,233
    Ceded incurred LAE                                       $ 7,875                 $ 5,952
</TABLE>



                                       -8-


<PAGE>

<PAGE>



Item 1.    Notes to Consolidated Financial Statements (Unaudited)--Continued


    The effect of reinsurance on premiums written and earned at June 30, 1996
    and 1995 was as follows:
<TABLE>
<CAPTION>
                                                   Six Months Ended June 30,
                                   ----------------------------------------------------------
                                             1996                              1995
                                           Premiums                          Premiums
                                    -----------------------          ------------------------
                                     Written        Earned            Written        Earned
                                    --------       --------          --------       ---------
                                                          (in thousands)

<S>                                 <C>            <C>               <C>             <C>     
    Direct                          $155,628       $146,401          $121,062        $110,892
    Assumed                            4,198          4,071               308             440
    Ceded                            (26,474)       (26,023)          (19,304)        (19,138)
                                   ----------       -------           -------          ------

    Net                             $133,352       $124,449          $102,066       $  92,194
                                    ========       ========          ========       =========
</TABLE>


8.   During the first quarter of 1996,  the Company  adopted FASB  Statement No.
     121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to be Disposed of, ("FASB 121"), which requires impairment losses to
     be recorded on long-lived assets,  certain  identifiable  intangibles,  and
     goodwill related to those assets, when indicators of impairment are present
     and the  undiscounted  cash flows estimated to be generated by those assets
     are less than the assets carrying amount.  The adoption of FASB 121 did not
     have a material impact on the accounting for Long-Lived Assets.

9.   During  the  second quarter  of  1996,  the  Company increased prior years'
     reserves by approximately  $13.0 million,  which was entirely offset by  an
     increase in the same amount of the  subrogation recoverable,  recognized in
     conjunction  with the  favorable ruling  in the  New York Court of Appeals.
     Such  increase  in   the  subrogation  recoverable  resulted  from  further
     documentation  and  verification  in the second  quarter of 1996 of  claims
     already  paid  and the  reserves  currently  held by  the Company that  the
     Company believes are reimbursable by the State of New York.


                                       -9-


<PAGE>

<PAGE>



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


The following  discussion and analysis  should be read in  conjunction  with the
consolidated  financial  statements and notes thereto included elsewhere in this
Report and with the  Company's  Annual  Report on Form 10-K for the fiscal  year
ended December 31, 1995.

Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995

The following table sets forth the net premiums earned by the principal lines of
insurance written by the Company for the periods indicated and the dollar amount
and percentage of change therein from period to period:

<TABLE>
<CAPTION>

                                                         Three Months         Increase (Decrease)
                                                       Ended June 30,             1995 to 1996
                                                  ------------------------------------------------
                                                    1996          1995         Amount         %
                                                    ----          ----         ------        ----
                                                              (dollar amounts in thousands)
<S>                                                <C>           <C>             <C>         <C> 
Medical malpractice (including
   dental malpractice)                             $27,891       $21,044         $6,847      32.5
General liability                                   17,328        11,887          5,441      45.8
Surety                                              12,688         9,690          2,998      30.9
Workers' compensation                                2,164         1,893            271      14.3
Other                                                6,077         1,926          4,158     315.5
                                                 ---------     ---------      ---------
                   Total                           $66,148       $46,440        $19,715      42.4
                                                   =======       =======        =======
</TABLE>


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

<TABLE>
<CAPTION>
                                            Statutory Combined Ratio      GAAP Combined Ratio
                                            ------------------------      -------------------
                                                  Three Months                Three Months
                                                 Ended June 30,               Ended June 30,
                                                 --------------               --------------
                                               1996           1995           1996         1995
                                               ----           ----           ----         ----
<S>                                             <C>           <C>             <C>         <C>  
Losses                                          46.0%         48.2%           46.0%       48.2%
Loss adjustment expenses (LAE)                  14.1          12.5            14.8        13.0
                                                ----          ----            ----        ----
Losses and LAE                                  60.1          60.7            60.8        61.2
Acquisition, underwriting, interest, and
  other expenses                                32.4          31.0            31.9        32.2
                                                ----          ----            ----        ----
Total combined ratio                            92.5%         91.7%           92.7%       93.4%
                                                ====          ====            ====        ====
</TABLE>

A variety of factors accounted for the 42.4% growth in net premiums earned, the
principal factor being increases in the Company's core and new program business,
partially offset by the ceding of earned premiums under the Company's aggregate
excess of loss reinsurance contract, pursuant to which 13.5% of earned premiums
for all lines of business except bail, customs, license and permit, and
miscellaneous surety bonds are ceded.

