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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2000

OR

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

For the transition period from  to

Commission file number 001-14673

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MEEMIC Holdings, Inc.(Exact name of registrant as specified in its charter)

|Michigan(State or other jurisdiction
of incorporation or organization)                            |  | 38-3436541(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|691 North Squirrel Road, Suite 100
Auburn Hills, Michigan(Address of principal executive offices) |  | 48321(Zip Code)                               

Registrant's
telephone number, including area code:(888) 463-3642

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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 /x/  No / /

The
number of shares outstanding of the registrant's common stock, no par value per share, as of May 9, 2000 was 6,599,500.

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TABLE OF CONTENTS

|         |  |                       |  |                                                                                                                          |  | Page No.
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | --------
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                         
|         |  | Item 1.               |  | Financial Statements                                                                                                     |  |         
|         |  |                       |  | Condensed Consolidated Balance Sheets at March 31, 2000 (Unaudited) and December 31, 1999                                |  | 3       
|         |  |                       |  | Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2000 and 1999 (Unaudited)               |  | 4       
|         |  |                       |  | Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2000 and 1999 (Unaudited) |  | 5       
|         |  |                       |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 (Unaudited)           |  | 6       
|         |  |                       |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                         |  | 7-9     
|         |  | Item 2.               |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                    |  | 10-13   
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                                                               |  | 13      
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                         
|         |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                         |  | 14      
|         |  | Signatures            |  | 15                                                                                                                      

2



## 

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

MEEMIC Holdings, Inc.
and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                         |  | March 31, 2000
(Unaudited) |         | December 31, 1999 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ------- | ----------------- | -
|
|ASSETS                                                                                                                                                                   | 
|Investments:                                                                                                                                                             |  |                            |         |                   |  
|Fixed maturities available for sale, at fair value (amortized cost of $159,847 and $160,112 in 2000 and 1999, respectively)                                              |  | $                          | 156,942 |                   | $
|Short-term investments, at cost, which approximates fair value                                                                                                           |  |                            | 6,948   |                   |  
|Real estate, at cost                                                                                                                                                     |  |                            | 2,300   |                   |  
|                                                                                                                                                                         |  |                            |         |                   |  
|Total investments                                                                                                                                                        |  |                            | 166,190 |                   |  
|Cash                                                                                                                                                                     |  |                            | 7,282   |                   |  
|Premiums due from policyholders                                                                                                                                          |  |                            | 5,137   |                   |  
|Amounts recoverable from reinsurers                                                                                                                                      |  |                            | 41,660  |                   |  
|Amounts recoverable from reinsurers, related party                                                                                                                       |  |                            | 9,822   |                   |  
|Accrued investment income                                                                                                                                                |  |                            | 2,136   |                   |  
|Deferred federal income taxes                                                                                                                                            |  |                            | 5,131   |                   |  
|Property and equipment, at cost, net of accumulated depreciation                                                                                                         |  |                            | 3,238   |                   |  
|Deferred policy acquisition costs                                                                                                                                        |  |                            | 1,859   |                   |  
|Intangible assets, net of amortization                                                                                                                                   |  |                            | 35,613  |                   |  
|Other assets                                                                                                                                                             |  |                            | 892     |                   |  
|                                                                                                                                                                         |  |                            |         |                   |  
|Total assets                                                                                                                                                             |  | $                          | 278,960 |                   | $
|                                                                                                                                                                         |  |                            |         |                   |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                     | 
|Liabilities:                                                                                                                                                             |  |                            |         |                   |  
|Loss and loss adjustment expense reserves                                                                                                                                |  | $                          | 98,455  |                   | $
|Unearned premiums                                                                                                                                                        |  |                            | 33,473  |                   |  
|Payable related to acquisition                                                                                                                                           |  |                            | 1,066   |                   |  
|Accrued expenses and other liabilities                                                                                                                                   |  |                            | 9,993   |                   |  
|Accrued expenses and other liabilities, related party                                                                                                                    |  |                            | 170     |                   |  
|Premiums ceded payable                                                                                                                                                   |  |                            | 4,860   |                   |  
|Federal income taxes payable                                                                                                                                             |  |                            | 1,338   |                   |  
|                                                                                                                                                                         |  |                            |         |                   |  
|Total liabilities                                                                                                                                                        |  |                            | 149,355 |                   |  
|                                                                                                                                                                         |  |                            |         |                   |  
|Shareholders' equity:                                                                                                                                                    |  |                            |         |                   |  
|Common stock, no par value; 10,000,000 shares authorized; 6,599,500 shares issued and outstanding in 2000 and 1999                                                       |  |                            | 65,295  |                   |  
|Retained earnings                                                                                                                                                        |  |                            | 66,198  |                   |  
|Accumulated other comprehensive loss: Net unrealized depreciation on investments, net of deferred federal income taxes of $1,017 and $938 in 2000 and 1999, respectively |  |                            | (1,888  | )                 |  
|                                                                                                                                                                         |  |                            |         |                   |  
|Total shareholders' equity                                                                                                                                               |  |                            | 129,605 |                   |  
|                                                                                                                                                                         |  |                            |         |                   |  
|Total liabilities and shareholders' equity                                                                                                                               |  | $                          | 278,960 |                   | $
|                                                                                                                                                                         |  |                            |         |                   |  

