UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549



---



FORM 10-Q

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2000

or

|    |  |                                                                                         
|--- |  | ----------------------------------------------------------------------------------------
|[ ] |  | 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
(State of Incorporation) |  | 38-2626206
(IRS Employer Identification No.)

26600 Telegraph Road, Southfield, Michigan 48034
(Address, zip code of principal executive offices)

(248) 358-1100
(Registrants telephone number, including area code)

___________________

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 aggregate number of shares of the Registrants Common Stock, $.01 par
value, outstanding on August 10, 2000 was 8,512,008.





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TABLE OF CONTENTS

|                                                                                               |                                                                          |       |      |     
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----- | ---- | ----
|                                                                                               |                                                                          |       |      | PAGE
|                                                                                               |                                                                          |       |      |     
|PART I - FINANCIAL INFORMATION                                                                 |                                                                         
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|ITEM 1 - FINANCIAL STATEMENTS                                                                 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Condensed Consolidated Statement of Income                               |       | 3-4 
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Consolidated Statement of Comprehensive Income                           |       | 5   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Condensed Consolidated Balance Sheet                                     |       | 6   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Condensed Consolidated Statement of Cash Flows                           |       | 7   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                               | Notes to Consolidated Financial Statements
and Management Representation |       | 8-13
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|ITEM 2 - MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS |                                                                          | 14-19
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|PART II - OTHER INFORMATION                                                                   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|ITEM 1  LEGAL PROCEEDINGS                                                                     |                                                                          | 20   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |                                                                          | 20   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                                      |                                                                          | 21   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|SIGNATURES                                                                                     |                                                                          | 22   

2



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PART 1  FINANCIAL INFORMATION

ITEM 1
FINANCIAL STATEMENTS

MEADOWBROOK INSURANCE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Six Months Ended June 30,
(Unaudited)
(in thousands)

|                           |                                                                                                  |                                   |      |         |        |      |        |         |        |  
|-------------------------- | ------------------------------------------------------------------------------------------------ | --------------------------------- | ---- | ------- | ------ | ---- | ------ | ------- | ------ | -
|                           |                                                                                                  |                                   |      | 2000    |        | 1999
|                           |                                                                                                  |                                   |      |         |        |     
|Revenues:                 
|                          
|                          
|                          
|                          
|                           | Net premium earned                                                                               |                                   | $    | 71,097  |        |      | $      | 55,941  |       
|                          
|                          
|                          
|                          
|                           | Net commissions and fees                                                                         |                                   |      | 20,702  |        |      |        | 18,196  |       
|                          
|                          
|                          
|                          
|                           | Net investment income                                                                            |                                   |      | 6,179   |        |      |        | 5,477   |       
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|                           |                                                                                                  | Total Revenues                    |      |         | 97,978 |      |        |         | 79,614 |  
|                          
|                          
|                          
|                          
|Expenses:                 
|                          
|                          
|                          
|                          
|                           | Loss and loss adjustment expenses                                                                |                                   |      | 117,755 |        |      |        | 88,230  |       
|                          
|                          
|                          
|                          
|                           | Reinsurance recoveries                                                                           |                                   |      | (66,643 | )      |      |        | (46,527 | )     
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|                           | Net loss and loss adjustment expenses                                                            |                                   |      | 51,112  |        |      |        | 41,703  |       
|                          
|                          
|                          
|                          
|                           | Other operating expenses                                                                         |                                   |      | 21,557  |        |      |        | 16,886  |       
|                          
|                          
|                          
|                          
|                           | Salaries and employee benefits                                                                   |                                   |      | 20,998  |        |      |        | 20,059  |       
|                          
|                          
|                          
|                          
|                           | Interest on notes payable                                                                        |                                   |      | 2,618   |        |      |        | 1,461   |       
|                          
|                          
|                          
|                          
|                           | Amortization of intangible assets                                                                |                                   |      | 961     |        |      |        | 683     |       
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|                           |                                                                                                  | Total Expenses                    |      |         | 97,246 |      |        |         | 80,792 |  
|                          
|                          
|                          
|                          
|                           |                                                                                                  | Income (Loss) Before Income Taxes |      |         | 732    |      |        |         | (1,178 | )
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|Federal income tax benefit |                                                                                                  |                                   | (287 | )       |        |      | (1,372 | )      
|                          
|                          
|                          
|                          
|                           | Net income before cumulative
effect of accounting change                                         |                                   |      | 1,019   |        |      |        | 194     |       
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|                           | Cumulative effect of accounting for insurance
related assessments, net of deferred taxes of $879 |                                   |      |        |        |      |        | (1,706  | )     
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|                           | Net Income (Loss)                                                                                |                                   | $    | 1,019   |        |      | $      | (1,512  | )     
|                           |                                                                                                  |                                   |      |         |        |      |        |        
|Basic EPS                 
|                          
|                          
|                          
|                          
|                           | Net income before cumulative effect of accounting change                                         |                                   | $    | 0.12    |        |      | $      | 0.02    |       
|                          
|                          
|                          
|                          
|                           | Cumulative effect of accounting change                                                           |                                   | $    | -       |        |      | $      | (0.19)  |       
|                          
|                          
|                          
|                          
|                           | Net income (loss)                                                                                |                                   | $    | 0.12    |        |      | $      | (0.17)  |       
|                          
|                          
|                          
|                          
|Diluted EPS               
|                          
|                          
|                          
|                          
|                           | Net income before cumulative effect of accounting change                                         |                                   | $    | 0.12    |        |      | $      | 0.02    |       
|                          
|                          
|                          
|                          
|                           | Cumulative effect of accounting change                                                           |                                   | $    | -       |        |      | $      | (0.19)  |       
|                          
|                          
|                          
|                          
|                           | Net income (loss)                                                                                |                                   | $    | 0.12    |        |      | $      | (0.17)  |       

The accompanying notes are an integral part of
the consolidated financial statements.

