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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION********Washington,D.C. 20549**

**FORM 10-Q**

**(Mark One)**
| **ý** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------|----------------------------------------------------------------------------------------------|

** **

**For thequarterly period ended June 30, 2001**

**OR**
| **o** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|-----------------------------------------------------------------------------------------------|

** **

**For thetransition period from ____________ to ___________**

**Commissionfile number 001-14673**

**MEEMIC Holdings, Inc.**(Exact name of registrant as specified in itscharter)

| **Michigan**                                                                         | **38-3436541**                        |
|--------------------------------------------------------------------------------------|---------------------------------------|
| (State  or other jurisdiction of   incorporation or organization)                    | (I.R.S.  Employer Identification No.) |
|                                                                                 |                                  |
| **691 North Squirrel Road, Suite 100  Auburn Hills, Michigan**                       | **48321**                             |
| (Address  of principal executive offices)                                            | (Zip  Code)                           |
|                                                                                 |
| Registrant's  telephone number, including area code:    **(888) 463-3642** |

 
| 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.    Yes ý  No o |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The number of shares outstanding of theregistrant’s common stock, no par value per share, as of August 9, 2001 was6,678,745.

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TABLE OF CONTENTS

| PART I.  | FINANCIAL INFORMATION                                                                           |                                                                                                                                     |
|----------|-------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                            |                                                                                                                                     |
|     | Item 1. Financial  Statements                                                                   |                                                                                                                                     |
|     |                                                                                            |                                                                                                                                     |
|     |                                                                                            | Condensed  Consolidated Balance Sheets at June 30, 2001 (Unaudited) and December 31,  2000                                               |   |
|     |                                                                                            |                                                                                                                                     |   |
|     |                                                                                            | Condensed  Consolidated Statements of Income for the Three Months and Six Months Ended  June 30, 2001 and 2000 (Unaudited)               |   |
|     |                                                                                            |                                                                                                                                     |   |
|     |                                                                                            | Condensed  Consolidated Statements of Comprehensive Income for the Three Months and Six  Months Ended June 30, 2001 and 2000 (Unaudited) |   |
|     |                                                                                            |                                                                                                                                     |   |
|     |                                                                                            | Condensed  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001  and 2000 (Unaudited)                            |   |
|     |                                                                                            |                                                                                                                                     |   |
|     |                                                                                            | Notes  to Condensed Consolidated Financial Statements (Unaudited)                                                                        |   |
|     |                                                                                            |                                                                                                                                     |   |
|     | Item  2. Management's  Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                     |
|     |                                                                                            |                                                                                                                                     |
|     | Item  3. Quantitative and Qualitative Disclosures About Market Risk                             |                                                                                                                                     |
|     |                                                                                            |                                                                                                                                     |
| Part II. | OTHER INFORMATION                                                                               |                                                                                                                                     |
|     |                                                                                            |                                                                                                                                     |
|     | Item  4. Submission of Matters to a Vote of Security Holders                                    |                                                                                                                                     |
|     |                                                                                            |                                                                                                                                     |
|     | Item 6.  Exhibits and Reports on Form 8-K                                                       |                                                                                                                                     |
|     |                                                                                            |                                                                                                                                     |
|     | Signatures                                                                                      |                                                                                                                                     |

 

