##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington D.C.
    20549
      Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarter ended
    March 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission File Number 1-14094
  Meadowbrook Insurance Group,
    Inc.
 (Exact name of Registrant as
    specified in its charter)
   Michigan

38-2626206(State of
    Incorporation)

(IRS Employer
    Identification No.)   26255 American Drive,
 Southfield, Michigan 48034
 (Address, zip code of principal
    executive offices)
  (248) 358-1100
 (Registrants telephone
    number, including area code)
   þ o
  Regulation S-T o o
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o    Rule 12b-2 o þ




---



##### Table of Contents



TABLE OF
    CONTENTS
    
 PagePART I  FINANCIAL
    INFORMATIONITEM 1



FINANCIAL STATEMENTSConsolidated Statements of Income (unaudited)

2Consolidated Statements of Comprehensive Income
    (unaudited)

3Consolidated Balance Sheets (unaudited)

4Consolidated Statement of Shareholders
    Equity (unaudited)

5Consolidated Statement of Cash Flows
    (unaudited)

6Notes to Consolidated Financial Statements
    (unaudited)

7-21ITEM 2



MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS

22-30ITEM 3



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

31-32ITEM 4



CONTROLS AND PROCEDURES

32PART II  OTHER
    INFORMATIONITEM 1



LEGAL PROCEEDINGS

33ITEM 1A  RISK FACTORS

33ITEM 2



UNREGISTERED SALES OF EQUITY SECURITIES AND USE
    OF PROCEEDS

33ITEM 6



EXHIBITS

33SIGNATURES

34EX-31.1EX-31.2EX-32.1EX-32.2  1




---



##### Table of Contents



PART 1 
    FINANCIAL INFORMATION ITEM 1  FINANCIAL
    STATEMENTS  MEADOWBROOK
    INSURANCE GROUP, INC.
 CONSOLIDATED
    STATEMENTS OF INCOME
    For the Three Months Ended March 31,  2010


2009(Unaudited)(In thousands, except share data)RevenuesPremiums earnedGross

$
179,613


$
155,014Ceded


(28,172
)


(25,976
)Net earned premiums


151,441



129,038Net commissions and fees


9,868



10,237Net investment income


13,029



12,342Realized losses:Total
    other-than-temporary
    impairments on securities


(305
)


(2,051
)Portion of loss recognized in other comprehensive income






Net
    other-than-temporary
    impairments on securities recognized in earnings


(305
)


(2,051
)Net realized gains excluding
    other-than-temporary
    impairments on securities


171



59Net realized losses


(134
)


(1,992
)Total revenues


174,204



149,625ExpensesLosses and loss adjustment expenses


99,321



93,806Reinsurance recoveries


(11,841
)


(18,911
)Net losses and loss adjustment expenses


87,480



74,895Policy acquisition and other underwriting expenses


51,879



38,993General selling & administrative expenses


5,906



8,166General corporate expenses


1,977



1,922Amortization expense


1,401



1,508Interest expense


2,443



2,782Total expenses


151,086



128,266Income before taxes and equity earnings


23,118



21,359Federal and state income tax expense


7,658



7,869Equity earnings of affiliates, net of tax


522



Equity earnings of unconsolidated subsidiaries, net of tax


452



50Net income

$
16,434


$
13,540Earnings Per ShareBasic

$
0.30


$
0.24Diluted

$
0.30


$
0.24Weighted average number of common sharesBasic


55,272,310



57,392,499Diluted


55,477,098



57,410,327Dividends paid per common share

$
0.03


$
0.02    2




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.



CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended March 31,  2010


2009(Unaudited)(In thousands)Net income

$
16,434


$
13,540Other comprehensive income, net of tax:Unrealized gains on securities


4,798



6,035Unrealized gains in affiliates and unconsolidated subsidiaries


147



Depreciation on non-credit other-than-temporary impairments on
    securities


(607
)


Net deferred derivative gain (losses)  hedging
    activity


(178
)


329Less reclassification adjustment for investment losses included
    in net income


156



2,014Other comprehensive gains, net of tax


4,316



8,378Comprehensive income

$
20,750


$
21,918    3




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
 CONSOLIDATED
    BALANCE SHEETS  March 31,


December 31,2010


2009(Unaudited)(In thousands, except share data)ASSETSInvestmentsDebt securities available for sale, at fair value (amortized
    cost of $1,093,396 and $1,045,454)

$
1,141,412


$
1,088,554Equity securities available for sale, at fair value (amortized
    cost of $26,793 and $26,919)