3



---



PART 1  FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS

MEADOWBROOK INSURANCE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the Quarter Ended June 30,
(Unaudited)
(in thousands)

|                           |                                       |                            |     |         |        |      |     |         |        | 
|-------------------------- | ------------------------------------- | -------------------------- | --- | ------- | ------ | ---- | --- | ------- | ------ | 
|                           |                                       |                            |     | 2000    |        | 1999
|                           |                                       |                            |     |         |        |     
|Revenues:                 
|                          
|                          
|                          
|                          
|                           | Net premium earned                    |                            | $   | 37,829  |        |      | $   | 29,782  |       
|                          
|                          
|                          
|                          
|                           | Net commissions and fees              |                            |     | 10,520  |        |      |     | 9,148   |       
|                          
|                          
|                          
|                          
|                           | Net investment income                 |                            |     | 3,392   |        |      |     | 2,768   |       
|                           |                                       |                            |     |         |        |      |     |        
|                           |                                       | Total Revenues             |     |         | 51,741 |      |     |         | 41,698 | 
|                          
|                          
|                          
|                          
|Expenses:                 
|                          
|                          
|                          
|                          
|                           | Loss and loss adjustment expenses     |                            |     | 64,283  |        |      |     | 45,539  |       
|                          
|                          
|                          
|                          
|                           | Reinsurance recoveries                |                            |     | (36,473 | )      |      |     | (24,627 | )     
|                           |                                       |                            |     |         |        |      |     |        
|                           | Net loss and loss adjustment expenses |                            |     | 27,810  |        |      |     | 20,912  |       
|                          
|                          
|                          
|                          
|                           | Other operating expenses              |                            |     | 10,928  |        |      |     | 8,064   |       
|                          
|                          
|                          
|                          
|                           | Salaries and employee benefits        |                            |     | 10,273  |        |      |     | 10,148  |       
|                          
|                          
|                          
|                          
|                           | Interest on notes payable             |                            |     | 1,378   |        |      |     | 621     |       
|                          
|                          
|                          
|                          
|                           | Amortization of intangible assets     |                            |     | 481     |        |      |     | 338     |       
|                           |                                       |                            |     |         |        |      |     |        
|                           |                                       | Total Expenses             |     |         | 50,870 |      |     |         | 40,083 | 
|                          
|                          
|                          
|                          
|                           |                                       | Income Before Income Taxes |     |         | 871    |      |     |         | 1,615  | 
|                           |                                       |                            |     |         |        |      |     |        
|Federal income tax benefit |                                       |                            | (43 | )       |        |      | (17 | )      
|                          
|                          
|                          
|                          
|                           | Net income                            |                            | $   | 914     |        |      | $   | 1,632   |       
|                          
|                          
|                          
|                          
|                           |                                       |                            |     |         |        |      |     |        
|                          
|                          
|                          
|                          
|Basic EPS                  |                                       |                            |     |         |        |      |     |        
|                          
|                          
|                          
|                          
|                           | Net income                            |                            | $   | 0.11    |        |      | $   | 0.19    |       
|                          
|                          
|                          
|                          
|Diluted EPS                |                                       |                            |     |         |        |      |     |        
|                          
|                          
|                          
|                          
|                           | Net income                            |                            | $   | 0.11    |        |      | $   | 0.19    |       

The accompanying notes are an integral part of
the consolidated financial statements.

4



---



MEADOWBROOK INSURANCE GROUP, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the Six Months Ended June 30,
(Unaudited)
(in thousands)

|                           |                                       |                                  |                                                                     |   |      |        |  
|-------------------------- | ------------------------------------- | -------------------------------- | ------------------------------------------------------------------- | - | ---- | ------ | -
|                           |                                       |                                  |                                                                     |   | 2000
|                           |                                       |                                  |                                                                     |   |     
|Net income                 |                                       | $                                | 1,019                                                               |  
|                          
|                          
|                          
|                          
|                           | Other comprehensive loss, net of tax:
|                          
|                          
|                          
|                          
|                           |                                       | Unrealized losses on securities:
|                          
|                          
|                          
|                          
|                           |                                       |                                  | Unrealized holding losses arising during the period                 |   |      | (256   | )
|                          
|                          
|                          
|                          
|                           |                                       |                                  | Less: reclassification adjustment for losses included in net income |   |      | 121    |  
|                           |                                       |                                  |                                                                     |  
|Other comprehensive income |                                       |                                  | (135                                                                | )
|                           |                                       |                                  |                                                                     |  
|Comprehensive income       |                                       | $                                | 884                                                                 |  
|                           |                                       |                                  |                                                                     |  
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                           |                                       |                                  |                                                                     |   | 1999
|                           |                                       |                                  |                                                                     |   |     
|Net loss                   |                                       | $                                | (1,512                                                              | )
|                          
|                          
|                          
|                          
|                           | Other comprehensive loss, net of tax:
|                          
|                          
|                          
|                          
|                           |                                       | Unrealized losses on securities:
|                          
|                          
|                          
|                          
|                           |                                       |                                  | Unrealized holding losses arising during the period                 |   |      | (3,574 | )
|                          
|                          
|                          
|                          
|                           |                                       |                                  | Less: reclassification adjustment for gains included in net loss    |   |      | (48    | )
|                           |                                       |                                  |                                                                     |  
|Other comprehensive loss   |                                       |                                  | (3,622                                                              | )
|                           |                                       |                                  |                                                                     |  
|Comprehensive loss         |                                       | $                                | (5,134                                                              | )
|                           |                                       |                                  |                                                                     |  

MEADOWBROOK INSURANCE GROUP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Quarter Ended June 30,
(Unaudited)
(in thousands)

|                           |                                       |                                 |                                                                     |  |      |     | 
|-------------------------- | ------------------------------------- | ------------------------------- | ------------------------------------------------------------------- |  | ---- | --- | 
|                           |                                       |                                 |                                                                     |  | 2000
|                           |                                       |                                 |                                                                     |  |     
|Net income                 |                                       | $                               | 914                                                                 | 
|                          
|                          
|                          
|                          
|                           | Other comprehensive loss, net of tax:
|                          
|                          
|                          
|                          
|                           |                                       | Unrealized gains on securities:
|                          
|                          
|                          
|                          
|                           |                                       |                                 | Unrealized holding gains arising during the period                  |  |      | 161 | 
|                          
|                          
|                          
|                          
|                           |                                       |                                 | Less: reclassification adjustment for losses included in net income |  |      | 110 | 
|                           |                                       |                                 |                                                                     | 
|Other comprehensive income |                                       |                                 | 271                                                                 | 
|                           |                                       |                                 |                                                                     | 
|Comprehensive income       |                                       | $                               | 1,185                                                               | 
|                           |                                       |                                 |                                                                     | 

|                         |                                       |                                  |                                                                  |   |  |        |  
|------------------------ | ------------------------------------- | -------------------------------- | ---------------------------------------------------------------- | - |  | ------ | -
|                         |                                       | 1999                            
|                         |                                       |                                 
|Net loss                 |                                       | $                                | 1,632                                                            |  
|                        
|                        
|                        
|                        
|                         | Other comprehensive loss, net of tax:
|                        
|                        
|                        
|                        
|                         |                                       | Unrealized losses on securities:
|                        
|                        
|                        
|                        
|                         |                                       |                                  | Unrealized holding losses arising during the period              |   |  | (2,413 | )
|                        
|                        
|                        
|                        
|                         |                                       |                                  | Less: reclassification adjustment for gains included in net loss |   |  | (29    | )
|                         |                                       |                                  |                                                                  |  
|Other comprehensive loss |                                       |                                  | (2,442                                                           | )
|                         |                                       |                                  |                                                                  |  
|Comprehensive loss       |                                       | $                                | (810                                                             | )
|                         |                                       |                                  |                                                                  |  

The accompanying notes are an integral part of
the consolidated financial statements.