**PART I.      FINANCIALINFORMATION**

**Item 1. Financial Statements**

**MEEMIC Holdings, Inc.and SubsidiariesCONDENSED CONSOLIDATED BALANCESHEETS**

** **

|                                                                                       | June 30, 2001  (Unaudited)                                                                                                                                                          |    | December 31, 2000 |    |
|--------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-------------------|---------|
|                                                                                       |                                                                                                                                                                                     |    |                   |    |
|                                                                                       | (In thousands, except share data)                                                                                                                                                   |    |
| **ASSETS**                                                                                 |                                                                                                                                                                                |    |              |    |
| Investments:                                                                               |                                                                                                                                                                                |    |              |    |
|                                                                                       | Fixed maturities available for sale, at  fair value (amortized cost of $176,642 and $166,179 in 2001 and 2000,  respectively)                                                       | $       | 179,975           |    | $ | 167,866 |   |
|                                                                                       | Short-term  investments, at cost, which approximates fair value                                                                                                                     | 1,956   |              | 6,859   |   |
|                                                                                       | Real estate,  at cost                                                                                                                                                               | 2,300   |              | 2,300   |   |
|                                                                                       |                                                                                                                                                                                |         |              |         |   |
|                                                                                       | Total  investments                                                                                                                                                                  | 184,231 |              | 177,025 |   |
| Cash and  cash equivalents                                                                 | 24,556                                                                                                                                                                              |    | 21,093            |    |
| Premiums due  from policyholders                                                           | 7,506                                                                                                                                                                               |    | 5,859             |    |
| Amounts  recoverable from reinsurers                                                       | 49,683                                                                                                                                                                              |    | 50,472            |    |
| Amounts  recoverable from reinsurers, related party                                        | 6,157                                                                                                                                                                               |    | 7,263             |    |
| Accrued  investment income                                                                 | 2,544                                                                                                                                                                               |    | 2,462             |    |
| Deferred  federal income taxes                                                             | 3,726                                                                                                                                                                               |    | 3,610             |    |
| Property and  equipment, at cost, net of accumulated depreciation                          | 3,695                                                                                                                                                                               |    | 3,922             |    |
| Deferred  policy acquisition costs                                                         | 3,152                                                                                                                                                                               |    | 2,784             |    |
| Intangible  assets, net of amortization                                                    | 31,958                                                                                                                                                                              |    | 33,420            |    |
| Federal  income taxes recoverable                                                          | -                                                                                                                                                                                   |    | 761               |    |
| Other assets                                                                               | 913                                                                                                                                                                                 |    | 803               |    |
|                                                                                       |                                                                                                                                                                                     |    |                   |    |
|                                                                                       | Total assets                                                                                                                                                                        | $       | 318,121           |    | $ | 309,474 |   |
|                                                                                       |                                                                                                                                                                                     |    |                   |    |
|                                                                                       |                                                                                                                                                                                |    |              |    |
| **LIABILITIES AND SHAREHOLDERS' EQUITY**                                                   |                                                                                                                                                                                |    |              |    |
| Liabilities:                                                                               |                                                                                                                                                                                |    |              |    |
|                                                                                       | Loss and  loss adjustment expense reserves                                                                                                                                          | $       | 107,910           |    | $ | 107,256 |   |
|                                                                                       | Unearned  premiums                                                                                                                                                                  | 39,251  |              | 36,755  |   |
|                                                                                       | Payable  related to acquisition                                                                                                                                                     | -       |              | 1,040   |   |
|                                                                                       | Accrued  expenses and other liabilities                                                                                                                                             | 12,749  |              | 11,512  |   |
|                                                                                       | Accrued  expenses and other liabilities, related party                                                                                                                              | 434     |              | 141     |   |
|                                                                                       | Premiums  ceded payable                                                                                                                                                             | 4,740   |              | 6,163   |   |
|                                                                                       | Federal  income taxes payable                                                                                                                                                       | 1,328   |              | -       |   |
|                                                                                       |                                                                                                                                                                                |         |              |         |   |
|                                                                                       | Total  liabilities                                                                                                                                                                  | 166,412 |              | 162,867 |   |
|                                                                                       |                                                                                                                                                                                     |    |                   |    |
| Shareholders'  equity:                                                                     |                                                                                                                                                                                |    |              |    |
|                                                                                       | Common stock, no par value; 10,000,000  shares authorized; 6,678,745 and 6,655,500 shares issued and outstanding in  2001 and 2000, respectively                                    | 66,087  |              | 65,855  |   |
|                                                                                       | Additional  paid-in capital                                                                                                                                                         | 7       |              | 225     |   |
|                                                                                       | Retained  earnings                                                                                                                                                                  | 83,449  |              | 79,430  |   |
|                                                                                       | Accumulated other comprehensive  income:  Net unrealized appreciation  on investments, net of deferred federal income taxes of $1,167 and $590 in  2001 and 2000, respectively | 2,166   |              | 1,097   |   |
|                                                                                       |                                                                                                                                                                                |         |              |         |   |
|                                                                                       | Total  shareholders' equity                                                                                                                                                         | 151,709 |              | 146,607 |   |
|                                                                                       |                                                                                                                                                                                |         |              |         |   |
|                                                                                       | Total  liabilities and shareholders' equity                                                                                                                                         | $       | 318,121           |    | $ | 309,474 |   |
|                                                                                       |                                                                                                                                                                                     |    |                   |    |
|                                                                                       |                                                                                                                                                                                |    |              |    |
| See the  accompanying notes to the unaudited condensed consolidated financial  statements. |                                                                                                                                                                                |    |              |    |
|                                                                                            |                                                                                                                                                                                     |         |                   |         |  |  |  |  |  |  |

 

**MEEMIC Holdings, Inc.and Subsidiaries****CONDENSED CONSOLIDATED STATEMENTS OF INCOME****For the Three and Six Months Ended June 30, 2001 and 2000 (Unaudited)**