The  increase  in  medical   malpractice   net  premiums  earned  was  primarily
attributable  to an increase in the number of  physicians  insured,  principally
those  associated  with  mental  health,  home care,  and other  social  service
organizations,  growth  in the  Company's  program  for  psychiatrists,  greater
penetration of the Ohio physician market,  growth in the dental program endorsed
by the Academy of General Dentistry,  rate increases in Florida and expansion in
other geographic areas.



                                      -10-


<PAGE>

<PAGE>



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


Net premiums earned for the general  liability line increased  primarily because
of increases in various  programs,  including  alarms and guards,  pest control,
umbrella,  asbestos abatement and excess employer's  liability.  These increases
were partially offset by a decrease in net premiums earned in the crane operator
liability program.

Growth in surety  net  premiums  earned  continued  in 1996,  and was  primarily
attributable to expanded  writings of license and permit bonds,  bonds for small
contractors, miscellaneous bonds, and bail bonds.

Net premiums earned for the workers'  compensation line increased primarily as a
result  of  required   participation  in  the  National  Workers'   Compensation
Reinsurance  Pools.  The  increase  was  partially  offset by  decreases  in the
specialty  niche program for cotton gins and other  smaller  programs due to the
Company's decision not to renew accounts deemed unprofitable.

Net premiums earned for the other lines of business  increased  primarily due to
increased volume in the earthquake  program and the mobile  homeowners  program.
These increases were partially offset by decreases in other  miscellaneous small
programs.

Net  investment  income  before  realized  capital  gains  increased  19.6%  due
principally to increases in investable assets resulting from the proceeds of the
$29  million  borrowing  under a line of credit  facility,  and cash inflow from
regular operations, partially offset by the interest charge on funds held by the
Company for the benefit of the reinsurer associated with the Company's aggregate
excess of loss reinsurance contract. Total net investment income increased 23.8%
due to the aforementioned  increase in net investment income and the realization
of capital  gains in the 1996 period in excess of the realized  capital gains in
the 1995 period. The average annual pre-tax yield on investments,  excluding the
charge for funds held under the aggregate  excess of loss  reinsurance  contract
and realized capital gains and losses, decreased to 6.5% from 6.9%, primarily as
the result of generally  lower  interest  rates  available for funds invested in
1995 and early 1996, and the impact of higher yielding  investments which mature
or which are called for  redemption  being  reinvested  at the lower rates.  The
average annual  after-tax yield on  investments,  excluding the charge for funds
held under the aggregate excess of loss reinsurance  contract and realized gains
and losses,  decreased to 4.9% from 5.2%,  primarily  for the reasons  described
above.

Gross  claims  adjusting  income  decreased  69.2%  primarily  as a result  of a
decrease in claim services provided to outside companies, partially offset by an
increase in the rates charged for certain services.

Total revenues increased 39.8% as a result of the above.



                                      -11-


<PAGE>

<PAGE>



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

Total expenses increased by 42.3% compared to the 39.8% increase in net premiums
earned. Losses and loss adjustment expenses ("LAE") increased at a 41.5% rate as
a result of a 35.7% increase in losses and a 63.1% increase in LAE. The increase
in losses and LAE was  equivalent to that of net earned  premiums which resulted
in a loss and LAE  component of the GAAP  Combined  Ratio .4  percentage  points
lower than in the comparable  1995 period,  due to the aggregate  excess of loss
reinsurance contract which provides coverage for losses and LAE in excess of 65%
and 66% for the 1996 and 1995 accident years,  respectively.  The 63.1% increase
in LAE  resulted  from a change in the line of  business  mix to those  having a
higher  percentage  relationship  of LAE to losses.  The Company also  increased
prior years' reserves by $13.0 million, which was entirely offset by an increase
in the same amount of the subrogation recoverable recognized in conjunction with
the  favorable  ruling in the New York  Court of  Appeals.  Such increase in the
subrogation  recoverable resulted from further documentation and verification in
the second  quarter of 1996 of claims  already paid and the  reserves  currently
held by the Company that the Company  believes are  reimbursable by the State of
New York. The 54.6% increase in t amortization of policy  acquisition  costs was
attributable  primarily to an increase in direct  commission  expense  resulting
from growth in programs with higher  commission rates, a decrease in reinsurance
commissions, increased staffing and marketing expenses related to expansion, and
salary  increases.  The 22.7%  increase in  underwriting,  other  expenses,  and
interest  expense was primarily the result of the interest  asssociated with the
$29  million  borrowed  under the line of credit  facility,  an  increase in the
additions to allowance for bad debts, increased staffing,  increased facilities,
equipment and materials expense  necessitated by the Company's growth and salary
increases.  Since the  non-claim  related  expenses  increased  at a  percentage
equivalent to that of earned premiums,  the non-claim  related  component of the
GAAP Combined Ratio was  comparable to the 1995 period.  The total GAAP Combined
Ratio decreased by .7 percentage points to 92.7% as a result of the above.