29,232



28,342Cash and cash equivalents


72,691



86,319Accrued investment income


12,477



11,599Premiums and agent balances receivable, net


178,275



155,327Reinsurance recoverable on:Paid losses


7,727



7,724Unpaid losses


269,524



266,801Prepaid reinsurance premiums


35,523



35,298Deferred policy acquisition costs


76,988



68,787Deferred federal income taxes


4,060



5,645Goodwill


118,842



118,842Other intangible assets


39,912



41,301Other assets


73,070



75,277Total assets

$
2,059,733


$
1,989,816LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesLosses and loss adjustment expenses

$
978,448


$
949,177Unearned premiums


353,475



325,915Debt


47,063



49,875Debentures


80,930



80,930Accounts payable and accrued expenses


40,320



34,251Funds held and reinsurance balances payable


29,360



29,161Payable to insurance companies


3,985



3,314Other liabilities


14,609



14,312Total liabilities


1,548,190



1,486,935Shareholders EquityCommon stock, $0.01 stated value; authorized
    75,000,000 shares; 54,261,542 and 55,519,970 shares
    issued and outstanding


543



555Additional paid-in capital


297,461



304,930Retained earnings


184,261



172,441Note receivable from officer


(818
)


(825
)Accumulated other comprehensive income


30,096



25,780Total shareholders equity


511,543



502,881Total liabilities and shareholders equity

$
2,059,733


$
1,989,816    4




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
 CONSOLIDATED
    STATEMENT OF SHAREHOLDERS EQUITY  AccumulatedAdditional





Note


Other


TotalCommon


Paid-In


Retained


Receivable


Comprehensive


ShareholdersStock


Capital


Earnings


from Officer


(Loss) Income


Equity(In thousands)Balances December 31, 2009

$
555


$
304,930


$
172,441


$
(825
)

$
25,780


$
502,881Net income










16,434











16,434Dividends declared and paid










(1,647
)










(1,647
)Net unrealized appreciation on available for sale securities


















4,347



4,347Net deferred derivative gain  hedging activity


















(178
)


(178
)Stock award


2



273















275Long term incentive plan; stock award for
    2009-2011
    plan years






251















251Repurchase of 1,456,000 shares of common stock


(14
)


(7,993
)


(2,967
)










(10,974
)Change in investment of affiliates, net of tax


















90



90Change in investment of unconsolidated subsidiaries


















57



57Note receivable from officer














7







7Balances March 31, 2010

$
543


$
297,461


$
184,261


$
(818
)

$
30,096


$
511,543    5




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS



For the Three Months Ended March 31,  2010


2009(Unaudited)(In thousands)Cash Flows From Operating ActivitiesNet income

$
16,434


$
13,540Adjustments to reconcile net income to net cash provided by
    operating activities:Amortization of other intangible assets


1,401



1,508Amortization of deferred debenture issuance costs


66



121Depreciation of furniture, equipment, and building


1,309



1,221Net amortization of discount and premiums on bonds


981



815Loss on sale of investments, net


156



2,014Gain on sale of fixed assets


(22
)


(22
)Long-term incentive plan expense


251



203Stock award


310



Equity earnings of affiliates, net of taxes


(522
)


Equity earnings of unconsolidated subsidiaries, net of tax


(452
)


Deferred income tax expense


47



1,710Changes in operating assets and liabilities:Decrease (increase) in:Premiums and agent balances receivable


(22,948
)


(9,336
)Reinsurance recoverable on paid and unpaid losses


(2,726
)


(2,140
)Prepaid reinsurance premiums


(225
)


(500
)Deferred policy acquisition costs


(8,201
)


(811
)Other assets


(2,220
)


(216
)Increase (decrease) in:Losses and loss adjustment expenses


29,271



11,993Unearned premiums


27,560



4,978Payable to insurance companies


671



(2,947
)Funds held and reinsurance balances payable


199



525Other liabilities


3,336



685Total adjustments


28,242



9,801Net cash provided by operating activities


44,676



23,341Cash Flows From Investing ActivitiesPurchase of debt securities available for sale


(73,468
)


(59,740
)Proceeds from sales and maturities of debt securities available
    for sale


28,166



35,685Purchase of equity securities available for sale






(198
)Proceeds from sales of equity securities available for sale


137



Capital expenditures


(1,040
)


(360
)Acquisition of rights renewals


(12
)


Other investing activities


159



1,065Net cash used in investing activities


(46,058
)


(23,548
)Cash Flows From Financing ActivitiesPayment of lines of credit


(2,813
)


(2,375
)Book overdrafts


1,519



712Dividends paid on common stock(1)






