<PAGE>

<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 September 30, 1997

                                       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)


           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 November 12, 1997 was 34,017,287.


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




                               Page 1 of 18 pages





<PAGE>

<PAGE>





                         FRONTIER INSURANCE GROUP, INC.




<TABLE>
<CAPTION>

                                      INDEX                                                PAGE
                                      -----                                                ----

<S>             <C>                                                                        <C>
PART I -  FINANCIAL INFORMATION

    Item 1.     Consolidated Financial Statements

                Consolidated Balance Sheets at
                September 30, 1997 (Unaudited) and December 31, 1996...................      3-4

                Consolidated Statements of Income (Unaudited) for
                the Three Months and Nine Months  Ended September 30, 1997 and 1996 ...       5

                Consolidated Statements of Cash Flows (Unaudited)
                for the Nine Months Ended September 30, 1997 and 1996..................        6

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

    Item 2.     Management's Discussion and Analysis of
                Financial Condition and Results of Operations..........................    10-16


PART II -  OTHER INFORMATION

    Item 1.     Legal Proceedings......................................................       17

    Item 2.     Changes in Securities..................................................       17

    Item 3.     Defaults upon Senior Securities........................................       17

    Item 4.     Submission of Matters to a Vote of Security Holders....................       17

    Item 5.     Other Information......................................................       17

    Item 6.     Exhibits and Reports on Form 8-K.......................................       17

    Signature   .......................................................................       18

</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>

                                                                             September 30,   December 31,
                                                                                 1997           1996
                                                                            ------------     ------------
                                                                              (Unaudited)

<S>                                                                             <C>               <C>    
Investments:
Securities, available for sale--at fair value:
    Fixed maturities (amortized cost: 1997--$950,015; 1996--$680,281)        $  969,121        $  685,277
    Equity securities (cost: 1997--$28,998; 1996--$13,871);                      34,915            16,271
Short-term investments                                                          177,758           133,835
Other investments                                                                12,467             2,937
                                                                             ----------        ----------
    TOTAL INVESTMENTS                                                         1,194,261           838,320

Cash                                                                              3,234             8,332
Agents' balances due, less allowances for doubtful accounts
  (1997--$2,250; 1996--$2,225)                                                   55,274            50,558
Premiums receivable from insureds, less allowances
   for doubtful accounts (1997--$55; 1996--$60)                                  36,005            26,225
Net reinsurance recoverables less allowances for
   possible uncollectible amounts (1997--$464; 1996--$517)                      349,259           192,569
Accrued investment income                                                        13,258             9,364
Federal income taxes recoverable                                                  3,107             3,987
Deferred policy acquisition costs                                                49,510            32,871
Deferred federal income tax asset                                                22,390            27,620
Home office building, property and equipment--at cost,
  less accumulated depreciation and amortization
  (1997-14,060; 1996--$11,184)                                                   44,884            37,167
Intangible assets, less accumulated amortization
  (1997--5,088; 1996--$3,808)                                                    12,837            11,738
Other assets                                                                     38,585             7,656
                                                                             ----------        ----------
        TOTAL ASSETS                                                         $1,822,604        $1,246,407
                                                                             ==========        ==========

</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>

                                                                  September 30,     December 31,
                                                                      1997              1996
                                                                   ----------      ------------
                                                                   (Unaudited)

<S>                                                                 <C>             <C>        
LIABILITIES
  Policy liabilities:
    Unpaid losses                                                   $ 530,309       $   429,506
    Unpaid loss adjustment expenses                                   116,134           109,567
    Unearned premiums                                                 398,293           185,728
                                                                   ----------      ------------
        TOTAL POLICY LIABILITIES                                    1,044,736           724,801
  Funds withheld under reinsurance contracts                           94,552            64,065
  Cash dividend payable to shareholders                                 2,374             1,904
  Other liabilities                                                    52,268            20,110
                                                                  -----------       -----------
    TOTAL LIABILITIES                                               1,193,930           810,880


COMMITMENTS AND CONTINGENCIES

GUARANTEED PREFERRED BENEFICIAL INTEREST
IN COMPANY'S CONVERTIBLE  SUBORDINATED
DEBENTURES                                                            166,643           166,953

