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

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Table of Contents

TABLE OF CONTENTS

|                                 |                                                                                        | Page       |
|--------------------------------------|---------------------------------------------------------------------------------------------|------------|
| PART I – FINANCIAL INFORMATION |                                                                                        |
|                                 |                                                                                        |
| ITEM 1 –                       | FINANCIAL STATEMENTS                                                                        |       |
|                                 | Consolidated Statements of Income (unaudited)                                               | 2          |
|                                 | Consolidated Statements of Comprehensive Income (unaudited)                                 |  3    |
|                                 | Consolidated Balance Sheets (unaudited)                                                     |  4    |
|                                 | Consolidated Statement of Shareholders’ Equity (unaudited)                            |  5    |
|                                 | Consolidated Statement of Cash Flows (unaudited)                                            |  6    |
|                                 | Notes to Consolidated Financial Statements (unaudited)                                      |  7-24 |
|                                 |                                                                                        |
| ITEM 2 –                       | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 25-37      |
|                                 |                                                                                        |
| ITEM 3 –                       | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                  | 38-39      |
|                                 |                                                                                        |
| ITEM 4 –                       | CONTROLS AND PROCEDURES                                                                     | 40         |
|                                 |                                                                                        |
| PART II – OTHER INFORMATION    |                                                                                        |
|                                 |                                                                                        |
| ITEM 1 –                       | LEGAL PROCEEDINGS                                                                           | 41         |
|                                 |                                                                                        |       |
| ITEM 1A –                      | RISK FACTORS                                                                                | 41         |
|                                 |                                                                                        |       |
| ITEM 2 –                       | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                 | 41         |
|                                 |                                                                                        |
| ITEM 6 –                       | EXHIBITS                                                                                    | 42         |
|                                 |                                                                                        |
| SIGNATURES                           | 43                                                                                          |

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Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

|                                                                        |   | 2011                              |       |   | 2010   |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------|------------|--------|--------|--------|
|                                                                        |   | (Unaudited)                       |       |
|                                                                        |   | (In thousands, except share data) |       |
| Revenues                                                                    |   |                              |       |   |   |   |
| Premiums earned                                                             |   |                              |       |   |   |   |
| Gross                                                                       |   | $                                 | 200,686    |   |   | $      | 179,613 |   |
| Ceded                                                                       |   |                              | (30,028    | )      |   |   | (28,172 | ) |
| Net earned premiums                                                         |   |                              | 170,658    |   |   |   | 151,441 |   |
| Net commissions and fees                                                    |   |                              | 8,438      |   |   |   | 9,868 |   |
| Net investment income                                                       |   |                              | 13,572     |   |   |   | 13,029 |   |
| Realized gains (losses):                                                    |   |                              |       |   |   |   |   |   |
| Total other-than-temporary impairments on securities                        |   |                              | (84        | )      |   |   | (305 | ) |
| Portion of loss recognized in other comprehensive income                    |   |                              | —    |   |   |   | — |   |
| Net other-than-temporary impairments on securities recognized in earnings   |   |                              | (84        | )      |   |   | (305 | ) |
| Net realized gains excluding other-than-temporary impairments on securities |   |                              | 896        |   |   |   | 171 |   |
| Net realized gains (losses)                                                 |   |                              | 812        |   |   |   | (134 | ) |
| Total revenues                                                              |   |                              | 193,480    |   |   |   | 174,204 |   |
|                                                                        |   |                              |       |   |   |   |   |   |
| Expenses                                                                    |   |                              |       |   |   |   |   |   |
| Losses and loss adjustment expenses                                         |   |                              | 128,723    |   |   |   | 99,321 |   |
| Reinsurance recoveries                                                      |   |                              | (23,461    | )      |   |   | (11,841 | ) |
| Net losses and loss adjustment expenses                                     |   |                              | 105,262    |   |   |   | 87,480 |   |
| Policy acquisition and other underwriting expenses                          |   |                              | 57,438     |   |   |   | 51,879 |   |
| General, selling and administrative expenses                                |   |                              | 6,244      |   |   |   | 5,906 |   |
| General corporate expenses                                                  |   |                              | 1,355      |   |   |   | 1,977 |   |
| Amortization expense                                                        |   |                              | 1,232      |   |   |   | 1,401 |   |
| Interest expense                                                            |   |                              | 2,172      |   |   |   | 2,443 |   |
| Total expenses                                                              |   |                              | 173,703    |   |   |   | 151,086 |   |
| Income before taxes and equity earnings                                     |   |                              | 19,777     |   |   |   | 23,118 |   |
| Federal and state income tax expense                                        |   |                              | 5,711      |   |   |   | 7,658 |   |
| Equity earnings of affiliates, net of tax                                   |   |                              | 1,073      |   |   |   | 522 |   |
| Equity earnings of unconsolidated subsidiaries, net of tax                  |   |                              | (23        | )      |   |   | 452 |   |
| Net income                                                                  |   | $                                 | 15,116     |   |   | $      | 16,434 |   |
|                                                                        |   |                              |       |   |   |   |   |   |
| Earnings Per Share                                                          |   |                              |       |   |   |   |   |   |
| Basic                                                                       |   | $                                 | 0.28       |   |   | $      | 0.30 |   |
| Diluted                                                                     |   | $                                 | 0.28       |   |   | $      | 0.30 |   |
|                                                                        |   |                              |       |   |   |   |   |   |
| Weighted average number of common shares                                    |   |                              |       |   |   |   |   |   |
| Basic                                                                       |   |                              | 53,252,007 |   |   |   | 55,272,310 |   |
| Diluted                                                                     |   |                              | 53,527,022 |   |   |   | 55,477,098 |   |
|                                                                        |   |                              |       |   |   |   |   |   |
| Dividends paid per common share                                             |   | $                                 | 0.04       |   |   | $      | 0.03 |   |

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

|                                                                                  |   | 2011           |   |   | 2010   |   |
|---------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                                                                  |   | (Unaudited)    |   |
|                                                                                  |   | (In thousands) |   |
| Net income                                                                            |   | $              | 15,116 |   |   | $      | 16,434 |   |
| Other comprehensive income, net of tax:                                               |   |           |   |   |   |   |   |   |
| Unrealized (losses) gains on securities                                               |   |           | (2,380 | )      |   |   | 4,798 |   |
| Unrealized (losses) gains in affiliates and unconsolidated subsidiaries               |   |           | (51    | )      |   |   | 147 |   |
| Increase (decrease) on non-credit other-than-temporary impairments on securities      |   |           | 316    |   |   |   | (607 | ) |
| Net deferred derivative gains (losses) - hedging activity                             |   |           | 666    |   |   |   | (178 | ) |
| Less reclassification adjustment for investment (gains) losses included in net income |   |           | (810   | )      |   |   | 156 |   |
| Other comprehensive (losses) gains, net of tax                                        |   |           | (2,259 | )      |   |   | 4,316 |   |
| Comprehensive income                                                                  |   | $              | 12,857 |   |   | $      | 20,750 |   |