The foregoing changes resulted in income before taxes of $13,545,000 for the
1996 quarter, a 29.4% increase from the comparable 1995 quarter. Net income for
the period increased by $1,984,000 or 25.5%.



Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995

The following table sets forth the net premiums earned by the principal lines of
insurance written by the Company for the periods indicated and the dollar amount
and percentage of change therein from period to period:

<TABLE>
<CAPTION>
                                                       Six Months             Increase (Decrease)
                                                     Ended June 30,              1995 to 1996
                                                     --------------              ------------
                                                   1996          1995          Amount        %
                                                   ----          ----          ------       ---
                                                          (dollar amounts in thousands)
<S>                                            <C>           <C>             <C>          <C> 
Medical malpractice (including
   dental malpractice)                             $51,989       $41,571        $10,418     25.1
General liability                                   34,238        21,927         12,311     56.1
Surety                                              24,336        19,342          4,994     25.8
Workers' compensation                                5,213         5,789           (576)    (9.9)
Other                                                8,666         3,565          5,101    143.1
                                               -----------     ---------      ---------
                   Total                          $124,442       $92,194        $32,248     35.0
                                                  ========       =======        =======
</TABLE>











                                               -12-


<PAGE>

<PAGE>



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


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

                                               Statutory Combined Ratio     GAAP Combined Ratio
                                              -------------------------     -------------------
                                                     Six Months                  Six Months
                                                  Ended June 30,              Ended June 30,
                                                  --------------              --------------
                                               1996           1995           1996         1995
                                               ----           ----           ----         ----
<S>                                             <C>           <C>             <C>         <C>  
Losses                                          45.7%         47.6%           45.7%       47.6%
Loss adjustment expenses (LAE)                  14.1          13.4            15.0        14.1
                                                ----          ----            ----        ----
Losses and LAE                                  59.8          61.0            60.7        61.7
Acquisition, underwriting, interest, and
  other expenses                                32.1          30.7            31.7        31.6
                                                ----          ----            ----        ----
Total combined ratio                            91.9%         91.7%           92.4%       93.3%
                                                ====          ====            ====        ====
</TABLE>

A variety of factors accounted for the 35.0% growth in net premiums earned,  the
principal factor being increases in the Company's core and new program business,
partially  offset by a decrease  in worker's  compensation  and by the ceding of
earned  premiums  under  the  Company's  aggregate  excess  of loss  reinsurance
contract,  pursuant to which 13.5% of earned  premiums for all lines of business
except bail,  customs,  license and permit,  and miscellaneous  surety bonds are
ceded.

The  increase  in  medical   malpractice   net  premiums  earned  was  primarily
attributable  to an increase in the number of  physicians  insured,  principally
those  associated  with  mental  health,  home care,  and other  social  service
organizations,  growth  in the  Company's  program  for  psychiatrists,  greater
penetration of the Ohio physician market,  growth in the dental program endorsed
by the Academy of General Dentistry,  rate increases in Florida and expansion in
other geographic areas.

Net premiums earned for the general  liability line increased  primarily because
of increases in various programs,  including social services, alarms and guards,
pest control,  umbrella,  asbestos  abatement and excess  employer's  liability.
These  increases were partially  offset by a decrease in net premiums  earned in
the crane operator liability program.

Growth in surety  net  premiums  earned  continued  in 1996,  and was  primarily
attributable to expanded  writings of license and permit bonds,  bonds for small
contractors, miscellaneous bonds, and bail bonds.

Net premiums earned for the workers'  compensation line decreased primarily as a
result of decreases  in the  specialty  niche  program for cotton gins and other
smaller  programs due to the  Company's  decision not to renew  accounts  deemed
unprofitable.  The  decrease  was  partially  offset by  increases  in  workers'
compensation premiums written in the social services programs.

