<PAGE>
                                                                    EXHIBIT 10.3

                       MEADOWBROOK INSURANCE GROUP, INC.
                            LONG TERM INCENTIVE PLAN


1. PURPOSE; EFFECTIVENESS OF THE PLAN

         (A) The purpose of this Plan is to provide key employees and executives
   of the Company and its Subsidiaries, whose performance helps the Company
   achieve its long term financial goals, the opportunity to earn bonuses
   payable in the form of cash and awards of restricted stock under the
   Company's Stock Option Plans. The Plan will also advance the interests of the
   Company and its shareholders by helping the Company and its Subsidiaries
   attract and retain the services of key employees and executives, upon whose
   judgment, initiative and efforts the Company is substantially dependent, and
   to provide those persons with further incentives to advance the interests of
   the Company and its shareholders.

         (B) The Plan is effective January 1, 2004. All Restricted Stock Awards
   referred to under this Plan shall be made by action of the Board and pursuant
   to the terms and conditions of the Stock Option Plans, as amended. This Plan
   will remain in effect until it is terminated by the Board.

2. DEFINITIONS. Unless the context otherwise requires, the following defined
terms (together with other capitalized terms defined elsewhere in this Plan)
will govern the construction of this Plan:

         (A) "1995 Stock Option Plan" means the Meadowbrook Insurance Group,
   Inc., 1995 Amended and Restated Stock Option Plan.

         (B) "2002 Stock Option Plan" means the Meadowbrook Insurance Group,
   Inc., 2002 Amended and Restated Stock Option Plan.

         (C) "Annual Net Operating Income" means with respect to any Fiscal
   Year, the after tax net income, as reported in the Company's published
   financial statements, excluding realized gains and losses net of taxes
   associated with such gains or losses. The Committee may, in its sole
   discretion, include or exclude in its determination of Annual Net Income any
   extraordinary items, including, not by way of limitation, income or expenses
   due to or related to mergers, acquisitions, divestitures and accounting
   changes.

         (D) "Annual Shareholders' Equity" means with respect to any Fiscal
   Year, the average of the Company's shareholders' equity, as reported in the
   Company's published financial statements as of January 1, April 1, July 1,
   October 1 and December 31 of each Fiscal Year, excluding unrealized gains or
   losses. The Committee may, in its sole discretion, include or exclude in its
   determination of Annual Shareholders' Equity any extraordinary items,
   including, not by way of limitation, changes in shareholders' equity related
   to mergers, acquisitions, divestitures and accounting changes.




                                  Page 1 of 8
<PAGE>



         (E) "Base Salary" means the annual amount of regular salary payable to
   a Participant at the commencement of any performance period and shall not
   include income attributable to the exercise of stock options, the grant of
   Restricted Stock, bonuses of any type, contributions to the Company's
   retirement plans, benefits provided to the Participant or any other cash or
   in kind payments to a Participant.

         (F) "Board" means the Board of Directors of the Company.

         (G) "Bonus Award" means the total bonus payable to a Participant for a
   specified Performance Period, as determined by the Committee in its
   discretion and expressed as a percentage of the Participant's Base Salary.

         (H) "Cash Award" means the portion of the Bonus Award payable in cash.

         (I) "Cause" means (i) the Participant's material breach of an
   employment agreement, if any, between the Participant and the Company or one
   of its Subsidiaries, (ii) the Participant's breach of a Confidential
   Information Agreement between the Participant and the Company or one of its
   Subsidiaries, (iii) the breach of any non-disclosure or non-compete agreement
   between the Participant and the Company or one of its Subsidiaries, or (iv)
   the Participant engages in illegal conduct or willful misconduct which
   materially and demonstrably injures the Company. For purposes of determining
   whether "Cause" exists, no act or failure to act, on the Participant's part
   shall be considered "willful," unless it is done, or omitted to be done, by
   the Participant in bad faith or without reasonable belief by the Participant
   that his action or omission was in the best interests of the Company.

         (J) "Code" means the Internal Revenue Code of 1986, as amended
   (references herein to Sections of the Code are intended to refer to Sections
   of the Code as enacted at the time of this Plan's adoption by the Board and
   as subsequently amended, or to any substantially similar successor provisions
   of the Code resulting from recodification, renumbering or otherwise).

         (K) "Committee" means the Compensation Committee of the Company's Board
   of Directors provided the Compensation Committee is comprised solely of
   Non-Employee Directors. In the alternative, the Board of Directors may, in
   its discretion, choose to act as the Committee for the Plan.

         (L) "Company" means Meadowbrook Insurance Group, Inc., a Michigan
   corporation and its successor or successors.

         (M) "Crediting Rate" means for any calendar year, the Treasury Bill
   rate, as reported in The Wall Street Journal, Midwest Edition.

         (N) "Cumulative Net Operating Income" means for any Performance Period
   the average of the Annual Net Operating Income for each Fiscal Year occurring
   in the Performance Period.