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CONSOLIDATED BALANCE SHEETS

|                                                                                                                    |   | March 31,                         |      |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|--------|--------------|--------|
|                                                                                                                    |   | 2011                              |      |   | 2010         |   |
|                                                                                                                    |   | (Unaudited)                       |      |   |         |   |
|                                                                                                                    |   | (In thousands, except share data) |      |
| ASSETS                                                                                                                  |   |                              |      |   |         |   |
| Investments                                                                                                             |   |                              |      |   |         |   |
| Debt securities available for sale, at fair value (amortized cost of $1,202,626 and $1,170,795)                         |   | $                                 | 1,253,082 |   |         | $      | 1,226,360 |   |
| Equity securities available for sale, at fair value (cost of $25,631 and $25,632)                                       |   |                              | 29,095    |   |         |   | 28,483 |   |
| Cash and cash equivalents                                                                                               |   |                              | 102,762   |   |         |   | 90,414 |   |
| Accrued investment income                                                                                               |   |                              | 13,013    |   |         |   | 13,021 |   |
| Premiums and agent balances receivable, net                                                                             |   |                              | 186,459   |   |         |   | 169,866 |   |
| Reinsurance recoverable on:                                                                                             |   |                              |      |   |         |   |   |   |
| Paid losses                                                                                                             |   |                              | 13,683    |   |         |   | 13,342 |   |
| Unpaid losses                                                                                                           |   |                              | 290,058   |   |         |   | 280,854 |   |
| Prepaid reinsurance premiums                                                                                            |   |                              | 29,810    |   |         |   | 28,208 |   |
| Deferred policy acquisition costs                                                                                       |   |                              | 84,454    |   |         |   | 78,755 |   |
| Deferred income taxes, net                                                                                              |   |                              | 6,454     |   |         |   | 5,569 |   |
| Goodwill                                                                                                                |   |                              | 118,842   |   |         |   | 118,842 |   |
| Other intangible assets                                                                                                 |   |                              | 35,505    |   |         |   | 36,637 |   |
| Other assets                                                                                                            |   |                              | 84,676    |   |         |   | 87,290 |   |
| Total assets                                                                                                            |   | $                                 | 2,247,893 |   |         | $      | 2,177,641 |   |
|                                                                                                                    |   |                              |      |   |         |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                              |   |                              |      |   |         |   |   |   |
| Liabilities                                                                                                             |   |                              |      |   |         |   |   |   |
| Losses and loss adjustment expenses                                                                                     |   | $                                 | 1,091,949 |   |         | $      | 1,065,056 |   |
| Unearned premiums                                                                                                       |   |                              | 376,845   |   |         |   | 352,585 |   |
| Debt                                                                                                                    |   |                              | 34,500    |   |         |   | 37,750 |   |
| Debentures                                                                                                              |   |                              | 80,930    |   |         |   | 80,930 |   |
| Accounts payable and accrued expenses                                                                                   |   |                              | 51,742    |   |         |   | 38,645 |   |
| Funds held and reinsurance balances payable                                                                             |   |                              | 31,781    |   |         |   | 28,824 |   |
| Payable to insurance companies                                                                                          |   |                              | 1,796     |   |         |   | 2,754 |   |
| Other liabilities                                                                                                       |   |                              | 20,387    |   |         |   | 23,996 |   |
| Total liabilities                                                                                                       |   |                              | 1,689,930 |   |         |   | 1,630,540 |   |
|                                                                                                                    |   |                              |      |   |         |   |   |   |
| Shareholders’ Equity                                                                                              |   |                              |      |   |         |   |   |   |
| Common stock, $0.01 stated value; authorized 75,000,000 shares; 53,275,204 and 53,236,542 shares issued and outstanding |   |                              | 520       |   |         |   | 520 |   |
| Additional paid-in capital                                                                                              |   |                              | 292,834   |   |         |   | 292,705 |   |
| Retained earnings                                                                                                       |   |                              | 232,283   |   |         |   | 219,298 |   |
| Note receivable from officer                                                                                            |   |                              | (790      | )      |         |   | (797 | ) |
| Accumulated other comprehensive income                                                                                  |   |                              | 33,116    |   |         |   | 35,375 |   |
| Total shareholders’ equity                                                                                        |   |                              | 557,963   |   |         |   | 547,101 |   |
| Total liabilities and shareholders’ equity                                                                        |   | $                                 | 2,247,893 |   |         | $      | 2,177,641 |   |

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CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

|                                                              |   | CommonStock |    |   | Additional PaidIn Capital |   |    | RetainedEarnings          |   |   | NoteReceivablefrom Officer |   |   | Accumulated OtherComprehensiveIncome |    |   | TotalShareholders’Equity |   |
|-------------------------------------------------------------------|--------|-------------|---------|--------|---------------------------|--------|---------|---------------------------|--------|--------|----------------------------|--------|--------|--------------------------------------|---------|--------|--------------------------------|--------|
|                                                              |   |        |    |   |                      |   |    | (Unaudited, In thousands) |   |   |                       |   |   |                                 |    |
| Balances December 31, 2010                                        |   | $           | 520     |   |                      | $      | 292,705 |                      |   | $      | 219,298                    |   |   | $                                    | (797    | )      |                           | $      | 35,375 |   |   | $ | 547,101 |   |
| Net income                                                        |   |        | — |   |                      |   | — |                      |   |   | 15,116                     |   |   |                                 | — |   |                           |   | — |   |   |   | 15,116 |   |
| Dividends declared and paid                                       |   |        | — |   |                      |   | — |                      |   |   | (2,131                     | )      |   |                                 | — |   |                           |   | — |   |   |   | (2,131 | ) |
| Change in unrealized on available for sale securities, net of tax |   |        | — |   |                      |   | — |                      |   |   | —                    |   |   |                                 | — |   |                           |   | (2,923 | ) |   |   | (2,923 | ) |
| Change in valuation allowance on deferred tax assets              |   |        | — |   |                      |   | — |                      |   |   | —                    |   |   |                                 | — |   |                           |   | 49 |   |   |   | 49 |   |
| Net deferred derivative gain - hedging activity                   |   |        | — |   |                      |   | — |                      |   |   | —                    |   |   |                                 | — |   |                           |   | 666 |   |   |   | 666 |   |
| Stock award                                                       |   |        | — |   |                      |   | 276     |                      |   |   | —                    |   |   |                                 | — |   |                           |   | — |   |   |   | 276 |   |
| Long term incentive plan; stock award for 2009-2011 plan years    |   |        | — |   |                      |   | (147    | )                         |   |   | —                    |   |   |                                 | — |   |                           |   | — |   |   |   | (147 | ) |
| Change in investment of affiliates, net of tax                    |   |        | — |   |                      |   | — |                      |   |   | —                    |   |   |                                 | — |   |                           |   | (48 | ) |   |   | (48 | ) |
| Change in investment of unconsolidated subsidiaries               |   |        | — |   |                      |   | — |                      |   |   | —                    |   |   |                                 | — |   |                           |   | (3 | ) |   |   | (3 | ) |
| Note receivable from officer                                      |   |        | — |   |                      |   | — |                      |   |   | —                    |   |   |                                 | 7       |   |                           |   | — |   |   |   | 7 |   |
| Balances March 31, 2011                                           |   | $           | 520     |   |                      | $      | 292,834 |                      |   | $      | 232,283                    |   |   | $                                    | (790    | )      |                           | $      | 33,116 |   |   | $ | 557,963 |   |