(1,149
)Cash payment for payroll taxes associated with long-term
    incentive plan net stock issuance


(35
)


(330
)Share repurchases


(10,883
)


Other financing activities


(34
)


(31
)Net cash used in financing activities


(12,246
)


(3,173
)Net decrease in cash and cash equivalents


(13,628
)


(3,380
)Cash and cash equivalents, beginning of period


86,319



76,588Cash and cash equivalents, end of period

$
72,691


$
73,208Supplemental Disclosure of Non-Cash Investing and Financing
    Activities:     (1)
    
    Dividend of $1,647,046 was paid on April 5, 2010   6




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
  NOTE 1 
    Summary of Significant Accounting Policies
  Basis
    of Presentation and Management Representation
      Form 10-K,
  Revenue
    Recognition
        sub-producer
 7




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Earnings
    Per Share
        Income
    Taxes
      Reclassifications
    and redefining segment reporting:
      As Reported


Reclassification


ReclassifiedLosses and loss adjustment expenses

$
88,698


$
5,108


$
93,806Reinsurance recoverables


(18,911
)






(18,911
)Net losses and loss adjustment expenses


69,787



5,108



74,895Salaries and employee benefits


19,827



(19,827
)


Policy acquisition and other underwriting expenses


23,969



15,024



38,993Other administrative expenses


10,393



(10,393
)


General selling and administrative expenses






8,166



8,166General corporate expenses






1,922



1,922Amortization expense


1,508







1,508Interest expense


2,782







2,782Total expenses

$
128,266


$



$
128,266  8




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Recent
    Accounting Pronouncements
  Consolidation Amendments to FASB Interpretation
    No. 46(R).
  2010-06 Fair Value Measurements and Disclosures ( ):
    Improving Disclosures about Fair Value Measurements. 2010-06 Fair Value Measurements
  2010-06
  NOTE 2 
    Restricted
    Stock Awards  Compensation  Stock
    Compensation
  NOTE 3 
    Debt  Credit
    Facilities
   9




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Derivative
    Instruments
    Debentures
    InterestRate atYear of




Year


Year





March 31,


PrincipalIssuance


Description

Callable


Due


Interest Rate Terms


2010(1)


Amount2003


Junior subordinated debentures


2008



2033



Three-month LIBOR, plus 4.05
%


4.34
%

$
10,3102004


Senior debentures


2009



2034



Three-month LIBOR, plus 4.00
%


4.25
%


13,0002004


Senior debentures


2009



2034



Three-month LIBOR, plus 4.20
%


4.45
%


12,0002005


Junior subordinated debentures


2010



2035



Three-month LIBOR, plus 3.58
%


3.84
%


20,620Junior subordinated debentures(2)


2007



2032



Three-month LIBOR, plus 4.00
%


4.25
%


15,000Junior subordinated debentures(2)


2008



2033



Three-month LIBOR, plus 4.10
%


4.35
%


10,000Total


$
80,930     (1)
    
    The underlying three-month LIBOR rate varies as a result of the
    interest rate reset dates used in determining the three-month
    LIBOR rate, which varies for each long-term debt item each
    quarter.(2)
    
    Represents the junior subordinated debentures acquired in
    conjunction with the ProCentury Merger (the Merger)
    on July 31, 2008.     10




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
            NOTE 4 
    Investments    March 31, 2010Cost or


Gross UnrealizedAmortized








Non-Credit


EstimatedCost


Gains


Losses


OTTI(1)


Fair ValueDebt Securities:U.S. Government and agencies

$
24,155


$
1,052


$
(28
)

$



$
25,179Obligations of states and political subs


507,498



21,148



(650
)






527,996Corporate securities


304,773



12,829



(769
)


(12
)


316,821Redeemable preferred stocks


2,689



1,916











4,605Residential mortgage-backed securities


200,933



12,486



(78
)


(558
)


212,783Commercial mortgage-backed securities


29,896



769



(362
)






30,303Other asset-backed securities


23,452



1,255



(154
)


(828
)


23,725Total debt securities available for sale


1,093,396



51,455



(2,041
)


(1,398
)


1,141,412Equity Securities:Perpetual preferred stock


12,005



1,997



(69
)






13,933Common stock


14,788



987



(476
)






15,299Total equity securities available for sale


26,793



2,984



(545
)






29,232Total securities available for sale

$
1,120,189


$
54,439


$
(2,586
)

$
(1,398
)

$
1,170,644   11




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  December 31, 2009Cost or


Gross UnrealizedAmortized








Non-Credit


EstimatedCost


Gains


Losses


OTTI(1)