|                                                                                              |                                                                |   |                 |   |      |   |      |   |
|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------|----------------------|--------|-----------|--------|-----------|--------|
|                                                                                              | **Three Months Ended**                                              |   | **Six Months Ended** |   |
|                                                                                              | **June 30,**                                                        |   | **June 30,**         |   |
|                                                                                              | 2001                                                                |   | 2000                 |   | 2001      |   | 2000      |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
|                                                                                              | (In thousands, except share data)                                   |   |
| Revenues and  other income:                                                                       |                                                                |   |                 |   |      |   |      |   |
|                                                                                              | Premiums  written                                                   | $      | 36,569               |   | $         | 33,764 |      | $      | 69,026 |   | $ | 63,746 |   |
|                                                                                              | Premiums  ceded                                                     | (1,299 | )                    | (2,268 | )         | (2,708 | )         | (4,322 | ) |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              | Net premiums  written                                               | 35,270 |                 | 31,496 |      | 66,318 |      | 59,424 |   |
|                                                                                              | Increase in unearned premiums, net of  prepaid reinsurance premiums | (2,621 | )                    | (2,409 | )         | (2,496 | )         | (1,734 | ) |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              | Net premiums  earned                                                | 32,649 |                 | 29,087 |      | 63,822 |      | 57,690 |   |
|                                                                                              | Net  investment income                                              | 2,682  |                 | 2,573  |      | 5,568  |      | 5,051  |   |
|                                                                                              | Net realized  investment losses on fixed maturities                 | (1,536 | )                    | -      |      | (1,562 | )         | (15    | ) |
|                                                                                              | Other income                                                        | 524    |                 | 543    |      | 870    |      | 920    |   |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              | Total  revenues and other income                                    | 34,319 |                 | 32,203 |      | 68,698 |      | 63,646 |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
| Expenses:                                                                                         |                                                                |   |                 |   |      |   |      |   |
|                                                                                              | Loss and loss  adjustment expenses incurred, net                    | 22,736 |                 | 18,227 |      | 45,400 |      | 38,329 |   |
|                                                                                              | Policy  acquisition and other underwriting expenses:                |   |                 |   |      |   |      |   |   |
|                                                                                              | Policy  acquisition and underwriting expenses                       | 8,804  |                 | 5,881  |      | 16,094 |      | 12,613 |   |
|                                                                                              | Management  fees, related party                                     | 173    |                 | 100    |      | 334    |      | 231    |   |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              |                                                                | 8,977  |                 | 5,981  |      | 16,428 |      | 12,844 |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |   |
|                                                                                              | Amortization  expense                                               | 731    |                 | 731    |      | 1,462  |      | 1,462  |   |
|                                                                                              | Other  expenses                                                     | 9      |                 | 12     |      | 47     |      | 31     |   |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              | Total  expenses                                                     | 32,453 |                 | 24,951 |      | 63,337 |      | 52,666 |   |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              | Income from operations before federal  income taxes                 | 1,866  |                 | 7,252  |      | 5,361  |      | 10,980 |   |
| Federal  income taxes                                                                             | 310                                                                 |   | 2,124                |   | 1,342     |   | 3,365     |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
|                                                                                              | Net income                                                          | $      | 1,556                |   | $         | 5,128  |      | $      | 4,019 |   | $ | 7,615 |   |
|                                                                                              |                                                                |        |                 |        |      |        |      |        |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |
| **Earnings per common share - basic**                                                             |                                                                |   |                 |   |      |   |      |   |
| Net income  per common share - basic                                                              | $                                                                   | 0.23   |                 | $      | 0.78      |   | $         | 0.60   |   | $ | 1.15 |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |
| **Earnings per common share - assuming dilution**                                                 |                                                                |   |                 |   |      |   |      |   |
| Net income  per common share - assuming dilution                                                  | $                                                                   | 0.23   |                 | $      | 0.76      |   | $         | 0.59   |   | $ | 1.14 |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |
| Weighted  average shares outstanding - basic                                                      | 6,653,959                                                           |   | 6,599,500            |   | 6,654,725 |   | 6,599,500 |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |
| Weighted  average shares outstanding - assuming dilution                                          | 6,787,844                                                           |   | 6,705,128            |   | 6,786,206 |   | 6,700,482 |   |
|                                                                                              |                                                                     |   |                      |   |           |   |           |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |
|                                                                                              |                                                                |   |                 |   |      |   |      |   |
| See the  accompanying notes to the unaudited condensed consolidated financial  statements.   |                                                                |   |                 |   |      |
|                                                                                                   |                                                                     |        |                      |        |           |        |           |        |  |  |  |  |  |  |  |  |  |

 

**MEEMICHoldings, Inc.and Subsidiaries****CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOME****For the Three and Six Months Ended June 30, 2001 and 2000 (Unaudited)**

|                                                                                              |                                                                                                                                                                                                                                                                       |   |                 |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|--------|--------|--------|--------|
|                                                                                              | **Three Months Ended**                                                                                                                                                                                                                                                     |   | **Six Months Ended** |   |
|                                                                                              | **June 30,**                                                                                                                                                                                                                                                               |   | **June 30,**         |   |
|                                                                                              | 2001                                                                                                                                                                                                                                                                       |   | 2000                 |   | 2001   |   | 2000   |   |
|                                                                                              |                                                                                                                                                                                                                                                                            |   |                      |   |        |   |        |   |
|                                                                                              |                                                                                                                                                                                                                                                                       |   | (In thousands)       |   |   |   |
| Comprehensive  income:                                                                            |                                                                                                                                                                                                                                                                       |   |                 |   |   |   |   |   |
|                                                                                              | Net income                                                                                                                                                                                                                                                                 | $      | 1,556                |   | $      | 5,128  |   | $      | 4,019 |   | $ | 7,615 |   |
|                                                                                              | Net unrealized (depreciation) appreciation on investments, net of  reclassification adjustment and net of deferred federal income taxes of ($22)  and $135 for three months in 2001 and 2000, respectively and $577 and $56 for  six months in 2001 and 2000, respectively | (42    | )                    | 250    |   | 1,069  |   | 183    |   |
|                                                                                              |                                                                                                                                                                                                                                                                       |        |                 |        |   |        |   |        |   |
|                                                                                              | Comprehensive  income                                                                                                                                                                                                                                                      | $      | 1,514                |   | $      | 5,378  |   | $      | 5,088 |   | $ | 7,798 |   |
|                                                                                              |                                                                                                                                                                                                                                                                       |        |                 |        |   |        |   |        |   |
|                                                                                              |                                                                                                                                                                                                                                                                       |   |                 |   |   |   |   |   |
| See the  accompanying notes to the unaudited condensed consolidated financial statements.    |                                                                                                                                                                                                                                                                       |   |                 |   |   |
|                                                                                                   |                                                                                                                                                                                                                                                                            |        |                      |        |        |        |        |        |  |  |  |  |  |  |

 