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CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                       |   | 2011           |    |   | 2010   |   |
|--------------------------------------------------------------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                                                                       |   | (Unaudited)    |    |
|                                                                                       |   | (In thousands) |    |
| Cash Flows From Operating Activities                                                       |   |           |    |   |   |   |
| Net income                                                                                 |   | $              | 15,116  |   |   | $      | 16,434 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:          |   |           |    |   |   |   |   |   |
| Amortization of other intangible assets                                                    |   |           | 1,232   |   |   |   | 1,401 |   |
| Amortization of deferred debenture issuance costs                                          |   |           | 31      |   |   |   | 66 |   |
| Depreciation of furniture, equipment, and building                                         |   |           | 1,291   |   |   |   | 1,309 |   |
| Net amortization of discount and premiums on bonds                                         |   |           | 816     |   |   |   | 981 |   |
| (Gain) loss on sale of investments, net                                                    |   |           | (810    | )      |   |   | 156 |   |
| Gain on sale of fixed assets                                                               |   |           | (22     | )      |   |   | (22 | ) |
| Long-term incentive plan expense                                                           |   |           | (147    | )      |   |   | 251 |   |
| Stock award                                                                                |   |           | 276     |   |   |   | 310 |   |
| Equity earnings of affiliates, net of taxes                                                |   |           | (1,073  | )      |   |   | (522 | ) |
| Equity earnings of unconsolidated subsidiaries, net of tax                                 |   |           | 23      |   |   |   | (452 | ) |
| Deferred income tax expense                                                                |   |           | 405     |   |   |   | 47 |   |
| Changes in operating assets and liabilities:                                               |   |           |    |   |   |   |   |   |
| Decrease (increase) in:                                                                    |   |           |    |   |   |   |   |   |
| Premiums and agent balances receivable                                                     |   |           | (16,593 | )      |   |   | (22,948 | ) |
| Reinsurance recoverable on paid and unpaid losses                                          |   |           | (9,545  | )      |   |   | (2,726 | ) |
| Prepaid reinsurance premiums                                                               |   |           | (1,602  | )      |   |   | (225 | ) |
| Deferred policy acquisition costs                                                          |   |           | (5,699  | )      |   |   | (8,201 | ) |
| Other assets                                                                               |   |           | 311     |   |   |   | (2,220 | ) |
| Increase (decrease) in:                                                                    |   |           |    |   |   |   |   |   |
| Losses and loss adjustment expenses                                                        |   |           | 26,893  |   |   |   | 29,271 |   |
| Unearned premiums                                                                          |   |           | 24,260  |   |   |   | 27,560 |   |
| Payable to insurance companies                                                             |   |           | (958    | )      |   |   | 671 |   |
| Funds held and reinsurance balances payable                                                |   |           | 2,957   |   |   |   | 199 |   |
| Other liabilities                                                                          |   |           | (2,545  | )      |   |   | 3,336 |   |
| Total adjustments                                                                          |   |           | 19,501  |   |   |   | 28,242 |   |
| Net cash provided by operating activities                                                  |   |           | 34,617  |   |   |   | 44,676 |   |
| Cash Flows From Investing Activities                                                       |   |           |    |   |   |   |   |   |
| Purchase of debt securities available for sale                                             |   |           | (61,779 | )      |   |   | (73,468 | ) |
| Proceeds from sales and maturities of debt securities available for sale                   |   |           | 44,606  |   |   |   | 28,166 |   |
| Proceeds from sales of equity securities available for sale                                |   |           | — |   |   |   | 137 |   |
| Capital expenditures                                                                       |   |           | (1,616  | )      |   |   | (1,040 | ) |
| Acquisition of rights renewals                                                             |   |           | (100    | )      |   |   | (12 | ) |
| Other investing activities                                                                 |   |           | 1,110   |   |   |   | 159 |   |
| Net cash used in investing activities                                                      |   |           | (17,779 | )      |   |   | (46,058 | ) |
| Cash Flows From Financing Activities                                                       |   |           |    |   |   |   |   |   |
| Payment of lines of credit                                                                 |   |           | (3,250  | )      |   |   | (2,813 | ) |
| Book overdrafts                                                                            |   |           | (1,248  | )      |   |   | 1,519 |   |
| Dividends paid on common stock (1)                                                         |   |           | — |   |   |   | — |   |
| Cash payment for payroll taxes associated with long-term incentive plan net stock issuance |   |           | — |   |   |   | (35 | ) |
| Share repurchases                                                                          |   |           | — |   |   |   | (10,883 | ) |
| Other financing activities                                                                 |   |           | 8       |   |   |   | (34 | ) |
| Net cash used in financing activities                                                      |   |           | (4,490  | )      |   |   | (12,246 | ) |
| Net increase (decrease) in cash and cash equivalents                                       |   |           | 12,348  |   |   |   | (13,628 | ) |
| Cash and cash equivalents, beginning of period                                             |   |           | 90,414  |   |   |   | 86,319 |   |
| Cash and cash equivalents, end of period                                                   |   | $              | 102,762 |   |   | $      | 72,691 |   |
| Supplemental Disclosure of Cash Flow Information:                                          |   |           |    |   |   |   |   |   |
| Interest Paid                                                                              |   | $              | 2,048   |   |   | $      | 2,135 |   |
| Net income taxes (received) paid (2)                                                       |   | $              | (696    | )      |   | $      | 1,479 |   |
| Supplemental Disclosure of Non-Cash Investing and Financing Activities:                    |   |           |    |   |   |   |   |   |
| Stock-based employee compensation                                                          |   | $              | 276     |   |   | $      | 310 |   |

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|                                       |   |           |      |   |             |   |   |   |   |   |           |   |   |                |    |
|--------------------------------------------|--------|----------------|-----------|--------|------------------|--------|--------|--------|--------|--------|----------------|--------|--------|---------------------|---------|
|                                       |   | March 31, 2011 |      |
|                                       |   | Cost or        |      |   | Gross Unrealized |   |   |   |   |
|                                       |   | AmortizedCost  |      |   | Gains            |   |   | Losses |   |   | Non-CreditOTTI |   |   | EstimatedFair Value |    |
| Debt Securities:                           |   |           |      |   |             |   |   |   |   |   |           |   |   |                |    |
| U.S. Government and agencies               |   | $              | 23,465    |   |             | $      | 1,136  |   |   | $      | (27            | )      |   | $                   | — |   |   | $ | 24,574 |   |
| Obligations of states and political subs   |   |           | 526,102   |   |             |   | 20,865 |   |   |   | (1,668         | )      |   |                | — |   |   |   | 545,299 |   |
| Corporate securities                       |   |           | 414,883   |   |             |   | 19,302 |   |   |   | (1,584         | )      |   |                | — |   |   |   | 432,601 |   |
| Redeemable preferred stocks                |   |           | 3,700     |   |             |   | 717    |   |   |   | —        |   |   |                | — |   |   |   | 4,417 |   |
| Residential mortgage-backed securities     |   |           | 178,701   |   |             |   | 10,760 |   |   |   | (875           | )      |   |                | (15     | ) |   |   | 188,571 |   |
| Commercial mortgage-backed securities      |   |           | 39,667    |   |             |   | 1,022  |   |   |   | (318           | )      |   |                | — |   |   |   | 40,371 |   |
| Other asset-backed securities              |   |           | 16,108    |   |             |   | 1,586  |   |   |   | (19            | )      |   |                | (426    | ) |   |   | 17,249 |   |
| Total debt securities available for sale   |   |           | 1,202,626 |   |             |   | 55,388 |   |   |   | (4,491         | )      |   |                | (441    | ) |   |   | 1,253,082 |   |
| Equity Securities:                         |   |           |      |   |             |   |   |   |   |   |           |   |   |                |    |   |   |   |   |   |
| Perpetual preferred stock                  |   |           | 10,869    |   |             |   | 2,394  |   |   |   | —        |   |   |                | — |   |   |   | 13,263 |   |
| Common stock                               |   |           | 14,762    |   |             |   | 1,466  |   |   |   | (396           | )      |   |                | — |   |   |   | 15,832 |   |
| Total equity securities available for sale |   |           | 25,631    |   |             |   | 3,860  |   |   |   | (396           | )      |   |                | — |   |   |   | 29,095 |   |
| Total securities available for sale        |   | $              | 1,228,257 |   |             | $      | 59,248 |   |   | $      | (4,887         | )      |   | $                   | (441    | ) |   | $ | 1,282,177 |   |