Net premiums earned for the other lines of business  increased  primarily due to
increased  volume in commercial  package policies in the social service program,
the earthquake  program and in the mobile  homeowners  program.  These increases
were partially offset by decreases in other miscellaneous small programs.








                                      -13-


<PAGE>

<PAGE>



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

Net  investment  income  before  realized  capital  gains  increased  17.7%  due
principally to increases in investable assets resulting from the proceeds of the
$29  million  borrowing  under a line of credit  facility,  and cash inflow from
regular operations, partially offset by the interest charge on funds held by the
Company for the benefit of the reinsurer associated with the Company's aggregate
excess of loss reinsurance contract. Total net investment income increased 31.8%
due to the aforementioned  increase in net investment income and the realization
of capital  gains in the 1996 period in excess of realized  capital gains in the
1995 period.  The average  annual  pre-tax yield on  investments,  excluding the
charge for funds held under the aggregate  excess of loss  reinsurance  contract
and realized capital gains and losses, decreased to 6.5% from 6.9%, primarily as
the result of generally  lower  interest  rates  available for funds invested in
1995 and early 1996, and the impact of higher yielding  investments which mature
or which are called for  redemption  being  reinvested  at the lower rates.  The
average annual  after-tax yield on  investments,  excluding the charge for funds
held under the aggregate excess of loss reinsurance  contract and realized gains
and losses,  decreased to 4.9% from 5.5%,  primarily  for the reasons  described
above.

Gross  claims  adjusting  income  decreased  50.7%  primarily  as a result  of a
decrease in claim services provided to outside companies, partially offset by an
increase in the rates charged for certain services.

Total revenues increased 34.5% as a result of the above.

Total expenses increased by 34.5% compared to the 35.0% increase in net premiums
earned. Losses and loss adjustment expenses ("LAE") increased at a 33.1% rate as
a result of a 29.6% increase in losses and a 44.6% increase in LAE. The increase
in losses  and LAE was  disproportionate  to that of net earned  premiums  which
resulted in a loss and LAE component of the GAAP Combined  Ratio 1.0  percentage
points lower than in the comparable 1995 period,  due to the aggregate excess of
loss reinsurance  contract which provides  coverage for losses and LAE in excess
of 65% and 66% for the 1996 and 1995  accident  years,  respectively.  The 41.4%
increase  in LAE  resulted  from a change in the line of  business  mix to those
having a higher  percentage  relationship  of LAE to losses.  The  Company  also
increased prior years' reserves by $13.0 million, which was entirely  offset  by
an increase  in the  same  amount  of the  subrogation recoverable recognized in
conjunction  with the  favorable  ruling in the New York Court of Appeals.  Such
increase in the subrogation  recoverable resulted from further documentation and
verification  in the  second  quarter  of 1996 of  claims  already  paid and the
reserves   currently  held  by  the  Company  that  the  Company   believes  are
reimbursable  by the State of New York. The 41.4% increase the  amortization  of
policy  acquisition  costs was  attributable  primarily to an increase in direct
commission  expense  resulting  from growth in programs  with higher  commission
rates, a decrease in reinsurance  commissions,  increased staffing and marketing
expenses  related to  expansion,  and salary  increases.  The 28.9%  increase in
underwriting,  other expenses,  and interest expense was primarily the result of
the interest  asssociated with the $29 million borrowed under the line of credit
facility,  an increase in the  additions to allowance  for bad debts,  increased
staffing, increased facilities,  equipment and materials expense necessitated by
the Company's growth and salary increases.  Since the non-claim related expenses
increased at a percentage  equivalent to that of earned premiums,  the non-claim
related  component of the GAAP Combined Ratio was comparable to the 1995 period.
The total GAAP Combined  Ratio  decreased by .9 percentage  points to 92.4% as a
result of the above.








                                      -14-


<PAGE>

<PAGE>



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

The foregoing changes resulted in income before taxes of $26,285,00 for the six
months ended 1996, a 34.7% increase from the comparable 1995 period. Net income
for the period increased by $4,362,000 or 29.7%.


Liquidity and Capital Resources

The Company is a holding company,  receiving cash  principally  through sales of
equities, borrowings, and dividends from its subsidiaries,  certain of which are
subject to dividend  restrictions.  The  ability of  insurance  and  reinsurance
companies  to  underwrite  insurance  and  reinsurance  is based on  maintaining
liquidity  and capital  resources  sufficient to pay claims and expenses as they
become due. The primary sources of liquidity for the Company's  subsidiaries are
funds  generated from insurance and  reinsurance  premiums,  investment  income,
commission and fee income,  capital  contributions from the Company and proceeds
from sales and maturities of portfolio  investments.  The principal expenditures
are for  payment  of  losses  and  LAE,  operating  expenses,  commissions,  and
dividends to shareholders.