**MEEMIC Holdings, Inc.and Subsidiaries****CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS****For the Six Months Ended June 30, 2001 and 2000 (Unaudited)**

|                                                                                       |                                                                               |    |   |    |
|--------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|---------|--------|---------|
|                                                                                       | 2001                                                                               |    | 2000   |    |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       | (In thousands)                                                                     |    |
| Cash flows  from operating activities:                                                     |                                                                               |    |   |    |
|                                                                                       | Net income                                                                         | $       | 4,019  |    | $ | 7,615 |   |
|                                                                                       | Adjustments to reconcile net income to net  cash provided by operating activities: |    |   |    |   |
|                                                                                       | Depreciation  and amortization                                                     | 2,385   |   | 2,081   |   |
|                                                                                       | Realized  losses on investments                                                    | 1,562   |   | 15      |   |
|                                                                                       | Net  (accretion of discount) amortization of premium on investments                | (15     | )      | 29      |   |
|                                                                                       | Deferred  federal income taxes                                                     | (693    | )      | (247    | ) |
|                                                                                       | Changes in  assets and liabilities:                                                |    |   |    |   |
|                                                                                       | Premiums due  from policyholders                                                   | (1,647  | )      | (1,280  | ) |
|                                                                                       | Amounts due  from reinsurers                                                       | 472     |   | (5,665  | ) |
|                                                                                       | Accrued  investment income                                                         | (82     | )      | (209    | ) |
|                                                                                       | Deferred  policy acquisition costs                                                 | (368    | )      | (78     | ) |
|                                                                                       | Other assets                                                                       | (110    | )      | 178     |   |
|                                                                                       | Loss and  loss adjustment expense reserves                                         | 654     |   | 8,752   |   |
|                                                                                       | Unearned  premiums                                                                 | 2,496   |   | 1,733   |   |
|                                                                                       | Accrued  expenses and other liabilities                                            | 1,268   |   | 2,204   |   |
|                                                                                       | Federal  income taxes payable/recoverable                                          | 2,365   |   | (423    | ) |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       | Net cash  provided by operating activities                                         | 12,306  |   | 14,705  |   |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
| Cash flows  from investing activities:                                                     |                                                                               |    |   |    |
|                                                                                       | Purchases of  short-term investments                                               | (10,855 | )      | (7,081  | ) |
|                                                                                       | Proceeds  from sale or maturity of short-term investments                          | 15,757  |   | -       |   |
|                                                                                       | Proceeds  from maturity of securities available for sale                           | 14,335  |   | 10,465  |   |
|                                                                                       | Purchases of  securities available for sale                                        | (26,344 | )      | (17,369 | ) |
|                                                                                       | Proceeds  from sales of property and equipment                                     | 47      |   | 5       |   |
|                                                                                       | Purchases of  property and equipment                                               | (743    | )      | (1,953  | ) |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       | Net cash  used in investing activities                                             | (7,803  | )      | (15,933 | ) |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
| Cash flows  from financing activities:                                                     |                                                                               |    |   |    |
|                                                                                       | Payment on  payable related to acquisition                                         | (1,040  | )      | -       |   |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
|                                                                                       | Net cash used  in financing activities                                             | (1,040  | )      | -       |   |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
| Net increase  (decrease) in cash and cash equivalents                                      | 3,463                                                                              |    | (1,228 | )       |
| Cash and  cash equivalents, beginning of year                                              | 21,093                                                                             |    | 8,779  |    |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
| Cash and  cash equivalents, end of period                                                  | $                                                                                  | 24,556  |   | $       | 7,551 |   |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
| Supplemental  disclosure of cash flow information:                                         |                                                                               |    |   |    |
| Federal  income taxes paid                                                                 | $                                                                                  | 2,116   |   | $       | 3,788 |   |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
|                                                                                       |                                                                               |    |   |    |
| Supplemental  disclosure of noncash financing activities:                                  |                                                                               |    |   |    |
|                                                                                       | Common stock  issued in cashless exercise of employee stock options                | $       | 283    |    | $ | - |   |
|                                                                                       |                                                                                    |    |        |    |
|                                                                                       |                                                                               |    |   |    |
| See the  accompanying notes to the unaudited condensed consolidated financial  statements. |                                                                               |    |   |
|                                                                                            |                                                                                    |         |        |         |  |  |  |  |  |  |  |

 