                                  Page 2 of 8


<PAGE>




         (O) "Cumulative Shareholders' Equity" means for any Performance Period
   the average of the Annual Shareholders' Equity for each Fiscal Year occurring
   in the Performance Period.

         (P) "Disability" has the same meaning as "permanent and total
   disability," as defined in Section 22(e)(3) of the Code.

         (Q) "Fair Market Value" means the market price per share of such Stock
   determined by the Committee for the Company's Stock Option Plans as of any
   given date pursuant to the terms and conditions of such plans.

         (R) "Fiscal Year" means the twelve month period commencing January 1
   and ending December 31 of the applicable year.

         (S) "Good Reason" a Participant will be deemed to have terminated his
   employment for "Good Reason" if the Participant tenders his or her
   resignation to the Company within six months following the occurrence of any
   one or more of the following, without the Company having previously obtained
   the Participant's written consent: (i) Participant is not reelected to or is
   removed from the position the Participant holds with the Company or a
   Subsidiary as of the beginning of the most recent Performance Period under
   this Plan; (ii) the Company or a Subsidiary fails to vest Participant with or
   removes from Participant the duties, responsibilities, authority or resources
   that the Participant reasonably needs to competently perform his duties for
   the Company; (iii) the Company changes the primary location of Participant's
   employment to a place more than 50 miles from the Participant's primary
   location of employment immediately prior to such change; or (iv) an action or
   failure to act that constitutes "Good Reason" pursuant to a written
   employment agreement to which both the Company and the Participant are
   parties.

         (T) "Hostile Change in Control" means the occurrence of either of the
   following events that is not approved by two-thirds of the members of the
   Board of Directors in office immediately prior to the event(s):

         1.   Any person (as such term is used in Section 13 of the Securities
              Exchange Act of 1934 and the rules and regulations thereunder and
              including any Affiliate or Associate of such person, as defined in
              Rule 12b-2 under said Act, and any person acting in concert with
              such person) directly or indirectly acquires or otherwise becomes
              entitled to vote more than

              A)  50% of the voting power of all classes of company stock or

              B)  50% of the outstanding shares of stock; or

         2.   The stockholders approve any merger or consolidation of the
              Company, or any sale, lease or exchange of all or any substantial
              part of the consolidated assets of the Company and its
              Subsidiaries to any other person in which the Company is not the
              continuing or surviving corporation.



                                  Page 3 of 8
<PAGE>





         (U) "Maximum Bonus Award" means the Bonus Award which the Committee,
   subject to its discretion, would declare if the Company's Cumulative ROE for
   a Performance Period equals or exceeds the Maximum ROE.

         (V) "Maximum ROE" means the Cumulative ROE at which the maximum Bonus
   Award may be awarded to a Participant, as determined by the Committee.

         (W) "Participant" means persons who, at a particular time, are
   employees or officers or of the Company or its Subsidiaries and who, in
   accordance with Sections 3 and 4 have been selected to participate in this
   Plan.

         (X) "Performance Period" means the three year period designated by the
   Committee to be used to determine Bonus Awards under this Plan, with the
   first Performance Period being the period commencing January 1, 2004 and
   ending December 31, 2006.

         (Y) "Plan" means this Meadowbrook Insurance Group, Inc. Long Term
   Incentive Plan.

         (Z) "Restricted Stock" means Stock issued or issuable by the Company
   which is subject to the restrictions imposed by the Stock Option Plans.

         (AA) "Restricted Stock Agreement" means an agreement between the
   Company and a Participant to evidence the terms and conditions of the
   issuance of Restricted Stock pursuant to the Stock Option Plans.

         (BB) "Retirement" means a Participant's termination of employment with
   the Company and all of its Subsidiaries on or after the date on which the
   Participant has attained age 65 and completed at least 5 years of service
   with the Company or its Subsidiaries and is not employed elsewhere.

         (CC) "ROE" or "Return on Equity" means the amount, rounded to the
   nearest one thousandth percentile, obtained by dividing Cumulative Net
   Operating Income by Cumulative Shareholders' Equity.

         (DD) "Stock" means shares of the Company's common stock.

         (EE) "Stock Award" means the portions of the Bonus Award that will be
   paid in the form of Restricted Stock.

         (FF) "Stock Option Plans" means the 1995 Stock Option Plan and the 2002
   Stock Option Plan.

         (GG) "Subsidiary" has the same meaning as "Subsidiary Corporation" as
   defined in Section 424(f) of the Code.




                                  Page 4 of 8
<PAGE>




         (HH) "Target Bonus Award" means the Bonus Award which the Committee,
   subject to its discretion, would declare if the Company's Target ROE for a
   Performance Period is met.

         (II) "Target ROE" means the Cumulative ROE at which the Target Bonus
   Award may be awarded to a Participant, as determined by the Committee.

         (JJ) "Tax Withholding Liability" means all federal and state income
   taxes, social security tax, Medicare tax and any other taxes applicable to
   the income arising from the payment of a Bonus Award and required by
   applicable law to be withheld by the Company. The Committee shall retain the
   discretion to determine the amount of Tax Withholding Liability.