See
the accompanying notes to the unaudited condensed consolidated financial statements.

3



MEEMIC Holdings, Inc.
and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended March 31, 2000 and 1999 (Unaudited)

|                                                                          |  | 2000 |           | 1999 |  
|------------------------------------------------------------------------- |  | ---- | --------- | ---- | -
|
|Revenues and other income:                                                |  |      |           |      |  
|Premiums written                                                          |  | $    | 29,982    |      | $
|Premiums ceded, related party                                             |  |      |          |      |  
|Premiums ceded, other                                                     |  |      | (2,054    | )    |  
|                                                                          |  |      |           |      |  
|Net premiums written                                                      |  |      | 27,928    |      |  
|Decrease in unearned premiums, net of prepaid reinsurance premiums        |  |      | 675       |      |  
|                                                                          |  |      |           |      |  
|Net premiums earned                                                       |  |      | 28,603    |      |  
|Net investment income                                                     |  |      | 2,478     |      |  
|Net realized investment (losses) gains on fixed maturities                |  |      | (15       | )    |  
|Other income                                                              |  |      | 377       |      |  
|                                                                          |  |      |           |      |  
|Total revenues and other income                                           |  |      | 31,443    |      |  
|                                                                          |  |      |           |      |  
|Expenses:                                                                 |  |      |           |      |  
|Loss and loss adjustment expenses incurred, net                           |  |      | 20,103    |      |  
|Policy acquisition and other underwriting expenses:                       |  |      |           |      |  
|Policy acquisition and underwriting expenses                              |  |      | 6,732     |      |  
|Ceding commissions, related party                                         |  |      |          |      |  
|Management fees, related party                                            |  |      | 131       |      |  
|                                                                          |  |      |           |      |  
|                                                                          |  |      | 6,863     |      |  
|Interest expense, related party                                           |  |      |          |      |  
|Amortization expense                                                      |  |      | 731       |      |  
|Other expenses                                                            |  |      | 19        |      |  
|                                                                          |  |      |           |      |  
|Total expenses                                                            |  |      | 27,716    |      |  
|                                                                          |  |      |           |      |  
|Income from operations before federal income taxes and extraordinary item |  |      | 3,727     |      |  
|Federal income taxes                                                      |  |      | 1,240     |      |  
|                                                                          |  |      |           |      |  
|Income before extraordinary item                                          |  |      | 2,487     |      |  
|Extraordinary item:                                                       |  |      |           |      |  
|Early extinguishment of debt                                              |  |      |          |      |  
|                                                                          |  |      |           |      |  
|Net income                                                                |  | $    | 2,487     |      | $
|                                                                          |  |      |           |      |  
|Earnings per common sharebasic                                           |  |      |           |      |  
|Income before extraordinary item per common sharebasic                   |  |      | 0.38      |      |  
|Income per share attributable to extraordinary itembasic                 |  |      |          |      |  
|                                                                          |  |      |           |      |  
|Net income per common sharebasic                                         |  | $    | 0.38      |      |  
|                                                                          |  |      |           |      |  
|Earnings per common shareassuming dilution                               |  |      |           |      |  
|Income before extraordinary item per common shareassuming dilution       |  |      | 0.36      |      |  
|Income per share attributable to extraordinary itemassuming dilution     |  |      |          |      |  
|                                                                          |  |      |           |      |  
|Net income per common shareassuming dilution                             |  | $    | 0.36      |      |  
|                                                                          |  |      |           |      |  
|Weighted average shares outstandingbasic                                 |  |      | 6,599,500 |      |  
|                                                                          |  |      |           |      |  
|Weighted average shares outstandingassuming dilution                     |  |      | 6,879,500 |      |  
|                                                                          |  |      |           |      |  

See the accompanying notes to the unaudited condensed consolidated financial statements.