SHAREHOLDERS' EQUITY--
  Preferred Stock, par value $.01 per share;
     authorized and unissued--1,000,000 shares
  Common Stock, par value $.01 per share
     (shares authorized:  50,000,000,
     shares  issued:  1997--34,002,844;1996--29,379,104)                  340               147
  Additional paid-in capital                                          367,853           221,984
  Net unrealized gains                                                 16,598             4,807
  Retained earnings                                                    78,022            42,424
                                                                 ------------     -------------
    SUBTOTAL                                                          462,813           269,362
  Less treasury stock--at cost (1997--90,450; 1996--91,080
    shares)                                                               782               788
                                                                 ------------     -------------
       TOTAL SHAREHOLDERS' EQUITY                                     462,031           268,574
                                                                  -----------      ------------
       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $1,822,604        $1,246,407
                                                                   ==========        ==========

Book value per share                                                   $11.58             $9.14
                                                                       ======             =====

</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                 Nine Months
                                                   Ended September 30,         Ended September 30,
                                              -------------------------      -----------------------
                                                 1997            1996          1997           1996
                                                 ----            ----          ----           ----

<S>                                             <C>            <C>           <C>           <C>     
REVENUES
  Premiums written                              $189,715       $123,202      $424,697      $283,028
  Premiums ceded                                 (68,201)       (22,525)     (134,724)      (48,999)
                                              ----------      ----------     ---------    ---------
         NET PREMIUMS WRITTEN                    121,514        100,677       289,973       234,029
   Increase in net unearned premiums             (18,298)       (30,050)      (32,933)      (39,260)
                                              ----------      ----------     ---------    ---------
         NET PREMIUMS EARNED                     103,216         70,327       257,040       194,769
  Net Investment income                           14,555          9,650        39,273        26,024
  Realized capital gains                             231           (221)        1,446         1,084
                                              ----------      ----------     ---------    ---------
         TOTAL NET INVESTMENT INCOME              14,786          9,429        40,719        27,108
  Gross claims adjusting income                                       9                          46
                                              ----------      ----------     ---------    ---------
         TOTAL REVENUES                          118,002         79,765       297,759       221,923

EXPENSES
    Losses                                        39,973         30,420        97,194        87,336
    Loss adjustment expenses                      15,657         11,623        40,145        30,351
    Amortization of policy acquisition costs      21,075         14,461        56,986        42,172
    Underwriting and other expenses               16,583          9,018        35,008        20,656
    Minority interest in income of
         consolidated subsidiary trust             2,725                        8,116
    Interest expense                                 515            529           986         1,409
                                              ----------      ----------     ---------    ---------
    TOTAL EXPENSES                                96,528         66,051       238,435       181,924

INCOME BEFORE INCOME TAXES                        21,474         13,714        59,324        39,999

INCOME TAXES
    State                                            479            (45)          889           502
    Federal                                        6,237          4,246        16,354        10,951
                                              ----------      ----------     ---------    ---------
         TOTAL INCOME TAXES                        6,716          4,201        17,243        11,453
                                              ----------      ----------     ---------    ---------

         NET INCOME                              $14,758         $9,513       $42,081       $28,546
                                              ==========      ==========     =========    =========

PER SHARE DATA:
    Primary earnings per common share               $.47           $.33         $1.40          $.99
                                                    ====           ====         =====          ====
    Fully diluted earnings per common share         $.42           $.33         $1.26          $.99
                                                    ====           ====         =====          ====

WEIGHTED AVERAGE COMMON  SHARES
OUTSTANDING (in thousands):
    Primary                                       31,683         28,872        30,130        28,748
    Fully diluted                                 39,041         28,872        37,488        28,748


</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>

                                                                               Nine Months
                                                                           Ended September 30,
                                                                      ----------------------------
                                                                         1997               1996
                                                                         ----               ----
<S>                                                                   <C>                    <C>
OPERATING ACTIVITIES
  Net income                                                          $  42,081           $  28,546
  Adjustments to reconcile net income to net cash provided
     by operating activities:
        Increase in policy liabilities                                   92,749             209,711
        Increase in reinsurance balances                                (57,642)            (58,545)
        Increase in agents' balances and premiums receivable            (16,565)            (26,905)
        Increase in deferred policy acquisition costs                   (16,639)             (9,891)
        Decrease (increase) in accrued investment income                    171                (324)
        Deferred income tax expense                                       8,824
        Depreciation and amortization                                     3,875               2,497
        Realized capital gains                                           (1,446)             (1,018)
        Other                                                            29,708              (1,179)
                                                                      ---------            --------
          NET CASH PROVIDED BY OPERATING ACTIVITIES                      85,116             142,892