|                                       |   | December 31, 2010 |      |
|--------------------------------------------|--------|-------------------|-----------|
|                                       |   | Cost or           |      |   | Gross Unrealized |   |   |   |   |
|                                       |   | Amortized         |      |   |   |   |   |   |   |   | Non-Credit |   |   | Estimated |   |
|                                       |   | Cost              |      |   | Gains |   |   | Losses |   |   | OTTI |   |   | Fair Value |   |
| Debt Securities:                           |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agencies               |   | $                 | 25,375    |   |   | $ | 1,363 |   |   | $ | (24 | ) |   | $ | — |   |   | $ | 26,714 |   |
| Obligations of states and political subs   |   |              | 527,080   |   |   |   | 22,176 |   |   |   | (2,125 | ) |   |   | — |   |   |   | 547,131 |   |
| Corporate securities                       |   |              | 379,974   |   |   |   | 21,555 |   |   |   | (1,355 | ) |   |   | (3 | ) |   |   | 400,171 |   |
| Redeemable preferred stocks                |   |              | 3,368     |   |   |   | 1,044 |   |   |   | — |   |   |   | — |   |   |   | 4,412 |   |
| Residential mortgage-backed securities     |   |              | 181,966   |   |   |   | 12,182 |   |   |   | (694 | ) |   |   | (151 | ) |   |   | 193,303 |   |
| Commercial mortgage-backed securities      |   |              | 34,942    |   |   |   | 1,236 |   |   |   | (478 | ) |   |   | — |   |   |   | 35,700 |   |
| Other asset-backed securities              |   |              | 18,090    |   |   |   | 1,476 |   |   |   | (33 | ) |   |   | (604 | ) |   |   | 18,929 |   |
| Total debt securities available for sale   |   |              | 1,170,795 |   |   |   | 61,032 |   |   |   | (4,709 | ) |   |   | (758 | ) |   |   | 1,226,360 |   |
| Equity Securities:                         |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Perpetual preferred stock                  |   |              | 10,869    |   |   |   | 2,006 |   |   |   | (6 | ) |   |   | — |   |   |   | 12,869 |   |
| Common stock                               |   |              | 14,763    |   |   |   | 1,255 |   |   |   | (404 | ) |   |   | — |   |   |   | 15,614 |   |
| Total equity securities available for sale |   |              | 25,632    |   |   |   | 3,261 |   |   |   | (410 | ) |   |   | — |   |   |   | 28,483 |   |
| Total securities available for sale        |   | $                 | 1,196,427 |   |   | $ | 64,293 |   |   | $ | (5,119 | ) |   | $ | (758 | ) |   | $ | 1,254,843 |   |

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|                                                                      |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                                                      |   | 2011      |    |   | 2010         |   |
| Unrealized gains                                                          |   | $         | 59,248  |   |         | $      | 64,293 |   |
| Unrealized losses                                                         |   |      | (4,887  | )      |         |   | (5,119 | ) |
| Non-credit OTTI                                                           |   |      | (441    | )      |         |   | (758 | ) |
| Net unrealized gains                                                      |   |      | 53,920  |   |         |   | 58,416 |   |
| Deferred federal income tax expense                                       |   |      | (18,872 | )      |         |   | (20,445 | ) |
| Net unrealized gains on investments, net of deferred federal income taxes |   | $         | 35,048  |   |         | $      | 37,971 |   |

|                                                 |   |                 |    |   |   |   |
|------------------------------------------------------|--------|----------------------|---------|--------|--------|--------|
|                                                 |   | For the Three Months |    |
|                                                 |   | Ended March 31,      |    |
|                                                 |   | 2011                 |    |   | 2010   |   |
| Realized (losses) gains:                             |   |                 |    |   |   |   |
| Debt securities:                                     |   |                 |    |   |   |   |
| Gross realized gains                                 |   | $                    | 923     |   |   | $      | 148 |   |
| Gross realized losses                                |   |                 | (113    | )      |   |   | (314 | ) |
| Total debt securities                                |   |                 | 810     |   |   |   | (166 | ) |
| Equity Securities:                                   |   |                 |    |   |   |   |   |   |
| Gross realized gains                                 |   |                 | — |   |   |   | 10 |   |
| Gross realized losses                                |   |                 | — |   |   |   | — |   |
| Total equity securities                              |   |                 | — |   |   |   | 10 |   |
| Net realized gains (losses)                          |   | $                    | 810     |   |   | $      | (156 | ) |
|                                                 |   |                 |    |   |   |   |   |   |
| OTTI included in realized losses on securities above |   | $                    | (84     | )      |   | $      | (305 | ) |

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|                                                                               |   | Available for Sale |      |
|------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                               |   | Amortized          |      |   | Estimated |   |
|                                                                               |   | Cost               |      |   | Fair Value |   |
| Due in one year or less                                                            |   | $                  | 31,828    |   |   | $ | 32,604 |   |
| Due after one year through five years                                              |   |               | 258,003   |   |   |   | 267,267 |   |
| Due after five years through ten years                                             |   |               | 538,511   |   |   |   | 565,701 |   |
| Due after ten years                                                                |   |               | 139,808   |   |   |   | 141,319 |   |
| Mortgage-backed securities, collateralized obligations and asset-backed securities |   |               | 234,476   |   |   |   | 246,191 |   |
|                                                                               |   | $                  | 1,202,626 |   |   | $ | 1,253,082 |   |

|                               |   |                 |   |   |   |   |
|------------------------------------|--------|----------------------|--------|--------|--------|--------|
|                               |   | For the Three Months |   |
|                               |   | Ended March 31,      |   |
|                               |   | 2011                 |   |   | 2010   |   |
| Net Investment Income Earned From: |   |                 |   |   |   |   |
| Debt securities                    |   | $                    | 13,192 |   |   | $      | 12,580 |   |
| Equity Securities                  |   |                 | 506    |   |   |   | 536 |   |
| Cash and cash equivalents          |   |                 | 216    |   |   |   | 184 |   |
| Total gross investment income      |   |                 | 13,914 |   |   |   | 13,300 |   |
| Less investment expenses           |   |                 | 342    |   |   |   | 271 |   |
| Net investment income              |   | $                    | 13,572 |   |   | $      | 13,029 |   |

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|   | ● | Historical and implied volatility of the security; |
|--------|---------|----------------------------------------------------|

|   | ● | Length of time and extent to which the fair value has been less than amortized cost; |
|--------|---------|--------------------------------------------------------------------------------------|

|   | ● | Conditions specifically related to the security such as default rates, loss severities, loan to value ratios, current levels of subordination, third party guarantees, and vintage; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Specific conditions in an industry or geographic area; |
|--------|---------|--------------------------------------------------------|

|   | ● | Any changes to the rating of the security by a rating agency; |
|--------|---------|---------------------------------------------------------------|

|   | ● | Failure, if any, of the issuer of the security to make scheduled payments; and |
|--------|---------|--------------------------------------------------------------------------------|

|   | ● | Recoveries or additional declines in fair value subsequent to the balance sheet date. |
|--------|---------|---------------------------------------------------------------------------------------|