4



MEEMIC Holdings, Inc.
and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2000 and 1999 (Unaudited)

|                                                                                                                                                      |  | 2000 |       | 1999 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | -
|
|Comprehensive income:                                                                                                                                 |  |      |       |      |  
|Net income                                                                                                                                            |  | $    | 2,487 |      | $
|Net unrealized depreciation on investments, net of reclassification adjustment and net of deferred federal income tax of $79 in 2000 and $260 in 1999 |  |      | (67   | )    |  
|                                                                                                                                                      |  |      |       |      |  
|Comprehensive income                                                                                                                                  |  | $    | 2,420 |      | $
|                                                                                                                                                      |  |      |       |      |  

See
the accompanying notes to the unaudited condensed consolidated financial statements.

5



MEEMIC Holdings, Inc.
and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2000 and 1999 (Unaudited)

|                                                                                  |  | 2000 |        | 1999 |  
|--------------------------------------------------------------------------------- |  | ---- | ------ | ---- | -
|
|Cash flows from operating activities:                                             |  |      |        |      |  
|Net income                                                                        |  | $    | 2,487  |      | $
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |        |      |  
|Depreciation and amortization                                                     |  |      | 1,058  |      |  
|Realized losses (gains) on investments                                            |  |      | 15     |      |  
|Net accretion of discount on investments                                          |  |      | 17     |      |  
|Deferred federal income taxes                                                     |  |      | (415   | )    |  
|Extraordinary loss on early extinguishment of debt                                |  |      |       |      |  
|Changes in assets and liabilities:                                                |  |      |        |      |  
|Premiums due from policyholders                                                   |  |      | (383   | )    |  
|Amounts due from reinsurers                                                       |  |      | (830   | )    |  
|Accrued investment income                                                         |  |      | 90     |      |  
|Deferred policy acquisition costs                                                 |  |      | 861    |      |  
|Other assets                                                                      |  |      | 115    |      |  
|Loss and loss adjustment expense reserves                                         |  |      | 2,446  |      |  
|Unearned premiums                                                                 |  |      | (675   | )    |  
|Accrued expenses and other liabilities                                            |  |      | 643    |      |  
|Federal income taxes payable                                                      |  |      | 169    |      |  
|                                                                                  |  |      |        |      |  
|Net cash provided by operating activities                                         |  |      | 5,598  |      |  
|                                                                                  |  |      |        |      |  
|Cash flows from investing activities:                                             |  |      |        |      |  
|Purchases of short-term investments                                               |  |      | (6,948 | )    |  
|Proceeds from maturity of securities available for sale                           |  |      | 4,087  |      |  
|Purchases of securities available for sale                                        |  |      | (3,854 | )    |  
|Proceeds from sales of property and equipment                                     |  |      | 1      |      |  
|Purchases of property and equipment                                               |  |      | (381   | )    |  
|                                                                                  |  |      |        |      |  
|Net cash (used in) provided by investing activities                               |  |      | (7,095 | )    |  
|                                                                                  |  |      |        |      |  
|Cash flows from financing activities:                                             |  |      |        |      |  
|Payment on payable related to acquisition                                         |  |      |       |      |  
|                                                                                  |  |      |        |      |  
|Net cash used in financing activities                                             |  |      |       |      |  
|                                                                                  |  |      |        |      |  
|Net (decrease) increase in cash                                                   |  |      | (1,497 | )    |  
|Cash, beginning of year                                                           |  |      | 8,779  |      |  
|                                                                                  |  |      |        |      |  
|Cash, end of period                                                               |  | $    | 7,282  |      | $
|                                                                                  |  |      |        |      |  
|Supplemental disclosure of cash flow information:                                 |  |      |        |      |  
|Federal income taxes paid                                                         |  | $    | 1,487  |      | $
|                                                                                  |  |      |        |      |  

See
the accompanying notes to the unaudited condensed consolidated financial statements.