Fair ValueDebt Securities:U.S. Government and agencies

$
26,177


$
1,037


$
(60
)

$



$
27,154Obligations of states and political subs


499,384



21,566



(816
)






520,134Corporate securities


257,187



10,872



(892
)


(22
)


267,145Redeemable preferred stocks


2,689



1,349



(38
)






4,000Residential mortgage-backed securities


214,562



11,379



(114
)


(615
)


225,212Commercial mortgage-backed securities


24,015



292



(579
)






23,728Other asset-backed securities


21,440



983



(181
)


(1,061
)


21,181Total debt securities available for sale


1,045,454



47,478



(2,680
)


(1,698
)


1,088,554Equity Securities:Perpetual preferred stock


12,131



1,350



(168
)






13,313Common stock


14,788



691



(450
)






15,029Total equity securities available for sale


26,919



2,041



(618
)






28,342Total securities available for sale

$
1,072,373


$
49,519


$
(3,298
)

$
(1,698
)

$
1,116,896     (1)
    
    Includes unrealized gains (losses) related to securities with
    non-credit OTTI.    March 31,


December 31,2010


2009Unrealized gains

$
54,439


$
49,519Unrealized losses


(2,586
)


(3,298
)Non-credit OTTI(1)


(1,398
)


(1,698
)Net unrealized gains


50,455



44,523Deferred federal income tax expense


(17,659
)


(15,583
)Valuation allowance adjustment on deferred income taxes


1,185



694Net unrealized gains on investments, net of deferred federal
    income taxes

$
33,981


$
29,634     (1)
    
    Includes unrealized gains (losses) related to securities with
    non-credit OTTI. 12




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     For the Three MonthsEnded March 31,2010


2009Realized (losses) gains:Debt securities:Gross realized gains

$
148


$
56Gross realized losses


(314
)


(1,752
)Total debt securities


(166
)


(1,696
)Equity Securities:Gross realized gains


10



Gross realized losses






(317
)Total equity securities


10



(317
)Net realized losses

$
(156
)

$
(2,013
)OTTI included in realized losses on securities above

$
(305
)

$
(2,051
)       Available for SaleEstimated FairAmortized Cost


ValueDue in one year or less

$
35,960


$
37,014Due after one year through five years


183,629



193,353Due after five years through ten years


458,040



478,977Due after ten years


161,486



165,255Mortgage-backed securities, collateralized obligations and other
    asset-backed securities


254,281



266,813$
1,093,396


$
1,141,412  13




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    For the Three MonthsEnded March 31,2010


2009Net Investment Income Earned From:Debt securities

$
12,580


$
11,725Equity Securities


536



523Cash and cash equivalents


184



377Total gross investment income


13,300



12,625Less investment expenses


271



283Net investment income

$
13,029


$
12,342   Other
    Than Temporary Impairments of Securities and Unrealized Losses
    on Investments
    other-than-temporary.
   14




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    
    Historical and implied volatility of the security;
    Length of time and extent to which the fair value has been less
    than amortized cost;
    Conditions specifically related to the security such as default
    rates, loss severities, loan to value ratios, current levels of
    subordination, third party guarantees, and vintage;
    Specific conditions in an industry or geographic area;
    Any changes to the rating of the security by a rating agency;
    Failure, if any, of the issuer of the security to make scheduled
    payments; and
    Recoveries or additional declines in fair value subsequent to
    the balance sheet date.       15




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    March 31, 2010Less Than 12 months


Greater Than 12 months


TotalFair Value of


Gross


Fair Value of


Gross


Fair Value of


GrossInvestments


Unrealized


Investments


Unrealized


Investments


Unrealizedwith


Losses and


with


Losses and


with


Losses andUnrealized


Non-Credit


Unrealized


Non-Credit


Unrealized


Non-CreditLosses


OTTI


Losses


OTTI


Losses


OTTIDebt Securities:U.S. Government and agencies

$
3,467


$
(28
)

$



$



$
3,467


$
(28
)Obligations of states and political subs


53,135



(498
)


6,327



(152
)


59,462



(650
)Corporate securities


60,590



(781
)










60,590



(781
)Redeemable preferred stocks






















Residential mortgage-backed securities


5,791



(63
)


4,613



(573
)


10,404



(636
)Commercial mortgage-backed securities


7,184



(46
)


281



(316
)


7,465



(362
)Other asset-backed securities


2,389



(743
)


1,119



(239
)


3,508



(982
)Total debt securities


132,556



(2,159
)


12,340



(1,280
)


144,896



(3,439
)Equity Securities:Perpetual preferred stock










1,440



(69
)