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|                                     |   |                                                         |    |   |                                    |   |    |                                                         |   |   |                                    |   |   |                                                          |    |   |                                    |   |
|------------------------------------------|--------|--------------------------------------------------------------|---------|--------|-----------------------------------------|--------|---------|--------------------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|---------------------------------------------------------------|---------|--------|-----------------------------------------|--------|
|                                     |   | March 31, 2011                                               |    |
|                                     |   | Less than 12 months                                          |    |   | Greater than 12 months                  |   |    | Total                                                        |   |
|                                     |   | Fair Value ofInvestments withUnrealizedLosses(99 Securities) |    |   | GrossUnrealizedLosses andNon-CreditOTTI |   |    | Fair Value ofInvestments withUnrealizedLosses(18 Securities) |   |   | GrossUnrealizedLosses andNon-CreditOTTI |   |   | Fair Value ofInvestments withUnrealizedLosses(117 Securities) |    |   | GrossUnrealizedLosses andNon-CreditOTTI |   |
| Debt Securities:                         |   |                                                         |    |   |                                    |   |    |                                                         |   |   |                                    |   |   |                                                          |    |   |                                    |   |
| U.S. Government and agencies             |   | $                                                            | 3,378   |   |                                    | $      | (27     | )                                                            |   | $      | —                                 |   |   | $                                                             | — |   |                                    | $      | 3,378 |   |   | $ | (27 | ) |
| Obligations of states and political subs |   |                                                         | 77,208  |   |                                    |   | (1,666  | )                                                            |   |   | 548                                     |   |   |                                                          | (2      | )      |                                    |   | 77,756 |   |   |   | (1,668 | ) |
| Corporate securities                     |   |                                                         | 90,368  |   |                                    |   | (1,584  | )                                                            |   |   | —                                 |   |   |                                                          | — |   |                                    |   | 90,368 |   |   |   | (1,584 | ) |
| Redeemable preferred stocks              |   |                                                         | — |   |                                    |   | — |                                                         |   |   | —                                 |   |   |                                                          | — |   |                                    |   | — |   |   |   | — |   |
| Residential mortgage-backed securities   |   |                                                         | 28,636  |   |                                    |   | (876    | )                                                            |   |   | 3,764                                   |   |   |                                                          | (14     | )      |                                    |   | 32,400 |   |   |   | (890 | ) |
| Commercial mortgage-backed securities    |   |                                                         | 6,956   |   |                                    |   | (228    | )                                                            |   |   | 520                                     |   |   |                                                          | (90     | )      |                                    |   | 7,476 |   |   |   | (318 | ) |
| Other asset-backed securities            |   |                                                         | 1,053   |   |                                    |   | (7      | )                                                            |   |   | 2,610                                   |   |   |                                                          | (438    | )      |                                    |   | 3,663 |   |   |   | (445 | ) |
| Total debt securities                    |   |                                                         | 207,599 |   |                                    |   | (4,388  | )                                                            |   |   | 7,442                                   |   |   |                                                          | (544    | )      |                                    |   | 215,041 |   |   |   | (4,932 | ) |
| Equity Securities:                       |   |                                                         |    |   |                                    |   |    |                                                         |   |   |                                    |   |   |                                                          |    |   |                                    |   |   |   |   |   |   |   |
| Perpetual preferred stock                |   |                                                         | — |   |                                    |   | — |                                                         |   |   | —                                 |   |   |                                                          | — |   |                                    |   | — |   |   |   | — |   |
| Common stock                             |   |                                                         | — |   |                                    |   | — |                                                         |   |   | 5,090                                   |   |   |                                                          | (396    | )      |                                    |   | 5,090 |   |   |   | (396 | ) |
| Total equity securities                  |   |                                                         | — |   |                                    |   | — |                                                         |   |   | 5,090                                   |   |   |                                                          | (396    | )      |                                    |   | 5,090 |   |   |   | (396 | ) |
| Total securities                         |   | $                                                            | 207,599 |   |                                    | $      | (4,388  | )                                                            |   | $      | 12,532                                  |   |   | $                                                             | (940    | )      |                                    | $      | 220,131 |   |   | $ | (5,328 | ) |

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|                                     |   | December 31, 2010                                            |    |
|------------------------------------------|--------|--------------------------------------------------------------|---------|
|                                     |   | Less than 12 months                                          |    |   | Greater than 12 months |   |   | Total |   |
|                                     |   | Fair Value ofInvestmentswith UnrealizedLosses(89 Securities) |    |   | GrossUnrealizedLosses andNon-CreditOTTI |   |   | Fair Value ofInvestmentswith UnrealizedLosses(19 Securities) |   |   | GrossUnrealizedLosses andNon-CreditOTTI |   |   | Fair Value ofInvestmentswith UnrealizedLosses(108 Securities) |   |   | GrossUnrealizedLosses andNon-CreditOTTI |   |
| Debt Securities:                         |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and agencies             |   | $                                                            | 3,381   |   |   | $ | (24 | ) |   | $ | — |   |   | $ | — |   |   | $ | 3,381 |   |   | $ | (24 | ) |
| Obligations of states and political subs |   |                                                         | 71,422  |   |   |   | (2,119 | ) |   |   | 679 |   |   |   | (6 | ) |   |   | 72,101 |   |   |   | (2,125 | ) |
| Corporate securities                     |   |                                                         | 70,411  |   |   |   | (1,358 | ) |   |   | — |   |   |   | — |   |   |   | 70,411 |   |   |   | (1,358 | ) |
| Redeemable preferred stocks              |   |                                                         | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Residential mortgage-backed securities   |   |                                                         | 22,161  |   |   |   | (694 | ) |   |   | 3,631 |   |   |   | (151 | ) |   |   | 25,792 |   |   |   | (845 | ) |
| Commercial mortgage-backed securities    |   |                                                         | 7,052   |   |   |   | (183 | ) |   |   | 311 |   |   |   | (295 | ) |   |   | 7,363 |   |   |   | (478 | ) |
| Other asset-backed securities            |   |                                                         | 1,569   |   |   |   | (16 | ) |   |   | 2,617 |   |   |   | (621 | ) |   |   | 4,186 |   |   |   | (637 | ) |
| Total debt securities                    |   |                                                         | 175,996 |   |   |   | (4,394 | ) |   |   | 7,238 |   |   |   | (1,073 | ) |   |   | 183,234 |   |   |   | (5,467 | ) |
| Equity Securities:                       |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Perpetual preferred stock                |   |                                                         | 995     |   |   |   | (6 | ) |   |   | — |   |   |   | — |   |   |   | 995 |   |   |   | (6 | ) |
| Common stock                             |   |                                                         | — |   |   |   | — |   |   |   | 5,063 |   |   |   | (404 | ) |   |   | 5,063 |   |   |   | (404 | ) |
| Total equity securities                  |   |                                                         | 995     |   |   |   | (6 | ) |   |   | 5,063 |   |   |   | (404 | ) |   |   | 6,058 |   |   |   | (410 | ) |
| Total securities                         |   | $                                                            | 176,991 |   |   | $ | (4,400 | ) |   | $ | 12,301 |   |   | $ | (1,477 | ) |   | $ | 189,292 |   |   | $ | (5,877 | ) |
|                                     |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Balance as of January 1, 2010                                    |   |   | (547    | )      |
|------------------------------------------------------------------|--------|--------|---------|--------|
| Additional credit impairments on:                                |   |   |    |   |
| Previously impaired securities                                   |   |   | (264    | )      |
| Securities for which an impairment was not previously recognized |   |   | — |   |
| Reductions                                                       |   |   | 89      |   |
| Balance as of December 31, 2010                                  |   | $      | (722    | )      |
| Additional credit impairments on:                                |   |   |    |   |
| Previously impaired securities                                   |   |   | (67     | )      |
| Securities for which an impairment was not previously recognized |   |   | — |   |
| Reductions                                                       |   |   | — |   |
| Balance as of March 31, 2011                                     |   | $      | (789    | )      |
|                                                             |   |   |    |   |