5



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MEADOWBROOK INSURANCE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

ASSETS(in thousands)

|                                                            |                                                                                   |                                                 |         |         |             |   |              |         |         |  | 
|----------------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------- | ------- | ------- | ----------- | - | ------------ | ------- | ------- |  | 
|                                                            |                                                                                   |                                                 |         |         | (Unaudited)
|                                                            |                                                                                   |                                                 |         |         | June 30,    |   | December 31,
|                                                            |                                                                                   |                                                 |         |         | 2000        |   | 1999        
|                                                            |                                                                                   |                                                 |         |         |             |   |             
|Investments:                                               
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Debt securities available for sale, at fair value
(cost of $195,172 and $188,755) |                                                 | $       | 192,138 |             |   | $            | 185,241 |        
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Equity securities available for sale, at fair value
(cost of $16,313 and $17,087) |                                                 |         | 14,925  |             |   |              | 16,569  |        
|                                                           
|                                                           
|                                                           
|                                                           
|Cash and cash equivalents                                   |                                                                                   |                                                 | 27,774  |         |             |   | 23,713       |        
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|                                                            |                                                                                   | Total investments and cash and cash equivalents |         |         | 234,837     |   |              |         | 225,523 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Premiums and agent balances receivable                      |                                                                                   |                                                 | 79,832  |         |             |   | 85,707       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Reinsurance recoverable on:                                
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Paid losses                                                                       |                                                 |         | 22,224  |             |   |              | 14,051  |        
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | Unpaid losses                                                                     |                                                 |         | 127,965 |             |   |              | 101,744 |        
|                                                           
|                                                           
|                                                           
|                                                           
|Deferred policy acquisition costs                           |                                                                                   |                                                 | 13,208  |         |             |   | 10,030       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Prepaid reinsurance premiums                                |                                                                                   |                                                 | 47,679  |         |             |   | 42,073       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Intangible assets                                           |                                                                                   |                                                 | 31,917  |         |             |   | 32,885       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Other assets                                                |                                                                                   |                                                 | 44,470  |         |             |   | 39,964       |        
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|                                                            | Total assets                                                                      |                                                 | $       | 602,132 |             |   | $            | 551,977 |        
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|LIABILITIES AND SHAREHOLDERS EQUITY                       
|                                                           
|                                                           
|                                                           
|                                                           
|Liabilities:                                               
|                                                           
|                                                           
|                                                           
|                                                           
|Reserve for losses and loss adjustment expenses             |                                                                                   | $                                               | 266,936 |         |             | $ | 229,244      |        
|                                                           
|                                                           
|                                                           
|                                                           
|Unearned premiums                                           |                                                                                   |                                                 | 102,419 |         |             |   | 90,095       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Notes payable, bank                                         |                                                                                   |                                                 | 55,699  |         |             |   | 58,463       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Other liabilities                                           |                                                                                   |                                                 | 76,432  |         |             |   | 73,767       |        
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|                                                            | Total liabilities                                                                 |                                                 |         | 501,486 |             |   |              | 451,569 |        
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|Contingencies and commitments                              
|                                                           
|                                                           
|                                                           
|                                                           
|Shareholders Equity:                                      
|                                                           
|                                                           
|                                                           
|                                                           
|Common stock, $.01 par value; authorized 30,000,000 shares:
|                                                           
|                                                           
|                                                           
|                                                           
|                                                            | 8,512,008 shares issued and outstanding                                           |                                                 |         | 85      |             |   |              | 85      |        
|                                                           
|                                                           
|                                                           
|                                                           
|Additional paid-in capital                                  |                                                                                   |                                                 | 67,917  |         |             |   | 67,907       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Retained earnings                                           |                                                                                   |                                                 | 36,319  |         |             |   | 35,809       |        
|                                                           
|                                                           
|                                                           
|                                                           
|Note receivable from officer                                |                                                                                   |                                                 | (746    | )       |             |   | (720         | )      
|                                                           
|                                                           
|                                                           
|                                                           
|Accumulated other comprehensive income                      |                                                                                   |                                                 | (2,929  | )       |             |   | (2,673       | )      
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|                                                            | Total shareholders equity                                                        |                                                 |         | 100,646 |             |   |              | 100,408 |        
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        
|                                                            |                                                                                   | Total liabilities and shareholders equity      |         | $       | 602,132     |   |              | $       | 551,977 | 
|                                                            |                                                                                   |                                                 |         |         |             |   |              |        

The accompanying notes are an integral part of the consolidated financial statements.

6



---



MEADOWBROOK INSURANCE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Six Months Ended June 30,
(Unaudited)
(in thousands)

|                                                       |                                                            |                                       |        |         |        |      |        |         |        |  
|------------------------------------------------------ | ---------------------------------------------------------- | ------------------------------------- | ------ | ------- | ------ | ---- | ------ | ------- | ------ | -
|                                                       |                                                            |                                       |        | 2000    |        | 1999
|                                                       |                                                            |                                       |        |         |        |     
|Net cash provided by operating activities              |                                                            | $                                     | 16,515 |         |        | $    | 14,107 |        
|                                                       |                                                            |                                       |        |         |        |      |        |        
|Cash flows (used in) provided by investing activities:
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Purchase of debt securities available for sale             |                                       |        | (163    | )      |      |        | (30,553 | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Purchase of equity securities available for sale           |                                       |        | (39,375 | )      |      |        | (10,263 | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Proceeds from sale of debt securities available for sale   |                                       |        | 929     |        |      |        | 30,789  |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Proceeds from sale of equity securities available for sale |                                       |        | 32,762  |        |      |        | 117     |       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Other investing activities                                 |                                       |        | (2141   | )      |      |        | 734     |       
|                                                       |                                                            |                                       |        |         |        |      |        |        
|                                                       |                                                            | Net cash used in investing activities |        |         | (7,988 | )    |        |         | (9,176 | )
|                                                      
|                                                      
|                                                      
|                                                      
|Cash flows (used in) provided by financing activities:
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net (payments) proceeds of bank loan                       |                                       |        | (2,764  | )      |      |        | (1,498  | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Dividends paid on common stock                             |                                       |        | (511    | )      |      |        | (519    | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Retirement of common stock                                 |                                       |        |        |        |      |        | (1,282  | )     
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Other financing activities                                 |                                       |        | (1,191  | )      |      |        |        |       
|                                                       |                                                            |                                       |        |         |        |      |        |        
|                                                       |                                                            | Net cash used in financing activities |        |         | (4,466 | )    |        |         | (3,299 | )
|                                                       |                                                            |                                       |        |         |        |      |        |        
|Increase in cash and cash equivalents                  |                                                            |                                       | 4,061  |         |        |      | 1,632  |        
|                                                      
|                                                      
|                                                      
|                                                      
|Cash and cash equivalents, beginning of period         |                                                            |                                       | 23,713 |         |        |      | 20,510 |        
|                                                       |                                                            |                                       |        |         |        |      |        |        
|Cash and cash equivalents, end of period               |                                                            | $                                     | 27,774 |         |        | $    | 22,142 |        
|                                                       |                                                            |                                       |        |         |        |      |        |        

The accompanying notes are an integral part of the consolidated financial statements.