At June  30,  1996,  $950.2  million  in  total  assets  were  comprised  of the
following: 67.1% cash and investments, 15.1% net reinsurance recoverables,  5.9%
premiums  receivable,  3.0% home office  building and  equipment,  5.8% deferred
expenses  (federal income taxes and policy  acquisition  costs),  and 3.1% other
assets.

The  Company's  subsidiaries  maintain  liquid  operating  positions  and follow
investment  guidelines that are intended to provide for an acceptable  return on
investment while preserving capital,  maintaining  sufficient  liquidity to meet
their obligations and, as to the Company's insurance subsidiaries, maintaining a
sufficient  margin of capital and surplus to ensure their unimpaired  ability to
write insurance and assume reinsurance.


The  following  table  provides  a profile  of the  Company's  fixed  maturities
investment portfolio by rating at June 30, 1996:
<TABLE>
<CAPTION>
                                                                    Amount
                                               Market            Reflected on         Percent of
        S&P's/Moody's Rating                    Value            Balance Sheet        Portfolio
        --------------------                   ------            -------------        ----------
                                                         (dollar amounts in thousands)
<S>                                           <C>                  <C>                <C>  
AAA/Aaa (including U.S. Treasuries
          of $24,098)                         $354,992             $354,992             62.4%
AA/Aa                                           90,554               90,554             15.9
A/A                                             82,479               82,479             14.5
BBB/Baa                                         41,073               41,073              7.1
All other                                           24                   24              0.1
                                          ------------         ------------          -------

          Total                               $569,122             $569,122            100.0%
                                              ========             ========           ======
</TABLE>

Cash flow  generated from  operations  for the six-month  periods ended June 30,
1996 and 1995 was $93 million, and $35 million,  respectively,  amounts adequate
to meet all obligations during the periods.

In April  1992,  the  Company  commenced  paying  quarterly  cash  dividends  to
shareholders.  Cash dividends  declared in the six-month  periods ended June 30,
1996 and 1995 were $3,448,000 and $3,129,000 respectively.

                                      -15-


<PAGE>

<PAGE>



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


Reinsurance

Frontier  has  entered  into  a  stop  loss  reinsurance  contract  with  Centre
Reinsurance  Company of New York ("Centre Re") for 1995 and future years.  Under
the terms of the agreement,  Centre Re provides  reinsurance  protection  within
certain accident year and contract aggregate dollar limits for losses and LAE in
excess of a  predetermined  ratio of these expenses to net premiums earned for a
given accident year for all lines of business except bail, customs,  license and
permit,  and miscellaneous  surety bonds. The loss and LAE ratio above which the
reinsurance  provides  coverage is 66%,  65%,  and 64% for  accident  years 1995
through 1997, respectively.  The maximum amount recoverable for an accident year
is 175% of the  reinsurance  premium paid for the accident year, or $162,500,000
in the aggregate for the three years. During the first quarter 1996 and 1995 the
Company  ceded 13.5% and 14% of the earned  premiums  from the covered  lines of
business to Centre Re, respectively.