6



MEEMIC Holdings, Inc.
and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(1) Description of Business

MEEMIC Holdings, Inc. and subsidiaries (the "Company") is an insurance holding company incorporated under Michigan law in October 1998. The
Company owns all of the issued and outstanding common stock of MEEMIC Insurance Services Corp. and MEEMIC Insurance Company, a stock insurance company incorporated under Michigan law. MEEMIC Insurance
Company ("MEEMIC") (formerly "Michigan Educational Employees Mutual Company") is a property and casualty insurance company that operates as a single segment writing private passenger automobile,
homeowner, boat and umbrella insurance products 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 the Company's products.

(2) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and have been
prepared in accordance with generally accepted accounting principles ("GAAP") 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-month period ended March 31, 2000 are not necessarily indicative of the results to be expected for the year ending December 31,
2000.

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 losses 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) Conversion

On June 24, 1998, the Board of Directors approved a plan of conversion for changing the corporate form of MEEMIC from the mutual form to the stock form.
Under the plan, eligible policyholders, officers and directors had the opportunity to acquire stock in the Company, which would acquire all of the newly issued stock of MEEMIC upon conversion. Prior
to the conversion, the Company did not engage in any significant operations and did not have assets or liabilities. On September 2, 1998, The Michigan Insurance Bureau concluded that MEEMIC's
plan of conversion complied with applicable laws and approved such plan. On April 20, 1999, the Securities and Exchange Commission declared effective the registration statement on Form S-1
filed by Holdings. The Company has also received a tax opinion regarding the tax treatment of the conversion as a tax-free reorganization.

7



At
a special policyholder meeting held on May 25, 1999, MEEMIC's plan of conversion was approved by policyholder vote. On July 1, 1999 MEEMIC converted to a stock
insurance company and became a wholly-owned subsidiary of the Company. Net proceeds of the initial public offering of the Company were $42,973,000, before offering costs of $700,000 and a donation to
the MEEMIC Foundation of $500,000. MEEMIC policyholders subscribed for 1,533,983 shares of common stock in the Company. Also pursuant to the plan of conversion, Professionals Group, Inc.
converted a $21.5 million surplus note (plus accrued interest) of MEEMIC owned by ProNational Insurance Company ("ProNational"), a wholly-owned subsidiary of Professional Group into 2,302,209 shares
of the Company; and, Professionals Group, Inc. fulfilled its obligations as standby purchaser by purchasing an additional 2,763,308 shares in the subscription offering. As a result,
Professionals Group owns 77.3% of the issued and outstanding shares of the Company. Since July 2, 1999, the Company has been trading on the Nasdaq National Market under the symbol "MEMH".

As
contemplated in the conversion plan, the amount payable relating to the agency acquisition was substantially repaid. In accordance with the purchase agreement, certain former
Agency shareholders elected to accelerate the individual amounts due to them related to the agency acquisition. Settlements of these early extinguishments of debt resulted in an extraordinary item
reflected on the income statement.

(4) Net Income Per Share

Net income per share is calculated by dividing net income per share by the weighted-average number of common shares outstanding. The weighted-average common
shares used for determining basic income per common share were 6,599,500 for the three months ended March 31, 2000. The effect of dilutive stock options added 280,000 shares for the three
months ended March 31, 2000 for the computation of diluted income per common share.

(5) Related Party Transactions

As of July 1, 1999 MEEMIC entered into an Expense Allocation Agreement with ProNational covering indirect expenses and salaries of key company
personnel. Expenses related to this agreement were $131,000 for the three months ended March 31, 2000. Prior to July 1, 1999, Professionals Group provided MEEMIC with information system
services and certain consulting services under a Management Services Agreement. Fees for such services were $518,000 for the three months ended March 31, 1999. Also effective July 1,
1999, MEEMIC cancelled its quota share reinsurance contract with ProNational to cede 40 percent of its net retained premiums on a quota share basis. Ceding commissions were $3,348,000 for the three
months ended March 31, 1999. Premiums earned of $11,161,000 and losses and loss adjustment expenses incurred of $8,378,000 were ceded to ProNational for the three months ended March 31,
1999.