**Notesto Condensed Consolidated Financial Statements (Unaudited)**

| **(1)** | **Description of Business**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              MEEMIC Holdings, Inc. is an  insurance holding company incorporated under Michigan law in October  1998.  MEEMIC Holdings, Inc. owns all  of the issued and outstanding common stock of MEEMIC Insurance Company  (“MEEMIC”) and MEEMIC Insurance Services Corp.  MEEMIC is a property and casualty insurance company that  operates as a single segment writing private passenger automobile, homeowner,  boat and umbrella insurance products primarily for educational employees and  their immediate families exclusively in the State of Michigan. MEEMIC sells  its insurance contracts through its sister company, MEEMIC Insurance Services  Corp., d/b/a MEIA Insurance Agency, which is the exclusive distributor of  MEEMIC’s products.  MEEMIC Holdings,  Inc. and its subsidiaries are sometimes referred to collectively as the  “Company”. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **(2)** | **Basis  of Presentation**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              The accompanying unaudited  condensed consolidated financial statements include the accounts of MEEMIC  Holdings, Inc. and its wholly-owned subsidiaries, and have been prepared in  accordance with accounting principles generally accepted in the United States  for Form 10–Q and Rule 10–01 of Regulation S-X  financial information.  Accordingly,  they have not been audited and they do not include all of the information and  footnotes required by generally accepted accounting principles for complete  financial statements. All significant intercompany transactions have been  eliminated in consolidation.                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              In the opinion of management, all  adjustments (consisting of normal recurring adjustments) considered necessary  for a fair presentation of financial position and results of operations have  been included.  The operating results  for the three and six month periods ended June 30, 2001 are not necessarily  indicative of the results to be expected for the year ending  December 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              In preparing the financial  statements, management is required to make estimates and assumptions that  affect the reported amounts of assets and liabilities as of the dates of the  balance sheets and revenues and expenses for the periods then ended.  Actual results may differ from those  estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              The most significant estimates  that are susceptible to significant change in the near term relate to the  determination of the loss and loss adjustment expense reserves.  Although considerable variability is  inherent in these estimates, management believes that the reserves are  adequate.  The estimates are reviewed  regularly and adjusted as necessary.   Such adjustments are reflected in current operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **(3)** | **Net  Income Per Share**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              Net income per share is  calculated by dividing net income  by  the weighted-average number of common shares outstanding.  The weighted-average common shares used  for determining basic income per common share were 6,653,959 and 6,599,500  for the three months ended June 30, 2001 and 2000, respectively.  For the six months ended June 30, 2001 and  2000 the weighted-average common shares were 6,654,725 and 6,599,500,  respectively.  The effect of dilutive  stock options added 133,885 and 131,481 shares for the three and six months  ended June 30, 2001, respectively.   For the same periods in 2000, dilutive stock options added 105,628 and  100,982 shares.                                                                                                                                                                                    |

 

| **(4)** | **Related  Party Transactions**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |              ProNational Insurance Company  (“ProNational”), a wholly-owned subsidiary of Professionals Group, Inc., owns  83.9% of the issued and outstanding shares of  MEEMIC Holdings, Inc.   MEEMIC has an Expense Allocation Agreement with ProNational covering  indirect expenses and salaries of key company personnel.  Expenses related to this agreement were  $173,000 and $334,000 for the three and six months ended June 30, 2001  compared to $100,000 and $231,000 for the same periods in 2000.                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |              On June 27, 2001 Professionals  Group, Inc. and Medical Assurance, Inc. completed  a consolidation of the two companies by forming a new holding  company, ProAssurance Corporation, that owns all of the stock of Medical  Assurance, Inc. and Professionals Group, Inc.  The stock of ProAssurance began trading on the  New York Stock Exchange on June 28, 2001  under the symbol “PRA”.  Medical  Assurance, Inc., ProNational and MEEMIC will continue to serve policyholders  under the umbrella of the new ProAssurance holding company. |

 

| **(5)** | **Revenue  Information**                                                                                                                                                                                                                                                                                                                                                                   |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                       |
|    |              The Company operates as a single  segment offering four insurance products - personal automobile, homeowners,  and as of March 1, 2000, boat and umbrella policies.  Revenue is from unaffiliated  customers.  Net premiums written and  net premiums earned from each of these products is as follows: |

 

 

|                  | Three  Months Ended |   | Six  Months Ended      |   |
|-----------------------|---------------------|--------|------------------------|--------|
|                  | June  30,           |   | June  30,              |   |
|                  | 2001                |   | 2000                   |   | 2001 |   | 2000 |   |
|                  |                     |   |                        |   |
|                  |                |   | (In  thousands)   |   |   |   |
| Net premiums written: |                |   |                   |   |   |   |   |   |
|                  | Personal automobile | $      | 30,132                 |   | $ | 28,537 |   | $ | 58,142 |   | $ | 55,098 |   |
|                  | Homeowners          | 4,969  |                   | 2,880  |   | 7,977 |   | 4,237 |   |
|                  | Boat                | 167    |                   | 78     |   | 196 |   | 87 |   |
|                  | Umbrella            | 2      |                   | 1      |   | 3 |   | 2 |   |
|                  |                |        |                   |        |   |  |   |  |   |
|                  | Total               | $      | 35,270                 |   | $ | 31,496 |   | $ | 66,318 |   | $ | 59,424 |   |
|                  |                     |   |                        |   |  |   |  |   |
|                  |                |   |                   |   |   |   |   |   |
| Net premiums earned:  |                |   |                   |   |   |   |   |   |
|                  | Personal automobile | $      | 28,676                 |   | $ | 27,170 |   | $ | 56,142 |   | $ | 53,925 |   |
|                  | Homeowners          | 3,911  |                   | 1,904  |   | 7,570 |   | 3,752 |   |
|                  | Boat                | 60     |                   | 12     |   | 108 |   | 12 |   |
|                  | Umbrella            | 2      |                   | 1      |   | 2 |   | 1 |   |
|                  |                     |   |                        |   |  |   |  |   |
|                  | Total               | $      | 32,649                 |   | $ | 29,087 |   | $ | 63,822 |   | $ | 57,690 |   |
|                  |                     |   |                        |   |  |   |  |   |
|                       |                     |        |                        |        |  |  |  |  |  |  |  |  |  |  |