INVESTING ACTIVITIES
  Proceeds from sales of fixed maturities available-for-sale             50,839              84,955
  Proceeds from calls, paydowns and maturities of fixed maturities
     available-for-sale                                                  71,754             160,917
  Proceeds from sales of equity securities                               13,458
  Purchases of securities                                              (223,153)           (361,933)
  Purchase of wholly-owned subsidiary, net of cash acquired             (89,056)
  Net purchases of short-term investments                               (33,987)            (11,921)
  Additions and improvements to home office building                     (6,985)
  Purchases of property and equipment                                    (3,609)             (8,772)
  Other                                                                  (9,530)            (10,091)
                                                                      ---------            --------
          NET CASH USED IN INVESTING ACTIVITIES                        (230,269)           (146,845)

FINANCING ACTIVITIES
  Proceeds from borrowings                                               62,000               7,100
  Repayment of borrowings                                               (62,000)
  Cash dividends paid                                                    (5,866)             (5,010)
  Issuance of common stock                                              145,901               9,113
  Reissuance of treasury stock                                               20
                                                                      ---------            --------
          NET CASH PROVIDED BY FINANCING ACTIVITIES                     140,055              11,203

          (DECREASE) INCREASE IN CASH                                    (5,098)              7,250

          CASH AT BEGINNING OF YEAR                                       8,332               5,115
                                                                      ---------            --------

          CASH AT END OF PERIOD                                       $   3,234            $ 12,365

</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, 1996. 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 1996 financial statements have been reclassified to conform
    to the 1997 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 nine-month period ended September 30, 1997 are not
    necessarily indicative of the results that may be expected for the year
    ending December 31, 1997.

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>   
    05/23/96       06/28/96     07/19/96       10% stock                   11(1)   2,622,356
    05/23/96       06/28/96     07/19/96       $.065 per share cash    $1,875            N/A
    08/15/96       09/30/96     10/18/96       $.065 per share cash    $1,903            N/A
    11/21/96       12/27/96     01/14/97       $.065 per share cash    $1,904            N/A
    02/27/97       03/24/97     04/18/97       $.065 per share cash    $1,905            N/A
    05/22/97       06/30/97     07/21/97       100% stock                 N/A        14,735,962
    05/22/97       06/30/97     07/21/97       $.07 per share cash     $2,057            N/A
    08/14/97       09/30/97     10/17/97       $.07 per share cash     $2,374            N/A

</TABLE>

    (1) Cash in lieu of fractional shares.

4.  At September 30, 1997, options to purchase 896,598 shares of Common Stock,
    at per share exercise prices ranging from $9.43 to $26.69, were outstanding,
    compared to options to purchase 560,600 shares of Common Stock, at per share
    exercise prices ranging from $9.43 to $15.40, outstanding at September 30,
    1996 under the Company's stock option plans (the "Plans"). Options to
    purchase 240,675 and 217,426 shares of Common Stock were exercisable at
    September 30,1997 and September 30,1996, 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 825,000 and 148,500 shares, respectively, of the Company's Common
    Stock at $22.73 per share at any time through December 31, 1999, which
    options were outstanding at September 30, 1997.

    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 September 30, 1997 and
    1996, such earned commissions accrued were $506,000 and $171,000,
    respectively. During the nine months ended September 30, 1997 and 1996, such
    earned commissions accrued were $419,000 and $69,000, respectively. The
    estimated profitability of the reinsured business is continually reviewed
    and as adjustments become necessary, such adjustments are reflected in
    current operations.