1,440



(69
)Common stock










5,084



(476
)


5,084



(476
)Total equity securities










6,524



(545
)


6,524



(545
)Total securities

$
132,556


$
(2,159
)

$
18,864


$
(1,825
)

$
151,420


$
(3,984
)   December 31, 2009Less Than 12 months


Greater Than 12 months


TotalFair Value of


Gross


Fair Value of


Gross


Fair Value of


GrossInvestments


Unrealized


Investments


Unrealized


Investments


Unrealizedwith


Losses and


with


Losses and


with


Losses andUnrealized


Non-Credit


Unrealized


Non-Credit


Unrealized


Non-CreditLosses


OTTI


Losses


OTTI


Losses


OTTIDebt Securities:U.S. Government and agencies

$
3,546


$
(60
)

$



$



$
3,546


$
(60
)Obligations of states and political subs


53,577



(640
)


7,115



(176
)


60,692



(816
)Corporate securities


55,276



(912
)


199



(2
)


55,475



(914
)Redeemable preferred stocks










721



(38
)


721



(38
)Residential mortgage-backed securities


5,971



(79
)


4,596



(650
)


10,567



(729
)Commercial mortgage-backed securities


3,286



(20
)


8,109



(559
)


11,395



(579
)Other asset-backed securities


3,177



(972
)


1,354



(270
)


4,531



(1,242
)Total debt securities


124,833



(2,683
)


22,094



(1,695
)


146,927



(4,378
)Equity Securities:Perpetual preferred stock


103



(24
)


2,862



(144
)


2,965



(168
)Common stock










5,074



(450
)


5,074



(450
)Total equity securities


103



(24
)


7,936



(594
)


8,039



(618
)Total securities

$
124,936


$
(2,707
)

$
30,030


$
(2,289
)

$
154,966


$
(4,996
)  16




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Balance as of January 1, 2010

$
(547
)Additional credit impairments on:Previously impaired securities


(245
)Securities for which an impairment was not previously recognized


Reductions


Balance as of March 31, 2010

$
(792
)   NOTE 5 
    Fair
    Value Measurements      
    Level 1  Observable unadjusted quoted prices in
    active markets for identical securities.      
    Level 2  Observable inputs other than quoted
    prices in active markets for identical securities, including:
    quoted prices in active markets for similar securities; quoted
    prices for identical or similar securities in markets that are
    not active; inputs other than quoted prices that are observable
    for the security (e.g., interest rates, yield curves observable
    at commonly quoted intervals, volatilities, prepayment speeds,
    credit risks, default rates); and inputs derived from or
    corroborated by observable market data by correlation or other
    means.      
    Level 3  Unobservable inputs, including the
    reporting entitys own data (e.g., cash flow estimates), as
    long as there are no contrary data indicating market
    participants would use different assumptions.   17




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Fair Value Measurements UsingQuoted Pricesin Active


SignificantMarkets for


Other


SignificantIdentical


Observable


UnobservableMarch 31, 2010


Assets


Inputs


InputsTotal


(Level 1)


(Level 2)


(Level 3)Debt Securities:U.S. Government and agencies

$
25,179


$



$
25,179


$
Obligations of states and political subs


527,996







527,996



Corporate securities


316,821







315,669



1,152Redeemable preferred stocks


4,605



4,605







Residential mortgage-backed securities


212,783







212,782



1Commercial mortgage-backed securities


30,303







30,303



Other asset-backed securities


23,725







20,247



3,478Total debt securities available for sale


1,141,412



4,605



1,132,176



4,631Equity Securities:Perpetual preferred stock


13,933



13,933







Common stock


15,299



15,299







Total equity securities available for sale


29,232



29,232







Total securities available for sale

$
1,170,644


$
33,837


$
1,132,176


$
4,631Derivatives  interest rate swaps

$
6,202






$
6,202



  18




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Fair ValueMeasurementUsing SignificantUnobservableInputs - Level 3Balance as of January 1, 2010

$
4,161Total gains or losses (realized/unrealized):Included in earnings


(27
)Included in other comprehensive income


45Purchases, issuances and settlements


420Transfers in and out of Level 3


32Balance as of March 31, 2010

$
4,631       NOTE 6 
    Derivative
    Instruments      FixedAmount atExpiration





Fixed


March 31,Effective Date

Date

Debt Instrument

Counterparty Interest Rate Terms

Rate


201010/6/2005

9/16/2010

Junior subordinated debentures

Three-month LIBOR, plus 3.58%


8.340
%

$
20,0004/23/2008

5/24/2011

Senior debentures

Three-month LIBOR, plus 4.20%


7.720
%


7,0004/23/2008

6/30/2013

Junior subordinated debentures

Three-month LIBOR, plus 4.05%


8.020
%


10,0004/29/2008

4/29/2013

Senior debentures

Three-month LIBOR, plus 4.00%


7.940
%


13,0007/31/2008

7/31/2013

Term loan(1)