7



---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  Earnings Per Share (EPS)

|                                                         |  |                                   |           |      |  |   |           |  
|-------------------------------------------------------- |  | --------------------------------- | --------- | ---- |  | - | --------- | -
|                                                         |  | For the Six Months Ended June 30,
|                                                         |  | (Unaudited)                      
|                                                         |  | 2000                              |           | 1999
|                                                         |  |                                   |           |     
|Basic EPS                                               
|                                                        
|                                                        
|                                                        
|                                                        
|Net income before cumulative effect of
accounting change |  | $                                 | 0.12      |      |  | $ | 0.02      |  
|                                                        
|                                                        
|                                                        
|                                                        
|Cumulative effect of accounting change                   |  |                                   |          |      |  | $ | (0.19     | )
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |  | $                                 | 0.12      |      |  | $ | (0.17     | )
|                                                        
|                                                        
|                                                        
|                                                        
|Diluted EPS                                             
|                                                        
|                                                        
|                                                        
|                                                        
|Net income before cumulative effect of
accounting change |  | $                                 | 0.12      |      |  | $ | 0.02      |  
|                                                        
|                                                        
|                                                        
|                                                        
|Cumulative effect of accounting change                   |  |                                   |          |      |  | $ | (0.19     | )
|                                                        
|                                                        
|                                                        
|                                                        
|Net income (loss)                                        |  | $                                 | 0.12      |      |  | $ | (0.17     | )
|                                                        
|                                                        
|                                                        
|                                                        
|Weighted average of number of common
shares outstanding:
|                                                        
|                                                        
|                                                        
|                                                        
|Basic                                                    |  |                                   | 8,511,659 |      |  |   | 8,644,657 |  
|                                                        
|                                                        
|                                                        
|                                                        
|Diluted                                                  |  |                                   | 8,511,659 |      |  |   | 8,790,745 |  

8



---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued.

NOTE 1  Earnings Per Share (EPS)

|                                                         |  |                                |           |      |  |   |           | 
|-------------------------------------------------------- |  | ------------------------------ | --------- | ---- |  | - | --------- | 
|                                                         |  | For the Quarter Ended June 30,
|                                                         |  | (Unaudited)                   
|                                                         |  | 2000                           |           | 1999
|                                                         |  |                                |           |     
|Basic EPS                                               
|                                                        
|                                                        
|                                                        
|                                                        
|Net income before cumulative effect of
accounting change |  | $                              | 0.11      |      |  | $ | 0.19      | 
|                                                        
|                                                        
|                                                        
|                                                        
|Cumulative effect of accounting change                   |  |                                |          |      |  |   |          | 
|                                                        
|                                                        
|                                                        
|                                                        
|Net income                                               |  | $                              | 0.11      |      |  | $ | 0.19      | 
|                                                        
|                                                        
|                                                        
|                                                        
|Diluted EPS                                             
|                                                        
|                                                        
|                                                        
|                                                        
|Net income before cumulative effect of
accounting change |  | $                              | 0.11      |      |  | $ | 0.19      | 
|                                                        
|                                                        
|                                                        
|                                                        
|Cumulative effect of accounting change                   |  |                                |          |      |  |   |          | 
|                                                        
|                                                        
|                                                        
|                                                        
|Net income                                               |  | $                              | 0.11      |      |  | $ | 0.19      | 
|                                                        
|                                                        
|                                                        
|                                                        
|Weighted average of number of common
shares outstanding:
|                                                        
|                                                        
|                                                        
|                                                        
|Basic                                                    |  |                                | 8,511,633 |      |  |   | 8,628,947 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Diluted                                                  |  |                                | 8,511,633 |      |  |   | 8,758,987 | 

NOTE 2  Commitments & Contingencies

On June 26, 1995, two shareholders and an officer of a former agent (the
Primary Plaintiffs) of Star Insurance Company (Star), and a former spouse
of one shareholder and an employee of the former agent (the Individual
Plaintiffs) initiated legal proceedings against, among others, Star and
Meadowbrook, Inc. (Meadowbrook) in the District Court for Washoe County,
Reno, Nevada. All of the plaintiffs requested injunctive relief, compensatory
damages, punitive and exemplary damages, and attorneys fees in an unspecified
amount. The Nevada Insurance Department revoked the licenses of one of the
Primary Plaintiffs and one of the Individual Plaintiffs and denied further
licensing of the other Primary Plaintiffs.

9



---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued.

Meadowbrook and Star vigorously defended themselves and filed counterclaims
against the Primary and Individual Plaintiffs. On April 1, 1998, the Court
issued an Order dismissing all claims of the Primary Plaintiffs with prejudice.

On January 12, 1999, the remaining claims of the Individual Plaintiffs and the
counterclaims of Meadowbrook and Star against the Primary and Individual
Plaintiffs were tried. On February 2, 1999, the jury returned a verdict in
favor of Meadowbrook and Star against the Primary Plaintiffs and Individual
Plaintiffs. In addition, the jury found against the Individual Plaintiffs and
in favor of Meadowbrook and Star on their remaining claims. On April 21, 1999,
the Court found in favor of Meadowbrook and Star and against the Primary and
Individual Plaintiffs on all outstanding claims for equitable relief.
A Final Judgment has been entered with the Court. All plaintiffs have filed an appeal
with the Nevada Supreme Court.

It is not expected that the outcome of this litigation will have a material impact on
the financial condition of the Company.

The Company is involved in other litigation arising in the ordinary course of operations. While
the results of litigation cannot be predicted with certainty, management is of the opinion, after
reviewing these matters with legal counsel, that the final outcome of such litigation will not have a material
effect upon the Company's financial statements.