(6) Revenue Information

The Company operates as a single segment offering four insurance productspersonal automobile, homeowners, and beginning March 1, 2000, boat
and umbrella policies. Revenue is from unaffiliated

8



customers.
Direct premiums written and net premiums earned from each of these products is as follows:

|                         |  | For the Three Months Ended March 31,
|------------------------ |  | ------------------------------------
|
|
|Direct premiums written: |  |                                     
|Personal automobile      |  | $                                   
|Homeowners               |  |                                     
|Boat                     |  |                                     
|Umbrella                 |  |                                     
|                         |  |                                     
|Total                    |  | $                                   
|                         |  |                                     
|Net premiums earned:     |  |                                     
|Personal automobile      |  | $                                   
|Homeowners               |  |                                     
|Boat                     |  |                                     
|Umbrella                 |  |                                     
|                         |  |                                     
|Total                    |  | $                                   
|                         |  |                                     

9



## 

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

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto included
elsewhere in this document and in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The following discussion of the financial condition and results of operations of
the Company contains certain forward-looking statements relating to anticipated future financial conditions and operating results of the Company and its current business plans. In the future, the
financial condition and operating results of the Company could differ materially from those discussed herein and its current business plans could be altered in response to market conditions and other
factors beyond the Company's control. Important factors that could cause or contribute to such differences or changes include those discussed in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. See the disclosures under "Item 1BusinessForward-Looking Statements".

Overview

MEEMIC provides private passenger automobile, homeowners, boat and umbrella insurance primarily to educational employees and their immediate families in the
State of Michigan. MEEMIC sells its insurance contracts through over 90 sales representatives associated with the MEIA Agency, which is the exclusive distributor of MEEMIC's products. As of
March 31, 2000, we had 122,355 policies in force, representing 160,917 insured vehicles, 36,571 homes, 32 boats and 19 personal umbrella policies.

Financial ConditionMarch 31, 2000 Compared to December 31, 1999

Our total assets increased to $279.0 million at March 31, 2000 from $274.6 million at December 31, 1999. The majority of our assets consist of
investments and cash, that in total were $173.5 million at March 31, 2000 and $168.4 million at December 31, 1999. We primarily invest in high quality bonds with the objective of
providing stable income while maintaining liquidity at appropriate levels for our current and long-term requirements. The portfolio consists primarily of government bonds, municipal bonds,
collateralized mortgage obligations, and investment grade corporate bonds. The modified duration of investments was 3.81 years at March 31, 2000 compared to 3.97 years at December 31,
1999. At March 31, 2000, the portfolio had an average Standard & Poor's security quality rating of AA (Excellent), and there were no securities in default concerning the timely payment
of interest and principal. Our gross unrealized gains and gross unrealized losses in investments in securities were $403,000 and $3.3 million, respectively, at March 31, 2000 and $488,000 and
$3.2 million, respectively, at December 31, 1999. These changes in our gross unrealized gains and losses are a result of fluctuating bond market values due to volatility of interest rates in
the marketplace.

Our
recorded estimates of loss and loss adjustment expense reserves were $98.5 million at March 31, 2000 compared to $96.0 million at December 31, 1999. The $2.5 million
increase in reserves at March 31, 2000 was due to general allowances for growth in the number of insured vehicles and homeowner policies in force.

Unearned
premiums were $33.5 million at March 31, 2000 and $34.1 million at December 31, 1999. The decrease in unearned premiums at March 31, 2000 compared to
December 31, 1999 of 1.8% is due to the timing of renewals for the auto book of business that has a concentration of 6-month renewal dates in April and October.

Other
liabilities were $17.4 million at March 31, 2000 and $17.3 million at December 31, 1999. Within other liabilities, accrued expenses are higher and premiums ceded
payable are lower at March 31, 2000 compared to December 31, 1999 due to timing differences on payments made.

10



Our
shareholders' equity increased $2.4 million to $129.6 million at March 31, 2000 from $127.2 million at December 31, 1999. This increase was due to net income
of $2.5 million, which was offset by a decrease in other comprehensive income that consisted of unrealized losses on the investment portfolio of $67,000.