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|                                       |   |               |      |   |                                                      |   |    |                                      |   |   |                                   |   |
|--------------------------------------------|--------|--------------------|-----------|--------|-----------------------------------------------------------|--------|---------|-------------------------------------------|--------|--------|----------------------------------------|--------|
|                                       |   |               |      |   | Fair Value Measurements Using                             |   |
|                                       |   | March 31,2011Total |      |   | Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1) |   |    | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Debt Securities:                           |   |               |      |   |                                                      |   |    |                                      |   |   |                                   |   |
| U.S. Government and agencies               |   | $                  | 24,574    |   |                                                      | $      | — |                                      |   | $      | 24,574                                 |   |   | $ | — |   |
| Obligations of states and political subs   |   |               | 545,299   |   |                                                      |   | — |                                      |   |   | 545,299                                |   |   |   | — |   |
| Corporate securities                       |   |               | 432,601   |   |                                                      |   | — |                                      |   |   | 431,809                                |   |   |   | 792 |   |
| Redeemable preferred stocks                |   |               | 4,417     |   |                                                      |   | 4,417   |                                      |   |   | —                                |   |   |   | — |   |
| Residential mortgage-backed securities     |   |               | 188,571   |   |                                                      |   | — |                                      |   |   | 188,571                                |   |   |   | — |   |
| Commercial mortgage-backed securities      |   |               | 40,371    |   |                                                      |   | — |                                      |   |   | 40,371                                 |   |   |   | — |   |
| Other asset-backed securities              |   |               | 17,249    |   |                                                      |   | — |                                      |   |   | 13,936                                 |   |   |   | 3,313 |   |
| Total debt securities available for sale   |   |               | 1,253,082 |   |                                                      |   | 4,417   |                                      |   |   | 1,244,560                              |   |   |   | 4,105 |   |
| Equity Securities:                         |   |               |      |   |                                                      |   |    |                                      |   |   |                                   |   |   |   |   |   |
| Perpetual preferred stock                  |   |               | 13,263    |   |                                                      |   | 12,533  |                                      |   |   | 730                                    |   |   |   | — |   |
| Common stock                               |   |               | 15,832    |   |                                                      |   | 15,832  |                                      |   |   | —                                |   |   |   | — |   |
| Total equity securities available for sale |   |               | 29,095    |   |                                                      |   | 28,365  |                                      |   |   | 730                                    |   |   |   | — |   |
| Total securities available for sale        |   | $                  | 1,282,177 |   |                                                      | $      | 32,782  |                                      |   | $      | 1,245,290                              |   |   | $ | 4,105 |   |
|                                       |   |               |      |   |                                                      |   |    |                                      |   |   |                                   |   |   |   |   |   |
| Derivatives - interest rate swaps          |   | $                  | (4,908    | )      |                                                      | $      | — |                                      |   | $      | (4,908                                 | )      |   | $ | — |   |

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|                                         |   | Fair ValueMeasurementUsingSignificantUnobservableInputs - Level 3 |    |
|----------------------------------------------|--------|-------------------------------------------------------------------|---------|
| Balance as of January 1, 2010                |   |                                                              | 4,161   |   |
|                                         |   |                                                              |    |   |
| Total gains or losses (realized/unrealized): |   |                                                              |    |   |
| Included in earnings                         |   |                                                              | (3      | ) |
| Included in other comprehensive income       |   |                                                              | 463     |   |
|                                         |   |                                                              |    |   |
| Purchases                                    |   |                                                              | — |   |
| Issuances                                    |   |                                                              | — |   |
| Settlements                                  |   |                                                              | (97     | ) |
|                                         |   |                                                              |    |   |
| Transfers in and out of Level 3              |   |                                                              | (442    | ) |
| Balance as of December 31, 2010              |   | $                                                                 | 4,082   |   |
|                                         |   |                                                              |    |   |
| Total gains or losses (realized/unrealized): |   |                                                              |    |   |
| Included in earnings                         |   |                                                              | (3      | ) |
| Included in other comprehensive income       |   |                                                              | 32      |   |
|                                         |   |                                                              |    |   |
| Purchases                                    |   |                                                              | — |   |
| Issuances                                    |   |                                                              | — |   |
| Settlements                                  |   |                                                              | (6      | ) |
|                                         |   |                                                              |    |   |
| Transfers in and out of Level 3              |   |                                                              |    |   |
| Balance as of March 31, 2011                 |   | $                                                                 | 4,105   |   |

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| Year ofIssuance |   | Description                        |   | YearCallable |   | Year Due |   | Interest Rate Terms           |   | InterestRate atMarch 31,2011 (1) |   |   | PrincipalAmount |   |
|-----------------|--------|------------------------------------|--------|--------------|--------|----------|--------|-------------------------------|--------|----------------------------------|--------|--------|-----------------|--------|
|            |   |                               |   |         |   |     |   |                          |   |                             |   |   |            |   |
| 2003            |   | Junior subordinated debentures     |   | 2008         |   | 2033     |   | Three-month LIBOR, plus 4.05% |   |                             | 4.36   | %      |            | $      | 10,310 |   |
| 2004            |   | Senior debentures                  |   | 2009         |   | 2034     |   | Three-month LIBOR, plus 4.00% |   |                             | 4.31   | %      |            |   | 13,000 |   |
| 2004            |   | Senior debentures                  |   | 2009         |   | 2034     |   | Three-month LIBOR, plus 4.20% |   |                             | 4.51   | %      |            |   | 12,000 |   |
| 2005            |   | Junior subordinated debentures     |   | 2010         |   | 2035     |   | Three-month LIBOR, plus 3.58% |   |                             | 3.89   | %      |            |   | 20,620 |   |
|            |   | Junior subordinated debentures (2) |   | 2007         |   | 2032     |   | Three-month LIBOR, plus 4.00% |   |                             | 4.31   | %      |            |   | 15,000 |   |
|            |   | Junior subordinated debentures (2) |   | 2008         |   | 2033     |   | Three-month LIBOR, plus 4.10% |   |                             | 4.41   | %      |            |   | 10,000 |   |
|            |   |                               |   |         |   |     |   |                          |   | Total                            |   |   | $               | 80,930 |   |