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

<TABLE>
<CAPTION>
                                       September 30, 1997    December 31, 1996
                                       ------------------    ------------------
                                                   (in thousands)
<S>                                                <C>          <C>       
     Ceded paid losses recoverable           $ 15,401             $  7,519
     Ceded unpaid losses and LAE              270,305              165,467
     Ceded unearned premiums                   97,973               32,403
     Ceded reinsurance payable                (34,420)             (12,820)
                                             --------             --------
          TOTAL                              $349,259             $192,569
                                             ========             ========

</TABLE>

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

<TABLE>
<CAPTION>
                                            Nine Months Ended September 30,
                                            -------------------------------
                                              1997                    1996
                                              ----                    ----
                                                   (in thousands)
<S>                                          <C>                    <C>
     Ceded premiums earned                   $131,571               $45,791
     Ceded incurred losses                     89,865               $12,018
     Ceded incurred LAE                        17,390               $ 3,246

</TABLE>


                                       -8-

<PAGE>

<PAGE>



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

    The effect of reinsurance on premiums written and earned at September 30,
    1997 and 1996 was as follows:

<TABLE>
<CAPTION>
                                                 Nine Months Ended September 30,
                                     ------------------------------------------------------------
                                             1997                                  1996
                                            Premiums                             Premiums
                                     ----------------------               ------------------------
                                      Written        Earned               Written         Earned
                                     --------        ------               -------         ------
                                                           (in thousands)

<S>                                  <C>            <C>                   <C>             <C>     
    Direct                           $410,931       $371,941              $278,093        $235,314
    Assumed                            13,766         16,670                 4,934           5,246
    Ceded                            (134,724)      (131,571)              (48,998)        (45,791)
                                     --------       --------            ----------      ----------
    Net                              $289,973       $257,040              $234,029        $194,769
                                     ========       ========              ========        ========

</TABLE>

7.  In the first quarter of 1997, the Company adopted Financial Accounting
    Standards Board Statement 125, "Accounting for Transfers and Servicing of
    Financial Assets and Extinguishments of Liabilities" ("FASB 125"), which
    provides accounting and reporting standards for sales, securitizations, and
    servicing of receivables and other financial assets, secured borrowing and
    collateral transactions, and the extinguishments of liabilities. The
    adoption excluded the provisions that deal with securities lending,
    repurchase and dollar repurchase agreements, and the recognition of
    collateral, which will be adopted in 1998 pursuant to the proposed
    amendment. The adoption of FASB 125 did not have a material impact to the
    Company's financial position or results of operations.

    In February 1997, the Financial Accounting Standards Board issued Statement
    128, "Earnings per Share," which is required to be adopted on December 31,
    1997. At that time, the Company will be required to change the method
    currently used to compute earnings per share and to restate all prior
    periods. Under the new requirements for calculating primary earnings per
    share, the dilutive effect of stock options will be excluded. The impact is
    expected to result in no change in primary earnings per share in either of
    the quarters ended September 30, 1997 or 1996. The impact on the calculation
    of fully diluted earnings per share for these quarters is not expected to be
    material.

                                       -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, 1996.

Three Months Ended September 30, 1997 Compared to Three Months Ended 
September 30, 1996

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                 Percent
                                                     Ended September 30,              Change
                                                 -----------------------             -------
                                                     1997          1996
                                                     ----          ----                     
                                                             (dollar amounts in thousands)
<S>                                              <C>           <C>                     <C> 
Net Premiums Earned:
   General liability                             $  29,713     $  20,776               43.0
   Medical malpractice                              27,101        28,396               (4.6)
   Surety                                           13,483        12,692                6.2
   Commercial earthquake                             1,481         2,327              (36.4)
   Workers' compensation                             2,113           768              175.1
   Specialty personal lines                         11,913           410            2,805.6
   Credit related products                          11,430                              N/A
   Other                                             5,982         4,958               20.7
                                                  --------      --------
     Total                                        $103,216      $ 70,327               46.8
                                                  ========      ========

</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 September 30,         Ended September 30,
                                            ------------------------     ---------------------
                                               1997          1996           1997          1996
                                               ----          ----           ----          ----
<S>                                           <C>           <C>            <C>            <C>
Losses                                        38.7%         43.3%           38.7%         43.3%
Loss adjustment expenses (LAE)                15.2          15.2            15.2          16.5
                                              ----          ----            ----          ----
Losses and LAE                                53.9          58.5            53.9          59.8
Acquisition, underwriting, interest, and
  other expenses                              33.6          30.3            36.5          33.3
                                              ----          ----            ----          ----
Total combined ratio                          87.5%         88.8%           90.4%         93.1%
                                              ====          ====            ====          ====
</TABLE>



A variety of factors accounted for the 46.8% growth in net premiums earned, the
principal factors being increases in the Company's core and new program
business, and the acquisitions of Lyndon Property Insurance Company (June 1997),
United Capitol Holding Company (May 1996) and Regency Insurance Company
(September 1996). These increases were partially offset by (i) a decrease in the
workers' compensation component of the social services programs due to price
competition, and (ii) decreases in medical malpractice as a result of a loss of
business due to the effects of rate increases in Florida, and the
reclassification of certain medical malpractice business to the general
liability line of business and (iii) a decrease in commercial earthquake
insurance.