Results of OperationsThree Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

Net income for the three months ended March 31, 2000 was $2.5 million compared to $1.1 million for the three months ended March 31, 1999.
Overall, our income from operations before taxes and extraordinary item was $3.7 million for the three months ended March 31, 2000 compared to $1.9 million for the three months ended
March 31, 1999. The primary reasons for the increase in net income and income from operations before taxes and extraordinary item for the three month period ended March 31, 2000 compared
to 1999 were the termination of the quota share agreement between MEEMIC and ProNational, the repayment of the $21.5 million surplus note, and the cancellation of the management agreement with
Professionals Group, all of which occurred in July 1999 in connection with the conversion. We retained approximately $11 million of premiums during the first quarter of 2000 that would have
been ceded to ProNational under the now cancelled quota share agreement. Expenses relating to interest on the surplus note and the management agreement were $838,000, for the three months ended
March 31, 1999 and are no longer being incurred in 2000.

Our
direct premiums written were $30.0 million for the three months ended March 31, 2000, an increase of $1.8 million, or 6.4%, compared to direct premiums written of $28.2
million for the three months ended March 31, 1999. Direct premiums written for automobile coverage were $27.2 million for the three months ended March 31, 2000, an increase of 5.0%
compared to $25.9 million for the three months ended March 31, 1999. The increase in auto premiums reflects policyholder growth and an increase in the value of autos being insured. The number
of insured vehicles increased 2.9% to 160,917 at March 31, 2000 from 156,359 at March 31, 1999. Our homeowners business also continued to increase. Direct premiums written for homeowners
were $2.8 million for the three months ended March 31, 2000, an increase of 27.3%, compared to $2.2 million for the three months ended March 31, 1999. The increase in homeowners premiums
was due to policyholder growth, a 7.6% rate increase that went into effect October 1, 1998 and an increase in the value of homes being insured. The number of homeowner policies in force
increased 18.8% to 36,571 at March 31, 2000 from 30,786 at March 31, 1999. Also on March 1, 2000 we began offering boat and umbrella policies of which direct written premiums were
$10,000 through March 31, 2000.

Net
premiums written were $27.9 million for the three months ended March 31, 2000, an increase of 74.4% compared to $16.0 million for the three months ended March 31,
1999. The increase in net premiums written was primarily due to the cancellation of a 40% quota share reinsurance agreement with ProNational, in addition to the increase in direct premiums written.
Net premiums earned were $28.6 million for the three months ended March 31, 2000, an increase of 71.3%, compared to $16.7 million for the three months ended March 31, 1999. The increase
in net premiums earned was also a result of the cancellation of ProNational's reinsurance agreement, in addition to the business growth.

Our
combined ratio was 94.3% for three months ended March 31, 2000, compared to 94.2% for the three months ended March 31, 1999. Overall, our loss ratio for the three
months ended March 31, 2000
was 62.9% compared to 63.3% for the three months ended March 31, 1999.

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Loss
ratios for the personal automobile and homeowners products were as follows:

|                              |  | For the Three Months Ended March 31:
|----------------------------- |  | ------------------------------------
|
|Personal auto liability       |  | 59.5%                               
|Personal auto physical damage |  | 65.4%                               
|Total personal auto           |  | 63.5%                               
|Homeowners                    |  | 54.4%                               
|Overall loss ratio            |  | 62.9%                               

The
auto loss ratios for first quarter 2000 are higher than the same period in 1999 due to a few additional bodily injury claims arising in 2000 and increased costs of auto repair
parts. The homeowners loss ratio for first quarter 2000 is significantly lower than the same period in 1999 due to the January 1999 winter storm.

Policy
acquisition and underwriting expenses were $6.9 million for the three months ended March 31, 2000, compared to $3.3 million for the same period in 1999. The underwriting
expenses ratio increased to 24.0% for the three months ended March 31, 2000, from 19.9% for the three months ended March 31, 1999. This increase was due to the cancellation of the quota
share agreement with ProNational whereby MEEMIC was receiving a commission for business ceded. The increase in underwriting expense for 2000 was offset by a corresponding decrease in loss adjustment
expenses for 2000, also as a result of the cancellation of the quota share agreement with ProNational.