**Item 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

             The following discussion andanalysis should be read in conjunction with the condensed consolidatedfinancial statements and the notes thereto included elsewhere in this documentand in the Company’s Annual Report on Form 10-K for the year ended December 31,2000.  The following discussion of ourfinancial condition and results of operations contains certain forward-lookingstatements relating to our anticipated future financial condition and operatingresults and our current business plans. In the future, our financial condition and operating results coulddiffer materially from those discussed herein and our current business planscould be altered in response to market conditions and other factors beyond ourcontrol.  Important factors that couldcause or contribute to such differences or changes include those discussed inthe Company’s Annual Report on Form 10-K for the year ended December 31, 2000.  See the disclosures in that report under“Item 1 – Business – Forward-Looking Statements”.
**Overview**

             Weprovide private passenger automobile, homeowners, boat and umbrella insuranceprimarily to educational employees and their immediate families in the State ofMichigan through our MEEMIC subsidiary. We sell our insurance contracts through over 95 sales representativesassociated with our insurance agency subsidiary, which is the exclusivedistributor of our products.  As of June30, 2001, we had 137,740 policies in force, representing 171,208 insuredvehicles, 45,040 homes, 1,644 boats and 612 personal umbrella policies.

**Financial Condition- June 30, 2001 Compared to December 31,2000**

             Ourtotal assets increased to $318.1 million at June 30, 2001 from $309.5 millionat December 31, 2000.  The majority ofour assets consist of investments and cash, which totaled $208.8 million atJune 30, 2001 and $198.1 million at December 31, 2000.  We primarily invest in high quality bondswith the objective of providing stable income while maintaining liquidity at appropriatelevels for our current and long-term requirements.  The portfolio consists primarily of government bonds, municipalbonds, collateralized mortgage obligations, and investment grade corporatebonds.  The modified duration ofinvestments was 3.82 years at June 30, 2001 compared to 3.60 years at December31, 2000.   At June 30, 2001, theportfolio had an average Standard & Poor’s security quality rating of AA(Excellent), and there were no securities in default concerning the timelypayment of interest and principal. However, three preferred stock securities were written down a total of$1.5 million in the second quarter of 2001 for other than temporary declines infair value due to uncertainty with California electric utilities.  Our gross unrealized gains and grossunrealized losses in investments in securities were $4.2 million and $0.9million, respectively, at June 30, 2001 and $3.2 million and $1.5 million,respectively, at December 31, 2000. These changes in our gross unrealized gains and losses are a result offluctuating bond market values due to volatility of interest rates in themarketplace.

             Ourrecorded estimates of loss and loss adjustment expense reserves were $107.9million at June 30, 2001 compared to $107.3 million at December 31, 2000.  The $0.6 million net increase in reserves atJune 30, 2001 was due to general allowances for growth in the number of insuredvehicles and homeowner policies in force.

             Unearnedpremiums were $39.3 million at June 30, 2001 and $36.8 million at December 31,2000.  The increase in unearned premiumsat June 30, 2001 compared to December 31, 2000 of 6.8% is due to the increasein premiums written and the timing of renewals for the auto book of businessthat has a concentration of 6-month renewal dates in April and October.

             Otherliabilities were $19.3 million at June 30, 2001 and $18.9 million at December31, 2000.  Within other liabilities,premiums ceded payable were lower at June 30, 2001 compared to December 31,2000 due primarily to the cancellation of the homeowners quota sharereinsurance agreement in 2001.  Accruedexpenses and federal income taxes payable were higher at June 30, 2001 comparedto December 31, 2000 due to the timing of payments.

             Ourbook value per common share outstanding was $22.72 at June 30, 2001, comparedto $22.03 at December 31, 2000. Shareholders’ equity increased $5.1 million to $151.7 million at June30, 2001 from $146.6 million at December 31, 2000.  This increase was due to net income of $4.0 million and anincrease in other comprehensive income of $1.1 million.

**Results of Operations – Three and Six Months Ended June 30,2001 Compared to Three and Six Months Ended June 30, 2000**

             Netincome for the three and six months ended June 30, 2001 was $1.6 million and$4.0 million, respectively, compared to $5.1 million and $7.6 million for thesame periods in 2000.  Overall, ourincome from operations before taxes was $1.9 million and $5.4 million,respectively, for the three and six months ended June 30, 2001 compared to $7.3million and $11.0 million for the same periods in 2000.  The decreases in income from operationsbefore taxes for the three and six month periods ended June 30, 2001 comparedto 2000 were primarily due to $1.7 million in expenses related to severancepayments to officers who left the company upon completion of the ProAssurancemerger, increased claims losses of $2.2 million and a $1.5 million lossrecognized on three securities deemed to have other than temporary declines infair value.

             Ourdirect premiums written were $36.6 million and $69.0 million for the three andsix months ended June 30, 2001, respectively, an increase of 8.3% compared tothe comparable periods in 2000.  Directpremiums written for automobile coverage were $31.2 million and $60.3 millionfor the three and six months ended June 30, 2001, respectively, an increase of6.5% and 6.7%, respectively, compared to the comparable periods in 2000.  The increases in auto premiums reflectpolicyholder growth and an increase in the value of autos being insured.  The number of insured vehicles increased4.1% to 171,208 at June 30, 2001 from 164,489 at June 30, 2000.  Our homeowners business also continued toincrease.  Direct premiums written forhomeowners were $5.1 million and $8.4 million for the three and six monthsended June 30, 2001, respectively, an increase of 15.9% and 18.3%,respectively, compared to the comparable periods in 2000.  The increases in homeowners premiums weredue to growth in the number of policyholders. The number of homeowner policies in force increased 17.0% to 45,040 atJune 30, 2001 from 38,498 at June 30, 2000. On March 1, 2000, we also began offering boat and umbrella policies,which contributed $219,000 and $267,000 to direct written premiums for thethree and six months ended June 30, 2001.