NOTE 3  Cumulative Effect of Accounting Change

As described in our 1998 Annual Report, the Accounting Standards Executive
Committee of the American Institute of Certified Public Accountants issued
Statement of Position 97-3, Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments (SOP 97-3). SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty-fund and
other insurance-related assessments, how to measure that liability, and when an
asset may be recognized for the recovery of such assessments through premium
tax offsets or policy surcharges. As required, the Company adopted SOP 97-3 in
the quarter ended March 31, 1999. The adoption of SOP 97-3 resulted in a
non-cash after-tax $1.7 million (net of tax of $879,064), or $0.19 per share,
cumulative effect accounting change.

NOTE 4  Reclassifications

Certain amounts in the 1999 notes to consolidated financial statements have
been reclassified to conform with the 2000 presentation.

10



---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued.

NOTE 5  Segment Information

Agency Operations

The agency segment was formed in 1955 as Meadowbrooks original business. The
insurance agency places principally commercial insurance, as well as personal
property, casualty, life and accident and health insurance, with more than 50
insurance carriers from which it earns commission income. The agency has grown
to be one of the largest agencies in Michigan and, with recent acquisitions,
expanded into Florida and California.

Program Business

The program business segment is engaged primarily in developing and managing
alternative market risk management programs for defined client groups and their
members. This includes providing services, such as reinsurance brokering, risk
management consulting, claims handling, and administrative services, along with
various types of property and casualty insurance coverage, including workers
compensation, general liability and commercial multiple peril. Insurance
coverage is primarily provided to associations or similar groups of members,
commonly referred to as programs. A program is a set of coverages and services
tailored to meet the specific requirements of a group of clients.

The following table sets forth the segment results (in thousands):

|                       |                                    |  |                                   |        |      |  |   |        |  
|---------------------- | ---------------------------------- |  | --------------------------------- | ------ | ---- |  | - | ------ | -
|                       |                                    |  | For the Six Months Ended June 30,
|                       |                                    |  |                                  
|                       |                                    |  | 2000                              |        | 1999
|                       |                                    |  |                                   |        |     
|Revenues:             
|                      
|                      
|                      
|                      
|                       | Net earned premiums                |  | $                                 | 71,097 |      |  | $ | 55,941 |  
|                      
|                      
|                      
|                      
|                       | Management fees                    |  |                                   | 12,272 |      |  |   | 9,910  |  
|                      
|                      
|                      
|                      
|                       | Investment income                  |  |                                   | 6,179  |      |  |   | 5,477  |  
|                       |                                    |  |                                   |        |      |  |   |       
|                       | Program business segment           |  |                                   | 89,548 |      |  |   | 71,328 |  
|                      
|                      
|                      
|                      
|                       | Agency operations                  |  |                                   | 8,744  |      |  |   | 8,688  |  
|                      
|                      
|                      
|                      
|                       | Intersegment revenue               |  |                                   | (314   | )    |  |   | (402   | )
|                       |                                    |  |                                   |        |      |  |   |       
|                       | Consolidated revenue               |  | $                                 | 97,978 |      |  | $ | 79,614 |  
|                       |                                    |  |                                   |        |      |  |   |       
|Pre-tax income (loss):
|                      
|                      
|                      
|                      
|                       | Program business                   |  | $                                 | 2,104  |      |  | $ | (1,125 | )
|                      
|                      
|                      
|                      
|                       | Agency operations                  |  |                                   | 2,386  |      |  |   | 2,430  |  
|                      
|                      
|                      
|                      
|                       | Reconciling items                  |  |                                   | (3,758 | )    |  |   | (2,483 | )
|                       |                                    |  |                                   |        |      |  |   |       
|                       | Consolidated pre-tax income (loss) |  | $                                 | 732    |      |  | $ | (1,178 | )
|                       |                                    |  |                                   |        |      |  |   |       

11



---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued.

|                       |                             |  |                                |        |      |  |   |        |  
|---------------------- | --------------------------- |  | ------------------------------ | ------ | ---- |  | - | ------ | -
|                       |                             |  | For the Quarter Ended June 30,
|                       |                             |  |                               
|                       |                             |  | 2000                           |        | 1999
|                       |                             |  |                                |        |     
|Revenues:             
|                      
|                      
|                      
|                      
|                       | Net earned premiums         |  | $                              | 37,829 |      |  | $ | 29,782 |  
|                      
|                      
|                      
|                      
|                       | Management fees             |  |                                | 6,135  |      |  |   | 4,958  |  
|                      
|                      
|                      
|                      
|                       | Investment income           |  |                                | 3,392  |      |  |   | 2,768  |  
|                       |                             |  |                                |        |      |  |   |       
|                       | Program business segment    |  |                                | 47,356 |      |  |   | 37,508 |  
|                      
|                      
|                      
|                      
|                       | Agency operations           |  |                                | 4,469  |      |  |   | 4,331  |  
|                      
|                      
|                      
|                      
|                       | Intersegment revenue        |  |                                | (84    | )    |  |   | (141   | )
|                       |                             |  |                                |        |      |  |   |       
|                       | Consolidated revenue        |  | $                              | 51,741 |      |  | $ | 41,698 |  
|                       |                             |  |                                |        |      |  |   |       
|Pre-tax income (loss):
|                      
|                      
|                      
|                      
|                       | Program business            |  | $                              | 1,571  |      |  | $ | 1,534  |  
|                      
|                      
|                      
|                      
|                       | Agency operations           |  |                                | 1,270  |      |  |   | 1,203  |  
|                      
|                      
|                      
|                      
|                       | Reconciling items           |  |                                | (1,970 | )    |  |   | (1,122 | )
|                       |                             |  |                                |        |      |  |   |       
|                       | Consolidated pre-tax income |  | $                              | 871    |      |  | $ | 1,615  |  
|                       |                             |  |                                |        |      |  |   |       

The pre-tax income reconciling items represent other expenses relating to the
holding company, amortization and interest expense, which are not allocated
among the segments.

NOTE 6  Subsequent Events

On July 28, 2000 the Company reduced the limit on its unsecured bank line by
$10 million. The permitted borrowing limit has been reduced to $50
million from $60 million. In conjunction with this transaction, the Company incurred $3.5
million of subordinated debt at terms substantially equivalent to the unsecured bank line.
The Company has agreed to further reduce the bank line to $40.0 million by September 30, 2000
and is currently engaged in efforts to do so.

12



---



MANAGEMENT REPRESENTATION

In the opinion of management, the financial statements reflect all adjustments
of a normal recurring nature necessary for a fair presentation of the interim
periods. Preparation of financial statements under GAAP requires management to
make estimates. Actual results could differ from those estimates. Interim
results are not necessarily indicative of results expected for the entire year.
These financial statements should be read in conjunction with the Companys
1999 Form 10-K, as filed with the Securities and Exchange Commission.