Litigation with the State of New York

In  December  1990,  the New York State  Court of Claims  rendered a decision in
favor of the  Company  holding  that a State  University  of New  York  ("SUNY")
medical school faculty member engaged in the clinical  practice of medicine at a
SUNY medical facility,  corollary to such physician's  faculty  activities,  was
within  the  scope of such  physician's  employment  by SUNY  and was  protected
against malpractice claims arising out of such activity by the State of New York
and not under  the  Company's  medical  malpractice  policy.  The  decision  was
affirmed on appeal by the New York State Appellate Division in November 1991 and
not  appealed  by the  State.  In July  1992,  the  State  of New  York  enacted
legislation  eliminating  medical school faculty  members of SUNY engaged in the
clinical practice of medicine at a SUNY medical facility from indemnification by
the State with  respect to  malpractice  claims  arising  out of such  activity,
retroactive  to July 1, 1991. In an opinion filed on September 3, 1993 the Court
of  Claims  of the  State of New  York  held,  inter  alia,  that the July  1992
legislation  by the State of New York  eliminating  SUNY medical  school faculty
members  engaged  in the  clinical  practice  of  medicine,  as  part  of  their
employment  by  SUNY,  from   indemnification  by  the  State  with  respect  to
malpractice  claims  arising  out  of  such  activity  was  not  to  be  applied
retroactively.  This  decision  was  affirmed  by the New York  State  Appellate
Division in April 1994.  Subsequently,  in February 1995, the Appellate Division
granted  leave to  Frontier  and the  State of New  York to have the  issues  of
Frontier's  entitlement  to  recover  its  costs  of  defense  and its  costs of
settlement ruled on by the State's highest Court, the New York Court of Appeals.
In  December  1995,  the New York  Court of  Appeals  ruled  on this  issue  and
concluded  that  Frontier  was  entitled to  recoveries  from the State for such
medical malpractice  claims. As a result of this decision,  the Company believes
the  above-referenced  decisions  are  controlling  precedents  and that it will
benefit  economically  by not being  ultimately  responsible  for certain claims
against SUNY physicians for whom it presently  carries  reserves and be entitled
to reimbursements of certain claims previously paid; accordingly, effective June
30, 1996 and December 31, 1995, Frontier  recorded  subrogation  recoverables of
approximately $13,000,000 and $19,000,000, respectively, representing the amount
of claims already paid and the reserves currently held by Frontier on open cases
that  management  believes  are  reimbursable  by the State of New York.  To the
extent that the amount of the actual  recovery  varies,  such difference will be
reported in the period recognized.  The Company is continuing to defend all SUNY
faculty  members  against  malpractice  claims  that have been  asserted  and is
maintaining reserves therefor adjusted for the anticipated recoveries.






                                      -16-


<PAGE>

<PAGE>



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


Shareholder Litigation

The Company  has been  served with  several  purported  class  actions  alleging
violations  of federal  securities  laws by the Company  and, in some cases,  by
certain of its officers and directors; certain actions also allege violations of
the  common  law.  The  complaints  relate  to the  Company's  November  8, 1994
announcement of its third quarter  financial results and allege that the Company
previously had omitted and/or misrepresented  material facts with respect to its
earnings and profits.  The Company  believes the suits are without merit and has
retained special legal counsel to contest them vigorously.




                                      -17-


<PAGE>

<PAGE>




PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

          Not applicable.


Item 2.   Changes in Securities

          Not applicable.


Item 3.   Defaults upon Senior Securities


          Not applicable.


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

          On May 23,  1996,  the  shareholders  of the company held their annual
          meeting in Rock Hill, New York. The shareholders of 11,900,479  shares
          of Common Stock were present or represented by proxy and, accordingly,
          a quorom was present and matters were voted upon as follows:


          a.   By plurality vote, the following  persons were elected  Directors
               of the Company:
<TABLE>
<CAPTION>

                                               Votes                   Votes
                                               For                    Withheld
                                               -----                  --------
<S>                                         <C>                       <C>  
                  Walter A. Rhulen          11,890,322                  8,692
                  Peter L. Rhulen           11,890,172                  8,842
                  Lawrence E. O'brien       11,890,322                  8,692
                  Douglas C.  Moat          11,884,507                 10,507
                  Alan Gerry                11,884,672                 14,342
</TABLE>

          b.   The vote to  ratify  the  reappointment  of Ernst & Young  LLP as
               independent  auditors of the Company also passed.  Votes totaling
               11,890,120 were in favor of the ratification, 4,769 were against,
               and 5,769 shares abstained.

Item 5.    Other Information

           On June 25, 1996, the Company announced that it executed definitive
           agreements to acquire 100% stock of Regency Insurance Company and
           Emrol Premium Finance Company in exchange for shares of Frontier
           stock.








                                      -18-


<PAGE>

<PAGE>



Item 6.    Exhibits and Reports on Form 8-K

           a.   Exhibits.

                None.

           b.   Reports on Form 8-K.

                On June 7,1996, the Company filed a report on Form 8-K, as
                amended on October 7, 1996, reporting that on May 22, 1996 it
                had acquired, through its wholly owned subsidiary, Frontier
                Insurance Company, 100% of the stock of United Capitol Holding
                Company.


                                      -19-


<PAGE>

<PAGE>



                                    SIGNATURE



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: October 9, 1996                             Frontier Insurance Group, Inc.
                                                  ------------------------------
                                                           (Registrant)




                                            By:    /s/ Mark H. Mishler
                                                   ----------------------------
                                                   Mark H. Mishler
                                                   Vice President - Finance &
                                                     Treasurer
                                                     (Principal Financial and
                                                     Accounting Officer and Duly
                                                     Authorized Officer)


                                      -20-