                                      -10-

<PAGE>

<PAGE>



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

Net premiums earned in medical malpractice decreased due to the loss of medical
malpractice business as a result of rate increases in Florida and the
reclassification of certain medical malpractice business to the general
liability line of business which more than offset the increase in the number of
physicians insured in the programs for psychiatrists and alternative risks,
geographical expansion in Ohio, Texas, Michigan and Illinois and growth in the
dental program endorsed by the Academy of General Dentistry.

Net premiums earned for the general liability line increased primarily because
of increases in various programs, including continued growth in the social
services programs, artisans contractor program, demolition contractors, and
excess employers' liability, and as a result of the acquisition of United
Capitol in May 1996. These increases were partially offset by a decrease in net
premiums earned in the umbrella and crane operator liability programs.

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

Net premiums earned for the workers' compensation line increased primarily as a
result of increases in the alternative risk program which the Company initiated
in 1996, partially offset by decreases in the specialty niche programs for
cotton gins and feed lots and decreases in social services programs due to price
competition.

Net premiums earned for the commercial earthquake program decreased primarily
due to the planned decrease in this line of business and increased ceded
premiums associated with the purchase of additional reinsurance.

Net premiums earned for the specialty personal lines increased due to increased
volume in the mobile homeowners program and the non-standard auto physical
business as a result of the acquisition of Lyndon and Regency.

Net premiums earned for the credit related products increased as a result of the
acquisition of Lyndon.

Net investment income before realized capital gains and losses increased 49.3%
due principally to increases in invested assets resulting from the Common Stock
offering in August 1997, the Convertible Trust Originated Preferred Securities
("Convertible TOPrS") offering in October 1996, cash inflow from regular
operations, and the contribution to net investment income by United Capitol,
Lyndon and Regency, partially offset by the interest charge on funds held by the
Company for the benefit of the reinsurer of the Company's aggregate excess of
loss reinsurance contract. Total net investment income increased 56.8% due to
the aforementioned increase in net investment income and an increase in realized
capital gains of 204.5%. The average annual pre-tax yield on investments,
excluding the charge for funds held under the aggregate excess loss of
reinsurance contract and realized capital gains and losses, was 6.3%, unchanged
from the previous year. The average annual after-tax yield on investments,
excluding the charge for funds held under the aggregate excess of loss
reinsurance contract and realized capital gains and losses, was 4.8%.

Gross claims adjusting income has been eliminated as a separate item as claims
adjusting services provided to outside companies have essentially been
eliminated.

Total revenues increased 47.9% as a result of the above.

Total expenses increased by 46.1% compared to the 47.9% increase in net premiums
earned. Losses and loss adjustment expenses ("LAE") increased at a 32.3% rate as
a result of a 31.4% decrease in losses and a 34.7% increase in LAE. The increase
in losses and LAE was disproportionate to that of net earned premiums due to the
aggregate excess of loss reinsurance contract which provides coverage for losses
and

                                      -11-

<PAGE>

<PAGE>



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

LAE in excess of 64% and 65% for the 1997 and 1996 accident years, respectively,
which, together, resulted in a loss and LAE component of the GAAP Combined Ratio
5.9 percentage points lower than in the comparable 1996 period. The 60.3%
increase in the amortization of policy acquisition costs, underwriting and other
expenses was attributable primarily to an increase in direct commission expense
resulting from growth in programs with higher commission rates, increased
staffing and marketing expenses related to expansion, salary increases and the
total expenses associated with Lyndon, United Capitol and Regency partially
offset by the $1,739,000 recognition of the amortization of the excess of net
assets over the purchase price associated with the Lyndon acquisition. The
$14,000 decrease in interest expense was primarily the result of the repayment
and termination of the line of credit in the fourth quarter of 1996, partially
offset by the interest expense associated with the draw-down from a revolving
credit facility that the Company obtained on September 3, 1997. The Company also
incurred approximately $2,725,000 of expenses in the 1997 quarter, associated
with the Convertible TOPrS. As the non-claim related component of the GAAP
Combined Ratio increased at a greater rate than premiums earned , the non-claim
component was 3.1 percentage points higher than in the comparable 1996 period.
The total GAAP Combined Ratio decreased by 2.7 percentage points to 90.4 as a
result of the above.