Certain statements made by the Company in this document may constitute
forward-looking statements. Actual results could differ materially from those
projected in forward-looking statements. These forward-looking statements
involve risk and uncertainties including, but not limited to the following: 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; investment rate of return; changes
in insurance regulation; changing rates of inflation; and general
economic conditions.

13



---



PART 1  FINANCIAL INFORMATION

ITEM 2
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the Periods ended June 30, 2000 and 1999

Meadowbrook Insurance Group, Inc. (the Company) is a program-oriented risk
management company specializing in alternative risk management solutions for
agents, brokers, profession/trade associations, and insureds of all sizes. The
Company owns insurance carriers, which are essential elements of the risk
management process. Management defines its business segments as agency
operations and program business operations based upon differences in products
and services.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999

Overview

2000 compared to 1999:

Results from operations, excluding the cumulative effect of an accounting
change, increased $825,000, or 425% from net income of $194,000 in 1999 to $1.0
million in 2000.

Year to date revenues increased $18.4 million, or 23%, to $98 million in 2000
from $79.6 million in 1999. Revenues from program business increased $18.2
million, or 25.5%, to $89.5 million for the six months ended June 30, 2000 from
$71.3 million for the comparable period in 1999. Agency revenues remained
consistent at $8.7 million for the six months ended June 30, 1999 and 2000.

Program Business

The following table sets forth the revenues and results from operations for
program business (in thousands):

|                       |                     |  |                           |        |      |  |   |        |  
|---------------------- | ------------------- |  | ------------------------- | ------ | ---- |  | - | ------ | -
|                       |                     |  | Six Months Ended June 30,
|                       |                     |  |                          
|                       |                     |  | 2000                      |        | 1999
|                       |                     |  |                           |        |     
|Revenue:              
|                      
|                      
|                      
|                      
|                       | Net earned premiums |  | $                         | 71,097 |      |  | $ | 55,941 |  
|                      
|                      
|                      
|                      
|                       | Management fees     |  |                           | 12,272 |      |  |   | 9,910  |  
|                      
|                      
|                      
|                      
|                       | Investment income   |  |                           | 6,179  |      |  |   | 5,477  |  
|                       |                     |  |                           |        |      |  |   |       
|                       | Total Revenue       |  | $                         | 89,548 |      |  | $ | 71,328 |  
|                       |                     |  |                           |        |      |  |   |       
|Pre-tax income (loss):
|                      
|                      
|                      
|                      
|                       | Program business    |  | $                         | 2,104  |      |  | $ | (1,125 | )
|                       |                     |  |                           |        |      |  |   |       

14



---



MANAGEMENTS DISCUSSION AND ANALYSIS  continued.
For the Periods ended June 30, 2000 and 1999

2000 compared to 1999:

Revenue from program business increased $18.2 million, or 25.5%, to $89.5
million for the six months ended June 30, 2000 from $71.3 million for the
comparable period in 1999. This increase reflects 27% growth in net earned
premiums to $71.1 million from $55.9 million for the six months ended June 30,
2000 and 1999 respectively. This increase reflects the 1999 acquisition which
contributed $6.7 million. Excluding the impact of the 1999 acquisition, net
earned premium increased 15.1%, or $8.5 million. This $8.5 million increase in
net earned premium includes an increase in new and existing business of $2.4
million and $10.3 million, respectively. These increases were offset by a
planned reduction of $4.0 million on unprofitable, discontinued programs and a
reduction of $200,000 on residual markets and retrospectively rated policies.
Management fees grew $2.4 million, or 23.8%, to $12.3 million from $9.9
million. Excluding the 1999 acquisition, management fees would be slightly
lower reflecting a decrease in fees for claims services on managed programs.
The remaining increase in program business revenue reflects an increase in net
investment income of $702,000, or 12.8%, from $5.5 million for the six months
ended June 30, 1999 to $6.2 million for the comparable period in 2000. This
increase in net investment income reflects an increase in average invested
assets of $17.6 million, or 9.4% relating to both the growth in existing
business and the acquisition of TPA associates. Also contributing to this
increase is the effect of shifting a larger portion of the investment portfolio to taxable
securities to maximize after-tax cash flow.

Program business for the six months ended June 30, 2000 generated a pre-tax
income of $2.1 million, which compares to a pre-tax loss of $1.1 million for
the same period in 1999. The 1999 pre-tax loss in program business reflects
the impact of the $4.7 million reserve strengthening charge. The 2000 pre-tax
income in program business reflects the improved profit margins from management
fees as the Company continues to realize the benefits of the expense reductions
initiated in late 1999. These improvements were somewhat offset by increased
pricing pressures that developed in the second half of 1999.

Agency Operations

The following table sets forth the revenues and results from operations for
agency operations (in thousands):

|               |  |                           |       |      |  |   |       | 
|-------------- |  | ------------------------- | ----- | ---- |  | - | ----- | 
|               |  | Six Months Ended June 30,
|               |  |                          
|               |  | 2000                      |       | 1999
|               |  |                           |       |     
|Net commission |  | $                         | 8,425 |      |  | $ | 8,286 | 
|              
|              
|              
|              
|Pre-tax income |  | $                         | 2,386 |      |  | $ | 2,430 | 

2000 compared to 1999:

Agency commissions increased $139,000, or 1.7%, to $8.4 million for the six
months ended June 30, 2000 from $8.3 million for the same period in 1999. The
agency operation generated pre-tax income of $2.4 million and was consistent
for the six-month period June 30, 1999 and 2000.

15



---



MANAGEMENTS DISCUSSION AND ANALYSIS  continued.
For the Periods ended June 30, 2000 and 1999

Other Items

Interest Expense

Interest expense of $2,618,000 and $1,461,000 was recorded for the six months
ended June 30, 2000 and 1999, respectively. This interest is principally
related to utilization of the Companys Lines of Credit. The increase in
interest expense is a result of both a higher average daily loan balance and
higher average interest rates during 2000 as compared to 1999. The average
daily loan balances at June 30, 2000 and 1999 were $54.6 million and $37.7
million, respectively. The average interest rate increased from approximately
7.5% at June 30, 1999 to approximately 9.5% at June 30, 2000. The outstanding
balance on this line was $52.2 million at June 30, 2000, as compared to $55.7
million at December 31, 1999.

Amortization Expense

Amortization expense of $961,000 and $684,000 was recorded for the six months
ended June 30, 2000 and 1999, respectively. This increase in amortization is
related to the goodwill recorded on the 1999 acquisition.