             Netpremiums written were $35.3 million and $66.3 million for the three and sixmonths ended June 30, 2001, respectively, an increase of 12.0% and 11.6%,respectively, compared to the comparable periods in 2000.  Net premiums earned were $32.6 million and$63.8 million for the three and six months ended June 30, 2001, respectively,an increase of 12.2% and 10.6%, respectively, compared to the comparableperiods in 2000.  The increases in netpremiums written and net premiums earned were greater than the increase indirect premiums written due to the cancellation of a quota share agreement in2001, whereby 40% of our homeowners business was ceded to a reinsurance companyin 2000.  In 2001, we are now retainingthis homeowners business.

             Ourcombined ratio was 97.1% and 96.9% for the three and six months ended June 30,2001, respectively, compared to 83.2% and 88.7% for the three and six monthsended June 30, 2000, respectively. Overall, our net loss ratio for the three and six months ended June 30,2001 was 60.0% and 62.8%, respectively, compared to 55.6% and 59.2% for thethree and six months ended June 30, 2000, respectively.
             Netloss ratios for the personal automobile and homeowners products were asfollows:
   For the Three Months For the Six Months    Ended June 30, Ended June 30:                    2001 2000 2001 2000         Personal  auto liability 38.7%31.0%44.0%45.1% Personal  auto physical damage 60.8%64.2%66.3%64.8% Total  personal auto 53.3%53.4%58.8%58.4% Homeowners 109.0%86.8%93.4%70.8% Overall loss  ratio 60.0%55.6%62.8%59.2%           
 

             The increases in net loss ratio andcombined ratio for the second quarter of 2001 were due to continued increasesin both the frequency and severity of homeowner claims, in addition to theincreases in auto and homeowner claims from the harsher winter in Michiganduring the first quarter of 2001.

             Policy acquisition and underwritingexpenses were $9.0 million and $16.4 million for the three and six months endedJune 30, 2001, respectively, compared to $6.0 million and $12.8 million for thesame periods in 2000.  The underwritingexpenses ratios were 27.5% and 25.7% for the three and six months ended June30, 2001 respectively, compared to 20.6% and 22.3% for comparable periods in2000.  The increases in 2001 are due to$1.7 million in expenses related to severance payments from change of controlagreements in connection with the ProAssurance merger and increased statutoryassessment fees.

             Net investment income, excludingrealized investment gains and losses, was $2.7 million and $5.6 million for thethree and six months ended June 30, 2001, respectively, compared to $2.6million and $5.1 million for the three and six months ended June 30, 2000,respectively.  These increases ininvestment income were due to increases in invested assets as a result of  positive cash flow from operations.  Consistent with 2000, investment income forthe three and six months ended June 30, 2001 was attributable primarily tointerest income and not to realized capital gains.  However, the increase for the three months ended June 30, 2001was partially offset by a $1.5 million loss recognized on three securitiesdeemed to have other than temporary declines in fair value due to uncertaintywith California electric utilities.  Theannualized tax equivalent total rate of return, which includes both income andchanges in market value of securities, was 3.52% and 7.15% for the three andsix months ended June 30, 2001, respectively, compared to 7.62% and 7.30% forthe three and six months ended June 30, 2000, respectively.  The decreases in 2001 were due toreinvestment at lower interest rates. Additionally, increases in the 10 year treasury bond rate greatlyimpacted the three months ended June 30, 2001 investment performance.  Yields during the second quarter of 2001increased from 4.97% to 5.41% resulting in lower bond market values compared tothe first quarter of 2001 when a decline in yields from 5.11% to 4.97% resultedin a bond rally.  The weighted averagetax equivalent book yield of the fixed maturity portfolio was 7.91% for the sixmonths ended June 30, 2001 compared to 6.90% for the same period in 2000.

**Liquidity and Capital Resources**

             Ourprimary sources of cash are from premiums, investment income and proceeds frommaturities of portfolio investments. The principal uses of cash are for payments of claims, commissions,taxes, operating expenses and purchases of investments.  Cash flow and liquidity are managed in orderto meet anticipated short-term payment obligations, and to maximizeopportunities to earn interest on those funds not immediately required.

             Cashprovided by operations for the six months ended June 30, 2001 was $12.3 millioncompared to $14.7 million for the six months ended June 30, 2000.  The $2.4 million decrease was primarily dueto substantially higher loss payments from increased auto and homeowner claimsincurred in the first half of 2001 compared to the same period in 2000.  The net increase in cash overall was $3.5million for the six months ended June 30, 2001 compared to a net decrease incash of $1.2 million for the six months ended June 30, 2000.  The $3.5 million increase in cash reflectsthe maturity of short-term investments offset by the aforementioned higher losspayments.
**Effects of New Accounting Pronouncements**

             TheFinancial Accounting Standards Board has issued Statement of FinancialAccounting Standards, or SFAS, No. 138 “Accounting for Certain DerivativeInstruments and Certain Hedging Activities” which amends SFAS No. 133"Accounting for Derivative Instruments and Hedging Activities," andis effective for fiscal quarters of all fiscal years beginning after June 15, 2000(as amended by SFAS No. 137).  SFAS No.133 requires that all derivative instruments be recorded on the balance sheetat fair value. Changes in the fair value of derivatives are recorded eachperiod in current earnings or other comprehensive income, depending on whethera derivative is designated as part of a hedge transaction and, if it is, thetype of hedge transaction.  SFAS No. 138addresses a limited number of issues that have caused problems for enterprisesapplying SFAS No. 133.  As the Companydoes not use derivative instruments, we adopted SFAS No. 133 and No. 138 andthe adoption did not affect the results of operations or financial position ofthe Company.