The foregoing changes resulted in income before taxes of $21,400,000 for the
1997 quarter, a 56.6% increase over the comparable 1996 quarter. Net income for
the period increased by $5,200,000 or 55.1%.

Nine Months Ended September 30, 1997 Compared to Nine Months 
Ended September 30, 1996

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>

                                                        Nine Months                  Percent
                                                     Ended September 30,              Change
                                                    ---------------------            --------
                                                     1997          1996
                                                     ----          ----
                                                          (dollar amounts in thousands)
<S>                                               <C>           <C>                    <C> 
Net Premiums Earned:
   General liability                              $ 80,500      $ 55,014               46.3
   Medical malpractice                              80,845        80,385                0.6
   Surety                                           40,497        37,021                9.4
   Commercial earthquake                             6,181         6,163                0.3
   Workers' compensation                             3,606         5,981              (39.7)
   Specialty personal lines                         18,019           906            1,888.9
   Credit related products                          14,286                              N/A
   Other                                            13,106         9,299               40.9
                                                  --------      --------
     Total                                        $257,040      $194,769               32.0
                                                  ========      ========
</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
                                            ------------------------     -------------------
                                                       Nine Months Ended September 30,
                                            -------------------------------------------------
                                               1997          1996           1997         1996
                                             --------      --------       --------     ------

<S>                                            <C>           <C>             <C>        <C>
Losses                                        37.8%         44.8%           37.8%      44.8%
Loss adjustment expenses (LAE)                15.6          14.5            15.6        15.6
                                              ----          ----            ----        ----
Losses and LAE                                53.4          59.3            53.4        60.4
Acquisition, underwriting, and
  other expenses                              35.0          31.3            35.8        32.3
                                              ----          ----            ----        ----
    Total combined ratio                      88.4%         90.6%           89.2%       92.7%
                                              ====          ====            ====        ====
</TABLE>


A variety of factors accounted for the 32.0% growth in net premiums earned, the
principal factor being increases in the Company's core and new program business
and as a result of the acquisitions of Lyndon, United Capitol and Regency. This
increase was partially offset by (i) a decrease in workers' compensation,
particularly the cotton gin program that the Company discontinued during 1996,
(ii) a decrease in the workers' compensation component of the social services
programs due to price competition, and (iii) to a loss of medical malpractice
business due to the effects of rate increases in Florida.

Net premiums earned for the general liability line increased primarily because
of increases in various programs, including continued growth in the social
services programs, artisans contractor program, demolition contractors, and
excess employers' liability, and, as a result of the acquisition of United
Capitol in May 1996. These increases were partially offset by a decrease in net
premiums earned in the umbrella and crane operator liability programs.

The increase in medical malpractice net premiums earned was primarily
attributable to an increase in the number of physicians insured in the programs
for psychiatrists and alternative risks, geographical expansion in Ohio, Texas,
Michigan and Illinois and growth in the dental program endorsed by the Academy
of General Dentistry, partially offset by decreases from the loss of business
due to the effect of rate increases in Florida and from the reclassification of
certain medical malpractice business to the general liability line of business.

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

Net premiums earned for the commercial earthquake program increased marginally
due to an increase in the number of policies written in 1996 which are earned
pro rata in 1997, partially offset by the planned decrease in this line of
business.

Net premiums earned for the workers' compensation line decreased primarily as a
result of decreases in the specialty niche programs for cotton gins and feed
lots and in social services programs due to price competition partially offset
by increases in the alternative risk program which the Company initiated in
1996.

Net premiums earned for the specialty personal lines increased primarily due to
increased volume in the mobile homeowners' program and auto physical damage
business as a result of the acquisition of Lyndon and Regency.

Net premiums earned for the credit related products increased as a result of the
acquisition of Lyndon.