Three-month LIBOR


3.950
%


47,0638/15/2008

8/15/2013

Junior subordinated debentures(2)

Three-month LIBOR


3.780
%


10,0009/4/2008

9/4/2013

Junior subordinated debentures(2)

Three-month LIBOR


3.790
%


15,000     (1)
    
    The Company is required to make fixed rate interest payments on
    the current balance of the term loan, amortizing in accordance
    with the term loan amortization schedule. The Company fixed only
    the variable interest portion of the loan. The actual interest
    payments associated with the term loan also include an
    additional rate of 2.00% in accordance with the credit agreement. 19




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   (2)
    
    The Company fixed only the variable interest portion of the
    debt. The actual interest payments associated with the
    debentures also include an additional rate of 4.10% and 4.00% on
    the $10.0 million and $15.0 million debentures,
    respectively.        NOTE 7 
    Shareholders
    Equity          NOTE 8 
    Commitments
    and Contingencies   20




---



##### Table of Contents



MEADOWBROOK
    INSURANCE GROUP, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    NOTE 9 
    Earnings
    Per Share      2010


2009Net income, as reported

$
16,434


$
13,540Common shares:BasicWeighted average shares outstanding


55,272,310



57,392,499DilutedWeighted average shares outstanding


55,272,310



57,392,499Dilutive effect of:Share awards under long term incentive plan


204,788



17,828Total


55,477,098



57,410,327Net income per common shareBasic

$
0.30


$
0.24Diluted

$
0.30


$
0.24  21




---



##### Table of Contents



ITEM 2  MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
    RESULTS OF OPERATIONSFor the Periods ended March 31, 2010 and
    2009



Forward-Looking
    Statements



This quarterly report may provide information including
    certain statements which constitute forward-looking statements
    within the meaning of Section 27A of the Securities Act of
    1933, as amended, and Section 21E of the Securities
    Exchange Act of 1934, as amended. These include statements
    regarding the intent, belief, or current expectations of
    management, including, but not limited to, those statements that
    use the words believes, expects,
    anticipates, estimates, or similar
    expressions. You are cautioned that any such forward-looking
    statements are not guarantees of future performance and involve
    a number of risks and uncertainties, and results could differ
    materially from those indicated by such forward-looking
    statements. Among the important factors that could cause actual
    results to differ materially from those indicated by such
    forward-looking statements are: the frequency and severity of
    claims; uncertainties inherent in reserve estimates;
    catastrophic events; a change in the demand for, pricing of,
    availability or collectability of reinsurance; increased rate
    pressure on premiums; ability to obtain rate increases in
    current market conditions; investment rate of return; changes in
    and adherence to insurance regulation; actions taken by
    regulators, rating agencies or lenders; attainment of certain
    processing efficiencies; changing rates of inflation; general
    economic conditions and other risks identified in our reports
    and registration statements filed with the Securities and
    Exchange Commission. We are not under any obligation to (and
    expressly disclaim any such obligation to) update or alter our
    forward-looking statements whether as a result of new
    information, future events or otherwise.



Business
    Overview



We are a publicly traded specialty insurance underwriter and
    insurance administration services company. We market and
    underwrite specialty property and casualty insurance programs
    and products on both an admitted and non-admitted basis through
    a broad and diverse network of independent retail, wholesale
    program administrators and general agents, who value service,
    specialized knowledge, and focused expertise. Our primary focus
    is on niche or specialty products and program business and risk
    management solutions for our customers. The services and
    coverages we provide are tailored to meet specific requirements
    of defined client groups and their members, which may include
    specialty program underwriting; admitted and excess and surplus
    lines insurance products; alternative risk transfer solutions,
    and insurance administration services. Program business refers
    to an aggregation of individually underwritten risks that have
    some characteristic
    and/or are
    distributed through a select group of general agencies, retail
    agencies and program administrators. We provide various types of
    property and casualty insurance coverage, primarily to
    associations or similar groups of members and to the specified
    classes of business of our agents. With our specialty programs
    and products, we seek to combine profitable underwriting,
    investment returns and efficient capital management to deliver
    consistent long-term growth in shareholder value. We also earn
    commission revenue, which represents 1.8% of our total revenue,
    through the operation of its retail property and casualty
    insurance agencies, located in Michigan, California, and
    Florida. These agencies produce commercial, personal lines, life
    and accident and health insurance, with more than fifty
    unaffiliated insurance carriers. These agencies produce an
    immaterial amount of business for our affiliated Insurance
    Company Subsidiaries