Taxes

The provision for income taxes was a $287,000 benefit for the six months ended
June 30, 2000, and a $1.3 million benefit for the same period in 1999,
representing effective tax rates of -39% and 116%, respectively. Historically,
the Companys tax rates vary from the 34% corporate rate due to its heavily
tax-exempt investment portfolio. Tax exempt securities at June 30, 2000
represented 40.5% of the portfolio, down from 53.1% at year-end, and down from
66.7% at June 30, 1999. The Company has shifted a larger portion of the
investment portfolio to
taxable debt securities to maximizing after-tax investment yields and
minimizing current outflow related to taxes.

RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2000 AND 1999

Overview

2000 compared to 1999:

Results from operations decreased $718,000, or 44% from net income of $1.6 million in 1999 to
$914,000 in 2000.

Revenues for the quarter increased $10 million, or 24%, to $51.7 million in
2000 from $41.7 million in 1999. Revenues from program business increased $9.8
million, or 26.3%, to $47.4 million for the quarter ending June 30, 2000 from
$37.5 million for the same quarter in 1999. Agency revenues increased
$138,000, or 3.2%, to $4.5 million during the second quarter 2000 from $4.3
million for the comparable period in 1999.

16



---



MANAGEMENTS DISCUSSION AND ANALYSIS  continued.
For the Periods ended June 30, 2000 and 1999

Program Business

The following table sets forth the revenues and results from operations for
program business (in thousands):

|                       |                     |  |                         |        |      |  |   |        | 
|---------------------- | ------------------- |  | ----------------------- | ------ | ---- |  | - | ------ | 
|                       |                     |  | Quarters Ended June 30,
|                       |                     |  |                        
|                       |                     |  | 2000                    |        | 1999
|                       |                     |  |                         |        |     
|Revenue:              
|                      
|                      
|                      
|                      
|                       | Net earned premiums |  | $                       | 37,829 |      |  | $ | 29,782 | 
|                      
|                      
|                      
|                      
|                       | Management fees     |  |                         | 6,135  |      |  |   | 4,958  | 
|                      
|                      
|                      
|                      
|                       | Investment income   |  |                         | 3,392  |      |  |   | 2,768  | 
|                       |                     |  |                         |        |      |  |   |       
|                       | Total Revenue       |  | $                       | 47,356 |      |  | $ | 37,508 | 
|                       |                     |  |                         |        |      |  |   |       
|Pre-tax income (loss):
|                      
|                      
|                      
|                      
|                       | Program business    |  | $                       | 1,571  |      |  | $ | 1,534  | 
|                       |                     |  |                         |        |      |  |   |       

2000 compared to 1999:

Revenue from program business increased $9.8 million, or 26.3%, to $47.4
million during the second quarter 2000 from $37.5 million compared to the same period in
1999. This increase reflects 27% growth in net earned premiums to $37.8
million from $29.8 million during the quarter ending June 30, 2000 compared to the same period in 1999.
This 27% increase reflects the 1999 acquisition which contributed $3.3 million.
Excluding the impact of the 1999 acquisition, net earned premium increased
15.8%, or $4.7 million. This $4.7 million increase in net earned premium
includes an increase in new business, existing business, residual markets /
retrospectively rated policies of $2.0 million, $5.2 million, and $300,000 respectively.
These increases were offset by a planned reduction of $2.8 million on
unprofitable discontinued programs. Management fees grew $1.1 million, or
23.8%, to $6.1 million from $5.0 million. This increase reflects the 1999
acquisition. Excluding the 1999 acquisition, management fees would be slightly
down reflecting a decrease in fees for claims services on managed programs.
The remaining increase reflects an increase in net investment income of
$624,000, or 22.5%, from $2.8 to $3.4 million during the second quarter in 1999
and 2000, respectively. This increase in net investment income reflects an
increase in average invested assets of $17.6 million, or 9.4% relating to both
growth in existing business and the acquisition in 1999.

Program business generated a pre-tax income of $1.5 million for both the
quarter ended June 30, 2000 and 1999. While the pre-tax income for program
business is consistent between these periods, the margins on the management
fees have improved as a result of the expense reduction initiatives taken in
late 1999. These improved margins offset underwriting results that were
impacted by the increase in pricing pressure that emerged in the second half of
1999.

17



---



MANAGEMENTS DISCUSSION AND ANALYSIS  continued.
For the Periods ended June 30, 2000 and 1999

Agency Operations

The following table sets forth the revenues and results from operations for
agency operations (in thousands):

|               |  |                         |       |      |  |   |       | 
|-------------- |  | ----------------------- | ----- | ---- |  | - | ----- | 
|               |  | Quarters Ended June 30,
|               |  |                        
|               |  | 2000                    |       | 1999
|               |  |                         |       |     
|Net commission |  | $                       | 4,380 |      |  | $ | 4,190 | 
|              
|              
|              
|              
|Pre-tax income |  | $                       | 1,270 |      |  | $ | 1,203 | 

2000 compared to 1999:

Agency commissions increased $198,000, or 4.5%, to $4.4 million in 2000 from
$4.2 million in 1999. Agency operations generated pre-tax income of $1.3
million in 2000 compared to $1.2 million in 1999.

Other Items

Interest Expense

Interest expense of $1,379,000 and $620,000 was recorded during the quarters
ended June 30, 2000 and 1999, respectively. This interest is related to
utilization of the Companys Line of Credit. The increase in interest expense
is a result of both a higher average daily loan balance and higher average
interest rates during 2000 as compared to 1999. The average daily loan
balances during 2000 and 1999 were $53.9 million and $36.1 million,
respectively. The average interest rate increased from approximately 7% at
June 30, 1999 to approximately 10% at June 30, 2000. The outstanding balance
on this line was $52.2 million at June 30, 2000, as
compared to $55.7 million
at December 31, 1999.

Amortization Expense

Amortization expense of $481,000 and $340,000 was recorded during the quarters
ended June 30, 2000 and 1999, respectively. This increase in amortization is
related to the goodwill recorded on the 1999 acquisition.

Taxes

The provision for income taxes was a $43,000 benefit for the three months ended
June 30, 2000, and a $17,000 benefit for the same period in 1999, representing
effective tax rates of -4.9% and -1.1%, respectively. Historically, the
Companys tax rates vary from the 34% corporate rate due to its heavily
tax-exempt investment portfolio. Tax exempt securities at June 30, 2000
represented 40.5% of the portfolio, down from 53.1% at year-end, and down from
66.7% at June 30, 1999. The Company has shifted a larger portion
of the investment portfolio to taxable debt securities to maximizing after-tax investment yields and
minimizing current outflow related to taxes.