                                      -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 and losses increased 50.9%
due principally to increases in invested assets resulting from the proceeds of
the Common Stock offering in August 1997, the Convertible Trust Originated
Preferred Securities ("Convertible TOPrS") offering in October 1996, cash inflow
from regular operations, and the contribution to net investment income by
Lyndon, United Capitol and Regency, partially offset by the interest charge on
funds held by the Company for the benefit of the reinsurer of the Company's
aggregate excess of loss reinsurance contract. Total net investment income
increased 50.2% due to the aforementioned increase in net investment income,
partially offset by a decrease in realized capital gains of 33.4%. The average
annual pre-tax yield on investments, excluding the charge for funds held under
the aggregate excess loss of reinsurance contract and realized capital gains and
losses, was 6.3%, unchanged from the previous year. The average annual after-tax
yield on investments, excluding the charge for funds held under the aggregate
excess of loss reinsurance contract and realized capital gains and losses, was
4.8%.

Gross claims adjusting income has been eliminated as a separate item as claims
adjusting services provided to outside companies have essentially been
eliminated.

Total revenues increased 34.2% as a result of the above.

Total expenses increased by 31.1% compared to the 32.0% increase in net premiums
earned. Losses and loss adjustment expenses ("LAE") increased at a 16.7% rate as
a result of a 11.3% increase in losses and a 32.3% increase in LAE. The increase
in losses and LAE was disproportionate to that of net earned premiums due to the
recognition of reserve redundancies in the general liability line of business
and to the aggregate excess of loss reinsurance contract which provides coverage
for losses and LAE in excess of 64% and 65% for the 1997 and 1996 accident
years, respectively, which, together, resulted in a loss and LAE component of
the GAAP Combined Ratio 7.0 percentage points lower than in the comparable 1996
period. The 32.3% 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 3.5%
increase in the amortization of policy acquisition costs, underwriting and other
expenses was attributable primarily to an increase in direct commission expense
resulting from growth in programs with higher commission rates, increased
staffing and marketing expenses related to expansion, salary increases and the
total expenses associated with Lyndon, United Capitol and Regency partially
offset by the recognition of $5,217,000 of the amortization of the excess of net
assets over the purchase price associated with the Lyndon acquisition. The 30.0%
decrease in interest expense was primarily the result of the repayment and
termination of the line of credit in the fourth quarter of 1996, partially
offset by the interest expense associated with the draw-down from a revolving
credit facility that the Company obtained on June 3, 1997. The Company also
incurred approximately $8,116,000 of expenses in the 1997 nine-month period
associated with the Convertible TOPrS. As the non-claim related component of
the GAAP Combined Ratio increased at a greater rate than premiums earned, the
non-claim component was 3.5 percentage points higher than in the comparable
1996 period. The total GAAP Combined Ratio decreased by 3.5 percentage points
to 89.2% as a result of the above.

The foregoing changes resulted in income before taxes of $59,324,000 for the
1997 quarter, a 48.3% increase from the comparable 1996 quarter. Net income for
the period increased by $13,625,000 or 47.4%.

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

                                      -14-

<PAGE>

<PAGE>



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

maturities of portfolio investments. The principal expenditures are for payment
of losses and LAE, operating expenses, commissions, and dividends to
shareholders.

At September 30, 1997, $1.8 billion in total assets were comprised of the
following: 65.7% cash and investments, 19.2% net reinsurance recoverables, 5.0%
premiums receivable, 2.5% home office building and equipment, 3.9% deferred
expenses (federal income taxes and policy acquisition costs), and 3.7% 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 September 30, 1997:

<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 $37,914)                         $527,497             $527,497             54.4%
AA/Aa                                          162,135              162,135             16.7
A/A                                            203,815              203,815             21.0
BBB/Baa                                         68,605               68,605              7.1
All other                                        7,069                7,069               .8
                                              --------             --------            -----
          Total                               $969,121             $969,121            100.0%
                                              ========             ========            =====
</TABLE>

Cash flow generated from operations for the nine-month periods ended September
30, 1997 and 1996 was $85,116,000 and $142,892,000, respectively, amounts
adequate to meet all obligations during the periods.

In April 1992, the Company commenced paying quarterly cash dividends to its
shareholders. Cash dividends declared in the nine-month periods ended September
30, 1997 and 1996 were $5,866,000 and $5,010,000 respectively.