Our programs are diversified geographically, by class and line
    of business, type of insured and distribution. In the
    workers compensation line of business, we have a regional
    focus in California, New England, Florida, and Nevada. Within
    the commercial automobile and commercial multiple peril line of
    business, we have a regional focus in the Southeast and
    California. In the general liability line of business, we have a
    focus in Texas. Our
    fee-for-service
    business is managed on a regional basis with an emphasis in the
    Midwest, New England, and Southeastern regions. Our corporate
    strategy emphasizes a regional focus and diverse sources of
    revenue between underwritten premiums, service fee revenue and
    commissions. This allows us to leverage our fixed costs over a
    larger revenue base and take advantage of new opportunities.


22




---



##### Table of Contents



Critical
    Accounting Policies
  Form 10-K
  Reclassifications
    and redefining segment reporting
      As Reported


Reclassification


ReclassifiedLosses and loss adjustment expenses

$
88,698


$
5,108


$
93,806Reinsurance recoverables


(18,911
)






(18,911
)Net losses and loss adjustment expenses


69,787



5,108



74,895Salaries and employee benefits


19,827



(19,827
)


Policy acquisition and other underwriting expenses


23,969



15,024



38,993Other administrative expenses


10,393



(10,393
)


General selling and administrative expenses






8,166



8,166General corporate expenses






1,922



1,922Amortization expense


1,508







1,508Interest expense


2,782







2,782Total expenses

$
128,266


$



$
128,266     RESULTS
    OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND
    2009
  Executive
    Overview
   23




---



##### Table of Contents



Results
    of Operations
    Revenues
      For the Three MonthsEnded March 31,2010


2009Revenue:Net earned premiums

$
151,441


$
129,038Management administrative fees


4,956



5,250Claims fees


1,746



1,966Investment income


13,029



12,342Commission revenue


3,166



3,021Net realized losses


(134
)


(1,992
)Total revenue

$
174,204


$
149,625        24




---



##### Table of Contents



Expenses
      For the Three MonthsEnded March 31,2010


2009Expense:Net losses and loss adjustment expenses

$
87,480


$
74,895Policy acquisition and other underwriting expenses


51,879



38,993General selling & administrative expenses


5,906



8,166General corporate expenses


1,977



1,922Amortization expense


1,401



1,508Interest expense


2,443



2,782Total expenses

$
151.086


$
128,266   Other Items  Reserves
     25




---



##### Table of Contents



Liquidity and Capital Resources
    Other
    Items
  Equity
    earnings of affiliated, net of tax;
    Reserves
    Minimum


MaximumReserve


Reserve


SelectedLine of Business

Range


Range


ReservesWorkers Compensation(1)

$
212,756


$
235,446


$
226,899Commercial Multiple Peril/General Liability


296,892



364,164



337,189Commercial Automobile


100,995



113,195



107,854Other


34,392



38,944



36,982Total Net Reserves

$
645,035


$
751,749


$
708,924     (1)
    
    Includes Residual Markets   26




---



##### Table of Contents



Reserves at


Incurred Losses


Paid Losses


Reserves atDecember 31,


Current


Prior


Total


Current


Prior


Total


March 31,Line of Business

2009


Year


Years


Incurred


Year


Years


Paid


2010Workers Compensation

$
185,729


$
36,525


$
1,476


$
38,001


$
1,080


$
16,665


$
17,745


$
205,985Residual Markets


21,907



1,212



(1,274
)


(62
)


889



42



931


$
20,914Commercial Multiple Peril/General Liability


333,688



26,144



(6,178
)


19,966



487



15,978



16,465


$
337,189Commercial Automobile


105,468



18,804



(1,860
)


16,944



2,582



11,976



14,558


$
107,854Other


35,584



14,502



(1,871
)


12,631



2,472



8,760



11,233


$
36,982Net Reserves


682,376


$
97,187


$
(9,707
)

$
87,480


$
7,510


$
53,421


$
60,932



708,924Reinsurance Recoverable


266,801



























269,524Consolidated

$
949,177


























$
978,448   TotalRe-estimated


DevelopmentReserves at


as aReserves at


March 31,


Percentage ofDecember 31,


2010 on


Prior YearLine of Business

2009


Prior Years


ReservesWorkers Compensation

$
185,729


$
187,205



0.8
%Commercial Multiple Peril/General Liability


333,688



327,510



−1.9
%Commercial Automobile


105,468



103,608



−1.8
%Other


35,584



33,713



−5.3
%Sub-total


660,469



652,036



−1.3
%Residual Markets


21,907



20,633



−5.8
%Total Net Reserves

$
682,376


$
672,669



−1.4
%   Workers Compensation Excluding Residual
    Markets
  Commercial Multiple Peril/General
    Liability
 27