             TheFinancial Accounting Standards Board has also issued SFAS No. 142 “Goodwill andOther Intangible Assets” which supersedes Opinion 17 "IntangibleAssets," and is effective for fiscal years beginning after December 15,2001.  SFAS No. 142 addresses howgoodwill and other intangible assets should be accounted for in financialstatements upon acquisition and how these items should be accounted forsubsequent to acquisition.  Contrary toOpinion 17, SFAS No. 142 does not presume that goodwill and all otherintangible assets are wasting assets requiring amortization.  Instead, goodwill and intangible assets thathave indefinite useful lives will be tested at least annually forimpairment.  If goodwill and intangibleassets are deemed to be impaired, the change will be charged through theStatement of Operations.  SFAS No. 142requires additional disclosure of information about goodwill and otherintangible assets in the years subsequent to their acquisition.  Intangible assets were $32.0 million at June30, 2001 and the Company determined there are currently no impaired intangibleassets.  Thus, adopting SFAS No. 142would not affect the current results of operations with any additional chargesfor impairment, but would eliminate current annual amortization expense of $2.9million.

**Item 3.  Quantitative and Qualitative DisclosuresAbout Market Risk**

             Marketrisk is the risk of loss due to adverse changes in market rates andprices.  Our primary market riskexposure is to changes in interest rates. The active management of interest rate risk is essential to ouroperations.

             Wemanage market risk through an investment committee consisting of seniorofficers of the Company, consultants and a professional investmentadvisor.  The committee periodicallymeasures the impact that an instantaneous rise in interest rates would have onthe fair value of securities.  The committeealso measures the duration, or interest rate sensitivity, of a fixed incomesecurity or portfolio.  Our investmentpolicy limits the duration of our portfolio to a maximum of 300% of theduration of our liabilities.

             Weare vulnerable to interest rate risk because, like other insurance companies,we invest primarily in fixed maturity securities, which are interest-sensitiveassets.  We do not invest in fixedmaturity securities for trading purposes. Mortgage-backed securities, which make up approximately 20% of ourinvestment portfolio, are particularly susceptible to interest ratechanges.  We invest primarily in classesof mortgage-backed securities that are less subject to prepayment risk and, asa result, somewhat less susceptible to interest rate risk than othermortgage-backed securities.

             Ourfixed maturity investment portfolio was valued at $180.0 million at June 30,2001 and had a duration of 3.82 years. The following table shows the effects of a change in interest rate onthe fair value and duration of our portfolio. We have assumed an immediate increase or decrease of 1% or 2% ininterest rate.  You should not considerthis assumption or the values shown in the table to be a prediction of actualfuture results.
   **Portfolio** **Change** **Modified**  **Change in Rates** **Value** **in Value** **Duration**         (dollars  in thousands)  +2% $165,333 $(14,641)4.17  +1% $172,604 $(7,370)4.13  +0% $179,974   3.82  -1% $186,936 $6,962 3.50  -2% $193,608 $13,608 3.49 
 

             Theother financial instruments, which include cash, premiums due from reinsurersand accrued investment income, do not produce a significant difference in fairvalue when included in the market risk analysis due to their short-term nature.
**PART II.  OTHERINFORMATION**

**Item 4.  Submission of Matters to a Vote of SecurityHolders**

             TheCompany held its Annual Meeting of Shareholders on May 23, 2001, at which timethe shareholders considered and voted on the election of eight directors.  Each of the nominees for director was anincumbent and all nominees were elected. The following table sets forth the number of shares voted for andwithheld with respect to each nominee.
      Nominee For Withheld          Victor T.  Adamo 6,315,590 93,458 R. Kevin  Clinton 6,378,948 30,100 John F.  Dodge, Jr. 6,406,348 2,700 Annette E.  Flood 6,368,998 40,050 Thomas E.  Hoeg 6,406,398 2,650 Lynn M.  Kalinowski 6,378,398 30,650 Ann F.  Putallaz 6,406,098 2,950 James O.  Wood 6,406,248 2,800 
             Subsequentto the Annual Meeting of Shareholders Annette E. Flood resigned as a directorand was replaced by A. Derrill Crowe, M.D., Chairman of ProAssuranceCorporation.  On August 7, 2001 theremaining directors removed R. Kevin Clinton as a director since he is nolonger an officer or employee of the Company.

**Item 6.  Exhibits andReports on Form 8-K**

             (b)        Reportson Form 8-K.

             Noreports on Form 8-K were filed during the quarter ended June 30, 2001.

**SIGNATURES**

             Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.
 MEEMIC  Holdings, Inc.      Date:  August 13, 2001/s/  Christine C. Schmitt Christine  C. Schmitt Treasurer  and Chief Financial Officer (as  Chief Financial Officer and on behalf  of the registrant)