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| Effective Date |   | ExpirationDate |   | Debt Instrument                    |   | Counterparty Interest Rate Terms |   | Fixed Rate |   |   | FixedAmount atMarch 31,2011 |   |
|----------------|--------|----------------|--------|------------------------------------|--------|----------------------------------|--------|------------|--------|--------|-----------------------------|--------|
|           |   |           |   |                               |   |                             |   |       |   |   |                        |   |
| 04/23/2008     |   | 05/24/2011     |   | Senior debentures (1)              |   | Three-month LIBOR, plus 4.20%    |   |       | 7.720  | %      |                        |   | 7,000 |   |
| 04/23/2008     |   | 06/30/2013     |   | Junior subordinated debentures     |   | Three-month LIBOR, plus 4.05%    |   |       | 8.020  | %      |                        |   | 10,000 |   |
| 04/29/2008     |   | 04/29/2013     |   | Senior debentures                  |   | Three-month LIBOR, plus 4.00%    |   |       | 7.940  | %      |                        |   | 13,000 |   |
| 07/31/2008     |   | 07/31/2013     |   | Term loan (2)                      |   | Three-month LIBOR                |   |       | 3.950  | %      |                        |   | 34,500 |   |
| 08/15/2008     |   | 08/15/2013     |   | Junior subordinated debentures (3) |   | Three-month LIBOR                |   |       | 3.780  | %      |                        |   | 10,000 |   |
| 09/04/2008     |   | 09/04/2013     |   | Junior subordinated debentures (3) |   | Three-month LIBOR                |   |       | 3.790  | %      |                        |   | 15,000 |   |
| 09/08/2010     |   | 05/24/2016     |   | Senior debentures                  |   | Three-month LIBOR, plus 4.20%    |   |       | 6.248  | %      |                        |   | 5,000 |   |
| 09/16/2010     |   | 09/15/2015     |   | Junior subordinated debentures     |   | Three-month LIBOR, plus 3.58%    |   |       | 6.160  | %      |                        |   | 10,000 |   |
| 09/16/2010     |   | 09/15/2015     |   | Junior subordinated debentures     |   | Three-month LIBOR, plus 3.58%    |   |       | 6.190  | %      |                        |   | 10,000 |   |

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|                                        |   | For the Three Months |       |
|---------------------------------------------|--------|----------------------|------------|
|                                        |   | Ended March 31,      |       |
|                                        |   | 2011                 |       |   | 2010 |   |
| Net income, as reported                     |   | $                    | 15,116     |   |   | $ | 16,434 |   |
| Common shares:                              |   |                 |       |   |   |   |   |   |
| Basic                                       |   |                 |       |   |   |   |   |   |
| Weighted average shares outstanding         |   |                 | 53,252,007 |   |   |   | 55,272,310 |   |
| Diluted                                     |   |                 |       |   |   |   |   |   |
| Weighted average shares outstanding         |   |                 | 53,252,007 |   |   |   | 55,272,310 |   |
| Dilutive effect of:                         |   |                 |       |   |   |   |   |   |
| Share awards under long term incentive plan |   |                 | 275,015    |   |   |   | 204,788 |   |
| Total                                       |   |                 | 53,527,022 |   |   |   | 55,477,098 |   |
| Net income per common share                 |   |                 |       |   |   |   |   |   |
| Basic                                       |   | $                    | 0.28       |   |   | $ | 0.30 |   |
| Diluted                                     |   | $                    | 0.28       |   |   | $ | 0.30 |   |

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| ITEM 2.  | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|---------------|---------------------------------------------------------------------------------------------|

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|                                               |   | For the Three MonthsEnded March 31,             |       |
|----------------------------------------------------|--------|-------------------------------------------------|------------|
|                                               |   | 2011                                            |       |   |  2010 |   |
|                                               |   |                                            |       |   |   |   |   |   |
|                                               |   | (In thousands, except share and per share data) |       |
| Operating income, net of tax                       |   | $                                               | 14,484     |   |   | $ | 16,821 |   |
| Net realized gains (losses), net of tax            |   |                                            | 632        |   |   |   | (387 | ) |
| Net income                                         |   | $                                               | 15,116     |   |   | $ | 16,434 |   |
|                                               |   |                                            |       |   |   |   |   |   |
| Diluted earnings per common share:                 |   |                                            |       |   |   |   |   |   |
| Net operating income                               |   | $                                               | 0.27       |   |   | $ | 0.30 |   |
| Net income                                         |   | $                                               | 0.28       |   |   | $ | 0.30 |   |
| Diluted weighted average common shares outstanding |   |                                            | 53,527,022 |   |   |   | 55,477,098 |   |

|                                            |   | For the Three MonthsEnded March 31, |   |
|-------------------------------------------------|--------|-------------------------------------|--------|
|                                            |   | 2011                                |   |   | 2010 |   |
| Accident year loss ratio                        |   |                                | 63.6   | % |   |   | 64.2 | % |
| Favorable development on  prior years |   |                                | -1.9   | % |   |   | -6.4 | % |
| Net loss & LAE ratio                        |   |                                | 61.7   | % |   |   | 57.8 | % |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | For the Three MonthsEnded March 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2011                                |    |   | 2010 |   |
| Revenue:                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                |    |   |   |   |   |   |
| Net earned premiums                                                                          |   | $                                   | 170,658 |   |   | $ | 151,441 |   |
| Management administrative fees                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                | 3,238   |   |   |   | 4,956 |   |
| Claims fees                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                | 1,607   |   |   |   | 1,746 |   |
| Commission revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                | 3,593   |   |   |   | 3,166 |   |
| Net investment income                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                | 13,572  |   |   |   | 13,029 |   |
| Net realized losses                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                | 812     |   |   |   | (134 | ) |
| Total revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                   | 193,480 |   |   | $ | 174,204 |   |

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|                                               |   | For the Three MonthsEnded March 31, |    |
|----------------------------------------------------|--------|-------------------------------------|---------|
|                                               |   | 2011                                |    |   | 2010 |   |
| Expense:                                           |   |                                |    |   |   |   |   |   |
| Net losses and loss adjustment expenses       |   | $                                   | 105,262 |   |   | $ | 87,480 |   |
| Policy acquisition and other underwriting expenses |   |                                | 57,438  |   |   |   | 51,879 |   |
| General selling & administrative expenses      |   |                                | 6,244   |   |   |   | 5,906 |   |
| General corporate expenses                         |   |                                | 1,355   |   |   |   | 1,977 |   |
| Amortization expense                               |   |                                | 1,232   |   |   |   | 1,401 |   |
| Interest expense                                   |   |                                | 2,172   |   |   |   | 2,443 |   |
| Total expenses                                     |   | $                                   | 173,703 |   |   | $ | 151.086 |   |

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| Line of Business                              |   | MinimumReserveRange |    |   | MaximumReserveRange |   |    | SelectedReserves |   |
|-----------------------------------------------|--------|---------------------|---------|--------|---------------------|--------|---------|------------------|--------|
|                                          |   |                |    |   |                |   |    |             |   |
| Workers’ Compensation (1)               |   | $                   | 296,515 |   |                | $      | 336,536 |             |   | $ | 319,044 |   |
| Commercial Multiple Peril / General Liability |   |                | 296,345 |   |                |   | 363,957 |             |   |   | 335,952 |   |
| Commercial Automobile                         |   |                | 106,112 |   |                |   | 118,730 |             |   |   | 113,116 |   |
| Other                                         |   |                | 31,455  |   |                |   | 35,551  |             |   |   | 33,779 |   |
| Total Net Reserves                            |   | $                   | 730,427 |   |                | $      | 854,774 |             |   | $ | 801,891 |   |