---



##### Table of Contents



Commercial Automobile
  Other
  Residual Markets
  Other
    Than Temporary Impairments
      Investments
  LIQUIDITY
    AND CAPITAL RESOURCES
     28




---



##### Table of Contents



Other
    Items
  Interest
    Rate Swaps
  Derivative Instruments
  Credit
    Facilities
  Debt
 29




---



##### Table of Contents



Investment
    Portfolio
      Shareholders
    Equity
          Contractual
    Obligations and Commitments
    Recent
    Accounting Pronouncements
  Consolidation Amendments to FASB Interpretation
    No. 46(R).
  2010-06, Fair Value Measurements and Disclosures ( ):
    Improving Disclosures about Fair Value Measurements. 2010-06 Fair Value Measurements
  2010-06
 30




---



##### Table of Contents



ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK            Rates Down


Rates


Rates Up100bps


Unchanged


100bpsFair Value

$
1,199,788


$
1,141,412


$
1,082,472Yield to Maturity or Call


2.46
%


3.45
%


4.47
%Effective Duration


4.77



5.15



5.29          31




---



##### Table of Contents



Derivative
    Instrument
    ITEM 4.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures.
  Rule 13a-15(e) Form 10-Q,
    Changes
    in Internal Control over Financial Reporting
   32




---



##### Table of Contents



PART II 
    OTHER INFORMATION ITEM 1.
    LEGAL
    PROCEEDINGS  Commitments and Contingencies Form 10-Q
  ITEM 1A.
    RISK
    FACTORS  Form 10-K
  ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS      Total Number


Maximumof Shares


Number ofPurchased as


Shares that mayPart of Publicly


yet beTotal


Average


Announced


RepurchasedNumber of


Price Paid


Plans or


Under the PlansPeriod

Shares


Per Share


Programs


or ProgramsJanuary 1  January 31, 2010





$








272,098February 1  February 28, 2010


350,000


$
6.98







4,650,000March 1  March 31, 2010


1,106,000


$
7.67







3,544,000Total


1,456,000


$
7.51



   ITEM 6.
    EXHIBITS    ExhibitNo.

Description10
.1

Form of Restricted Stock Agreement in connection with restricted
    stock awards granted to Robert S. Cubbin, Karen M. Spaun,
    Michael G. Costello, Stephen A. Belden, and James M. Mahoney
    (incorporated by reference from Current Report on
    Form 8-K
    filed on March 1, 2010).31
.1

Certification of Robert S. Cubbin, Chief Executive Officer of
    the Corporation, pursuant to Securities Exchange Act
    Rule 13a-14(a).31
.2

Certification of Karen M. Spaun, Senior Vice President and Chief
    Financial Officer of the Corporation, pursuant to Securities
    Exchange Act
    Rule 13a-14(a).32
.1

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002, signed by Robert S. Cubbin, Chief Executive Officer
    of the Corporation.32
.2

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002, signed by Karen M. Spaun, Senior Vice President and
    Chief Financial Officer of the Corporation.  33




---



##### Table of Contents



SIGNATURES    Meadowbrook Insurance Group, Inc.
  By:
    /s/  Karen
    M. Spaun      34




---



##### Table of Contents



EXHIBITS INDEX
  ExhibitNo.

Description10
.1

Form of Restricted Stock Agreement in connection with restricted
    stock awards granted to Robert S. Cubbin, Karen M. Spaun,
    Michael G. Costello, Stephen A. Belden, and James M. Mahoney
    (incorporated by reference from Current Report on
    Form 8-K
    filed on March 1, 2010).31
.1

Certification of Robert S. Cubbin, Chief Executive Officer of
    the Corporation, pursuant to Securities Exchange Act
    Rule 13a-14(a).31
.2

Certification of Karen M. Spaun, Senior Vice President and Chief
    Financial Officer of the Corporation, pursuant to Securities
    Exchange Act
    Rule 13a-14(a).32
.1

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002, signed by Robert S. Cubbin, Chief Executive Officer
    of the Corporation.32
.2

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the
    Sarbanes-Oxley
    Act of 2002, signed by Karen M. Spaun, Senior Vice President and
    Chief Financial Officer of the Corporation.  35