On June 3, 1997, the Company obtained a five-year $100,000,000 revolving loan
credit facility from Deutsche Bank AG, New York Branch and/or Cayman Islands
Branch, from which it borrowed $62,000,000 at an initial floating interest rate
of 6.04%, based upon Eurodollar interest rates, payable quarterly, to fund a
portion of the $92,000,000 purchase price for Lyndon. On August 21, 1997, the
company repaid the credit facility.

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 prior to 1997. During the first quarter
of 1997, the Company elected to include license and permit bonds, fidelity bonds
and certain other miscellaneous surety bonds in the net premiums earned ceded
under the contract. The loss and LAE ratio above which the reinsurance provides
coverage is 65% and 64% for accident years 1996 through 1997, respectively. The
maximum amount recoverable for an accident year is 175% of the reinsurance
premium

                                      -15-

<PAGE>

<PAGE>



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

paid for the accident year, or $162,500,000 in the aggregate for the three
years. During the first quarter 1997 and 1996, the Company ceded 13.0% and 13.5%
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
September 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. In January 1997, the New York Court of Claims rendered a decision
granting summary judgement to the Company on three SUNY cases that were
previously paid by the Company. This decision has been appealed 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.

Shareholder Litigation

The Company is a defendant in a class action alleging violations of federal
securities laws by the Company and certain of its officers and directors. The
complaint relates to the Company's November 5, 1994 announcement of its third
quarter financial results and alleges that the Company previously had omitted
and/or misrepresented material facts with respect to its earnings and profits.
The Company believes the suit is without merit and has retained special legal
counsel to contest the suit vigorously and believes that the Company's exposure
to liability under such lawsuit, if any, would not have a material adverse
effect on the Company's financial condition.

                                      -16-

<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

           Not applicable.

Item 5.    Other Information

           On October 23, 1997, the Company announced that it executed
           definitive agreements to acquire Accel Life Insurance Company, Dublin
           International Limited, Acceleration National Service Corporation and
           the extended service contract business of Acceleration National
           Insurance Company from Accel International Corporation.

           On October 7, 1997, the Company announced that it executed a
           definitive agreement to acquire Western Indemnity Insurance Company
           and its affiliate, Professional Risk Management Services of Texas,
           Inc., from the Galtney Group, Inc.

Item 6.    Exhibits and Reports on Form 8-K

           a. Exhibits.
              (11) Computations or Per Share Earnings
              (27) Financial Data Schedule

           b. Reports on Form 8-K.
              None


                                      -17-

<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: November 13, 1997              Frontier Insurance Group, Inc.
                                     ------------------------------
                                             (Registrant)

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

                                      -18-
<PAGE>

<PAGE>



FRONTIER INSURANCE GROUP, INC.       1996 FORM 10-K                   EXHIBIT 11

                        Computation of Per Share Earnings
                 (in thousands, except per share dollar amounts)

<TABLE>
<CAPTION>
                                                     Three Months                    Nine Months
                                                 Ended September 30,            Ended September 30,
Primary earnings per share:                          1997        1996             1997         1996
                                                 -----------  ----------       ---------     ------

<S>                                               <C>          <C>              <C>          <C>    
Net Income                                        $ 14,758     $ 9,513          $42,081      $28,546
                                                  ========     =======          =======      =======
Weighted average shares of
  common stock outstanding (1)                      31,683      28,872           30,130       28,748
                                                    ======      ======           ======       ======
Net income per share of
  common stock outstanding (1)                        $.47        $.33            $1.40         $.99
                                                      ====        ====            =====         ====
Fully diluted earnings per share:

Net Income                                         $16,529      $9,513          $47,356      $28,546
                                                   =======      ======          =======      =======
Weighted average shares of
  common stock and common stock
  equivalents outstanding (1)                       39,041      28,872           37,488       28,748
                                                    ======      ======           ======       ======
Net income per share of
  common stock and common stock
   equivalents outstanding (1)                        $.42        $.33            $1.26         $.99
                                                      ====        ====            =====         ====

</TABLE>

------------------
(1)      Weighted average shares of common stock outstanding have been adjusted
         to give effect to the Company's common stock dividends and a 3-for-2
         stock split. Accordingly, net income per share of common stock has been
         adjusted.


<PAGE>