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|                                          |   |                        |      |   | Incurred Losses    |   |    | Paid Losses |   |   |                 |   |
|-----------------------------------------------|--------|-----------------------------|-----------|--------|--------------------|--------|---------|-------------|--------|--------|----------------------|--------|
| Line of Business                              |   | Reserves atDecember 31,2010 |      |   |   CurrentYear |   |    | PriorYears  |   |   |   TotalIncurred |   |   |   CurrentYear |   |   | PriorYears |   |   | Total Paid |   |   | Reserves atMarch 31,2011 |   |
|                                          |   |                        |      |   |               |   |    |        |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Workers’ Compensation                   |   | $                           | 285,069   |   |               | $      | 45,769  |        |   | $      | 2,480                |   |   | $ | 48,249 |   |   | $ | 1,752 |   |   | $ | 31,243 |   |   | $ | 32,995 |   |   | $ | 300,323 |   |
| Residual Markets                              |   |                        | 18,963    |   |               |   | 996     |        |   |   | (275                 | )      |   |   | 721 |   |   |   | 670 |   |   |   | 293 |   |   |   | 963 |   |   |   | 18,721 |   |
| Commercial Multiple Peril / General Liability |   |                        | 330,850   |   |               |   | 27,970  |        |   |   | (4,843               | )      |   |   | 23,127 |   |   |   | 670 |   |   |   | 17,355 |   |   |   | 18,025 |   |   |   | 335,952 |   |
| Commercial Automobile                         |   |                        | 112,388   |   |               |   | 19,236  |        |   |   | 2,203                |   |   |   | 21,439 |   |   |   | 3,240 |   |   |   | 17,471 |   |   |   | 20,711 |   |   |   | 113,116 |   |
| Other                                         |   |                        | 36,932    |   |               |   | 14,522  |        |   |   | (2,796               | )      |   |   | 11,726 |   |   |   | 1,900 |   |   |   | 12,979 |   |   |   | 14,879 |   |   |   | 33,779 |   |
| Net Reserves                                  |   |                        | 784,202   |   |               | $      | 108,493 |        |   | $      | (3,231               | )      |   | $ | 105,262 |   |   | $ | 8,232 |   |   | $ | 79,341 |   |   | $ | 87,573 |   |   |   | 801,891 |   |
| Reinsurance Recoverable                       |   |                        | 280,854   |   |               |   |    |        |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 290,058 |   |
| Consolidated                                  |   | $                           | 1,065,056 |   |               |   |    |        |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 1,091,949 |   |
| Line of Business                              |   | Reserves at December 31,2010 |    |   | Total Re-estimated Reserves at March 31, 2011 on Prior Years |   |    | Development as aPercentage ofPrior YearReserves |   |
|-----------------------------------------------|--------|------------------------------|---------|--------|--------------------------------------------------------------|--------|---------|-------------------------------------------------|--------|
|                                          |   |                         |    |   |                                                         |   |    |                                            |   |   |   |   |
| Workers’ Compensation                   |   | $                            | 285,069 |   |                                                         | $      | 287,549 |                                            |   |   | 0.9 | % |
| Commercial Multiple Peril / General Liability |   |                         | 330,850 |   |                                                         |   | 326,007 |                                            |   |   | -1.5 | % |
| Commercial Automobile                         |   |                         | 112,388 |   |                                                         |   | 114,591 |                                            |   |   | 2.0 | % |
| Other                                         |   |                         | 36,932  |   |                                                         |   | 34,136  |                                            |   |   | -7.6 | % |
| Sub-total                                     |   |                         | 765,239 |   |                                                         |   | 762,283 |                                            |   |   | -0.4 | % |
| Residual Markets                              |   |                         | 18,963  |   |                                                         |   | 18,688  |                                            |   |   | -1.5 | % |
| Total Net Reserves                            |   | $                            | 784,202 |   |                                                         | $      | 780,971 |                                            |   |   | -0.4 | % |

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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|                      |   | Rates Down100bps |      |   | RatesUnchanged |   |      | Rates Up100bps |   |
|---------------------------|--------|------------------|-----------|--------|----------------|--------|-----------|----------------|--------|
| Fair Value                |   | $                | 1,315,301 |   |           | $      | 1,253,082 |           |   | $ | 1,189,839 |   |
| Yield to Maturity or Call |   |             | 2.73      | %      |           |   | 3.66      | %              |   |   | 4.68 | % |
| Effective Duration        |   |             | 4.7       |   |           |   | 5.1       |           |   |   | 5.2 |   |

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ITEM 4.   CONTROLS AND PROCEDURES

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ITEM 1.  LEGAL PROCEEDINGS

ITEM 1A.  RISK FACTORS

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

| Period                         |   | TotalNumber ofShares |    |   | AveragePrice PaidPer Share |   |    | Total Numberof SharesPurchased asPart of PubliclyAnnouncedPlans orPrograms |   |   | MaximumNumber ofShares that maystill beRepurchasedUnder the Plansor Programs |   |
|--------------------------------|--------|----------------------|---------|--------|----------------------------|--------|---------|----------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------|--------|
| January 1 - January 31, 2011   |   |                 | — |   |                       | $      | — |                                                                       |   |   | —                                                                      |   |   |   | 2,519,000 |   |
| February 1 - February 28, 2011 |   |                 | — |   |                       |   | — |                                                                       |   |   | —                                                                      |   |   |   | 2,519,000 |   |
| March 1 - March 31, 2011       |   |                 | — |   |                       |   | — |                                                                       |   |   |                                                                         |   |   |   | 2,519,000 |   |
| Total                          |   |                 | — |   |                       |   | — |                                                                       |   |   | —                                                                      |   |   |   |   |   |

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ITEM 6.  EXHIBITS

| ExhibitNo. |   | Description                                                                                                                                                                                                             |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                                                    |
| 10.1       |   | Meadowbrook Insurance Group, Inc. Amended and Restated 2009 Equity Compensation Plan.                                                                                                                                   |
| 31.1       |   | Certification of Robert S. Cubbin, Chief Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).                                                                                      |
| 31.2       |   | Certification of Karen M. Spaun, Senior Vice President and Chief Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).                                                              |
| 32.1       |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Robert S. Cubbin, Chief Executive Officer of the Corporation.                         |
| 32.2       |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Karen M. Spaun, Senior Vice President and Chief Financial Officer of the Corporation. |

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SIGNATURES

|   | Meadowbrook Insurance Group, Inc. |                      |
|--------|-----------------------------------|---------------------------|
|   |                              |                      |   |
|   | By: /s/                           | Karen M. Spaun            |   |
|   |                              | Senior Vice President and |   |
|   |                              | Chief Financial Officer   |   |

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| ExhibitNo. |   | Description                                                                                                                                                                                                             |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                                                    |
| 10.1       |   | Meadowbrook Insurance Group, Inc. Amended and Restated 2009 Equity Compensation Plan.                                                                                                                                   |
| 31.1       |   | Certification of Robert S. Cubbin, Chief Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).                                                                                      |
| 31.2       |   | Certification of Karen M. Spaun, Senior Vice President and Chief Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).                                                              |
| 32.1       |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Robert S. Cubbin, Chief Executive Officer of the Corporation.                         |
| 32.2       |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Karen M. Spaun, Senior Vice President and Chief Financial Officer of the Corporation. |

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