18



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MANAGEMENTS DISCUSSION AND ANALYSIS  continued.
For the Periods ended June 30, 2000 and 1999

LIQUIDITY AND CAPITAL RESOURCES

The principal sources of funds for the Company are insurance premiums,
investment income, proceeds from the maturity and sale of invested assets, risk
management fees and agency commissions. Funds are primarily used for the
payment of claims, commissions, salaries and employee benefits, and other
operating expenses. In addition, the Company has a high volume of intercompany
transactions due to the payment of management fees by the insurance
subsidiaries to the risk management subsidiaries, which are subject to
regulatory approval by state insurance departments.

Cash flow provided by operations for the six months ended June 30, 2000 and
1999 was $16.5 million and $14.1 million, respectively. At June 30, 2000, the
Company held $27.8 million in cash and cash equivalents.

The Company has an unsecured Revolving Line of Credit ("Line of Credit") totaling $60.0 million, of which
$52.2 million was outstanding at June 30, 2000 and $55.7 million was
outstanding at December 31, 1999. The Line of Credit expires on August 1,
2002. The Company drew on this Line of Credit during 1999 primarily to meet
acquisition and cash flow needs. As of July 28, 2000, the Company reduced the
Line Of Credit limit by $10 million to $50 million. In
conjunction with this transaction, the Company incurred $3.5 million
of subordinated debt at terms substantially equivalent to the
unsecured bank line.  The Company has agreed to further reduce the
bank line to $40.0 million by September 30, 2000, and is currently
engaged in efforts to do so.

In addition, a non-insurance subsidiary had a Line Of Credit with a bank which
permits borrowings up to 80% of the accounts receivable which collateralize the
line. This Line of Credit will expire March 31, 2001, and is automatically renewable each
year. At June 30, 2000, $3.5 million was outstanding under
this Line of Credit.

One of the Companys principal corporate objectives is to operate at
appropriate leverage ratios.

19



---



PART II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 26, 1995, two shareholders and an officer of a former agent (the
Primary Plaintiffs) of Star, and a former spouse of one shareholder and an
employee of the former agent (the Individual Plaintiffs) initiated legal
proceedings against, among others, Star and Meadowbrook in the District Court
for Washoe County, Reno, Nevada. All of the plaintiffs requested injunctive
relief, compensatory damages, punitive and exemplary damages, and attorneys
fees in an unspecified amount. The Nevada Insurance Department revoked the
licenses of one of the Primary Plaintiffs and one of the Individual Plaintiffs
and denied further licensing of the other Primary Plaintiffs.

The Company vigorously defended itself and filed counter-claims against the
Primary and Individual Plaintiffs. On April 1, 1998, the Court issued an Order
dismissing all claims of the Primary Plaintiffs with prejudice.

On January 12, 1999, the remaining claims of the Individual Plaintiffs and the
counterclaims of Meadowbrook and Star against the Primary and Individual
Plaintiffs were tried. On February 2, 1999, the jury returned a verdict in
favor of Meadowbrook and Star against the Primary Plaintiffs and Individual
Plaintiffs. In addition, the jury found against the Individual Plaintiffs and
in favor of Meadowbrook and Star on their remaining claims. On April 21, 1999,
the Court found in favor of Meadowbrook and Star and against the Primary and
Individual Plaintiffs on all outstanding claims for equitable relief.
A Final Judgment has been entered with the Court. All plaintiffs have filed an appeal
with the Nevada Supreme Court.

It is
not expected that the outcome of this litigation will have a material impact on
the financial condition of the Company.

The Company is involved in other litigation arising in the ordinary course of operations. While the results
of litigation cannot be predicted with certainty, management is of the opinion, after reviewing
these matters with legal counsel, that the final outcome of such litigation will not have a
material effect upon the Company's financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 15, 2000, the Company held its Annual Meeting of Shareholders (Annual
Meeting) to consider and act upon the following proposals: (1) the election of
five (5) members of the Board of Directors of the Company; (2) ratification of
the appointment of the Companys independent accountants,
PricewaterhouseCoopers, LLP; and (3) to vote upon a proposal to amend the
Companys Articles of Incorporation to increase the number of authorized shares
of common stock from 20,000,000 to 30,000,000.

The following Directors were up for election at the Annual Meeting: (1) Robert
S. Cubbin; (2) Hugh W. Greenberg; (3) Joseph C. Henry; (4) Irvin F. Swider,
Sr.; (5) Florine Mark. The shareholders re-elected the Directors at the Annual
Meeting; and therefore, each shall continue in office. The vote tabulation for
each Director was as follows: (1) Robert S. Cubbin   6,584,133 in favor and
710,130 withheld; (2) Hugh W. Greenberg  6,583,503 in favor and 710,760
withheld; (3) Joseph C. Henry  6,573,487 in favor and 720,776 withheld; (4)
Irvin F. Swider, Sr.  6,581,433 in favor and 712,830 withheld; and (5) Florine
Mark  6,520,761 in favor and 773,502 withheld.

The shareholders ratified the appointment of PricewaterhouseCoopers, LLP by a
vote of 7,287,034 in favor, 5,891 against and 1,338 abstained.

20



---



PART II  OTHER INFORMATION

The shareholders approved the increase in authorized shares of the Company from
20,000,000 to 30,000,000 by a vote of 6,495,488 in favor, 787,281 against and
11,494 abstained.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8K

(A) The following documents are filed as part of this Report:

|        |  |                                                                                                                                      |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Exhibit
|No.     |  | Description                                                                                                                         
|        |  |                                                                                                                                     
|10.11   |  | Amendment No. 2 to Revolving Credit Agreement between Meadowbrook Insurance Group, Inc.
and Comerica Bank dated as of July 28, 2000.
|       
|       
|       
|       
|11      |  | Statement re computation of per share earnings                                                                                      
|       
|       
|       
|       
|27      |  | Financial Data Schedule                                                                                                             

(B) Reports on Form 8-K

None.

21



---



SIGNATURES

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

|                                                                        
|------------------------------------------------------------------------
|Meadowbrook Insurance Group, Inc.                                       
|                                                                        
|By: /s/         William J. Lohmeyer
____________________________________
|                                                                        
|Sr. Vice President and
Chief Financial Officer                          

Dated: August 10, 2000

22



---



EXHIBIT INDEX

|        |  |                                                                                                                                      |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|Exhibit
|No.     |  | Description                                                                                                                         
|        |  |                                                                                                                                     
|10.11   |  | Amendment No. 2 to Revolving Credit Agreement between Meadowbrook Insurance Group, Inc.
and Comerica Bank dated as of July 28, 2000.
|       
|       
|       
|       
|11      |  | Statement re computation of per share earnings                                                                                      
|       
|       
|       
|       
|27      |  | Financial Data Schedule