Net
investment income, before interest expense and excluding realized investment gains, was $2.5 million for the three months ended March 31, 2000, compared to $1.8 million for
the three months ended March 31, 1999. This increase in investment income was due to increases in invested assets from proceeds of the conversion and related subscription offering and positive
cash flow from operations. Consistent with 1999, investment income for the three months ended 2000 was earned primarily from interest income and not from realized capital gains and losses. The
annualized tax equivalent total rate of return, which includes both income and changes in market value of securities, was 6.83% for the three months ended March 31, 2000 compared to 4.07% for
the three months ended March 31, 1999. The increase of the return in the first quarter of 2000 compared to the same period in 1999 was due to higher interest rates and a lower level of security
market value reductions during the first quarter of 2000. The weighted average tax equivalent book yield of the fixed maturity portfolio was 6.97% for the three months ended March 31, 2000
compared to 6.82% for the same period in 1999.

Liquidity and Capital Resources

Our primary sources of cash are from premiums, investment income and proceeds from maturities 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 order to meet anticipated short-term payment obligations, and to
maximize opportunities to earn interest on those funds not immediately required.

Cash
provided by operations for the three months ended March 31, 2000 was $5.6 million compared to $111,000 for the three months ended March 31, 1999. The $5.5 million
increase in cash provided by operations for the three months ended March 31, 2000 compared to the three months ended March 31, 1999 was primarily due to the Company now retaining more of
its premiums as a result of terminating the ProNational quota share agreement. The net decrease in cash overall was $1.5 million for the three months ended March 31, 2000 compared to a net
increase in cash of $1.1 million for the three months ended March 31, 1999. The $1.5 million decrease in cash reflects a net increase in new investments from $5.5 million provided by operations
and $1.5 million in previously uninvested funds.

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Effects of New Accounting Pronouncements

The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards, or SFAS, No. 133 "Accounting for Derivative Instruments
and Hedging Activities" which is 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 sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction, and if it is, the type of hedge transaction. As the Company does not use derivative instruments, we anticipate that the adoption of
SFAS No. 133 will not affect the results of operations or financial position of the Company.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Management of Market Risk

Market risk is the risk of loss due to adverse changes in market rates and prices. Our primary market risk exposure is to changes in interest rates. The active
management of interest rate risk is essential to our operations.

We
manage market risk through an investment committee consisting of senior officers of the Company, consultants and a professional investment advisor. The committee periodically
measures the impact that an instantaneous rise in interest rates would have on the fair value of securities. The committee also measures the duration, or interest rate sensitivity, of a fixed income
security or portfolio. Our investment policy limits the duration of our portfolio to a maximum of 300% of the duration of our liabilities.

We
are vulnerable to interest rate risk because, like other insurance companies, we invest primarily in fixed maturity securities, which are interest-sensitive assets. We do not
invest in fixed maturity securities for trading purposes. Mortgage-backed securities, which make up approximately 20% of our investment portfolio, are particularly susceptible to interest rate
changes. We invest primarily in classes of mortgage-backed securities that are less subject to prepayment risk and, as a result, somewhat less susceptible to interest rate risk than other
mortgage-backed securities.

Our
fixed maturity investment portfolio was valued at $157 million at March 31, 2000 and had a duration of 3.81 years. The following table shows the effects of a change in
interest rate on the fair value and duration of our portfolio. We have assumed an immediate increase or decrease of 1% or 2% in interest rate. You should not consider this assumption or the values
shown in the table to be a prediction of actual future results.

|Change in Rates |  | Portfolio Value |         | Change in Value |   | Modified Duration
|--------------- |  | --------------- | ------- | --------------- | - | -----------------
|
|+2%             |  | $               | 145,096 |                 | $ | (11,846          
|+1%             |  | $               | 150,847 |                 | $ | (6,095           
|0%              |  | $               | 156,942 |                 |   |                  
|-1%             |  | $               | 163,061 |                 | $ | 6,119            
|-2%             |  | $               | 168,971 |                 | $ | 12,029           

The
other financial instruments, which include cash, premiums due from reinsurers and accrued investment income, do not produce a significant difference in fair value when included in
the market risk analysis due to their short-term nature. The payable related to acquisition is not significantly affected by market risk as the discount rate for early extinguishment is fixed.

13



PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

|Exhibit Number |  | Exhibit Description    
|-------------- |  | -----------------------
|27             |  | Financial Data Schedule



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## 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                   |  | MEEMIC Holdings, Inc.
|------------------ |  | ---------------------
|DATE: May 12, 2000 |  |                      
|                   |  |                      

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