         (KK) "Threshold Bonus Award" means the Bonus Award which the Committee,
   subject to its discretion, would declare if the Company's Cumulative ROE for
   a Performance Period is the Threshold ROE.

         (LL) "Threshold ROE" means the Cumulative ROE below which no Bonus
   Award shall be awarded to a Participant, as determined by the Committee.

3. ELIGIBILITY. The Committee shall select the key employees and executives of
the Company who shall be eligible to participate in the Plan. If the Committee
selects for participation in the Plan a key employee or executive within the
final twelve months of a Performance Period, such individual shall, unless
otherwise determined by the Committee, participate in the Plan as of the first
day of the next Performance Period. If the Committee selects for participation
in the Plan a key employee or executive more than twelve months prior to the end
of a Performance Period, such individual shall, unless otherwise determined by
the Committee, participate in the Plan as of the first day of the next Fiscal
Year in the Performance Period and shall be eligible for a pro-rata award, based
on the ROE for the Performance Period.

4. ADMINISTRATION.

         (A) ADMINISTRATION BY THE COMMITTEE. The Committee, subject to the
   direction of the Board, will administer this Plan, but may delegate such
   powers or duties to employees of the Company or its Subsidiaries, as it deems
   appropriate. The Board may take any action under this Plan that the Committee
   could otherwise take.

         (B) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have full
   and final authority in its discretion, at any time subject only to the
   express terms, conditions and other provisions of the Company's articles of
   incorporation, bylaws and this Plan, and the specific limitations on such
   discretion set forth herein:

             (i) to select and approve the persons who may become Participant
         and to whom Bonus Awards may be made;

             (ii) to determine the amount of a Participant's Base Salary to be
         used in calculating a Bonus Award;



                                  Page 5 of 8
<PAGE>





             (iii) to determine the amount of any Target Bonus Awards and Bonus
         Awards, including the portion of such award payable as a Cash Award and
         the portion of such award payable in Restricted Stock, subject to the
         terms and conditions of the Stock Option Plans;

             (iv) to determine the Crediting Rate to be applied to the portion
         of any Cash Bonus that is unpaid and the date or dates on which the
         Cash Bonus shall be paid;

             (v) to determine Annual Net Income, Cumulative Net Income, Annual
         Shareholders' Equity, Cumulative Shareholders' Equity, Return on Equity
         and extraordinary items that may be excluded or included in determining
         the Company's financial performance;

             (vi) to determine Bonus Awards to be declared for each Plan
         Participant; and

             (vii) to interpret this Plan, to prescribe, amend and rescind rules
         and regulations relating to this Plan, and to make all other
         determinations necessary or advisable for the operation and
         administration of this Plan.

5. BONUS AWARDS. Following the end of a Performance Period, the Committee shall
determine the actual ROE for the Company for that Performance Period and, unless
otherwise determined by the Committee, shall declare Bonus Awards to
Participants in accordance with an agreed upon formula.

         (A) THRESHOLD, TARGET AND MAXIMUM AWARDS. For each Performance Period
   the Committee shall establish a Threshold ROE, a Target ROE and a Maximum
   ROE. The Committee shall also establish a Threshold Bonus Award, a Target
   Bonus Award and a Maximum Bonus Award that may become payable pursuant to
   this Plan, such Minimum and Maximum Bonus Awards being stated as a percentage
   of the Target Bonus Award.

         (B) PRO-RATA AWARDS. Unless the Committee otherwise determines, if the
   Cumulative ROE is between the Threshold ROE and the Target ROE, the Committee
   shall declare Bonus Awards between the Threshold Bonus Award and the Maximum
   Bonus Award determined by interpolation. Unless the Committee otherwise
   determines, if the Cumulative ROE is between the Target ROE and the Maximum
   ROE, the Committee shall declare Bonus Awards between the Target Bonus Award
   and the Maximum Bonus Award determined by interpolation.

         (C) COMMITTEE DISCRETION. Until the date on which the Committee
   declares Bonus Awards for a Performance Period, the Committee retains the
   discretion to not declare in whole or in part a Bonus Award to any
   Participant for any reason the Committee deems fit, notwithstanding the
   Company's achievement of any level of ROE for a Performance Period.

         (D) ALLOCATION OF BONUS AWARDS. Unless otherwise determined by the
   Committee, 50% of a Bonus Award shall be allocated to a Cash Award and 50% of
   a Bonus Award shall be


                                  Page 6 of 8
<PAGE>




   allocated to a Restricted Stock Award. The number of shares of Company
   Stock to be subject to a Restricted Stock Award shall be the number of
   shares, rounded to the nearest whole share, equal to 50% of the Bonus Award
   divided by the Fair Market Value of Company Stock as of the first day of the
   Performance Period. The Committee may not declare Restricted Stock Awards
   under either of the Company's Stock Option Plans and such Restricted Stock
   Awards may only be made by the committee for the Stock Option Plans. In the
   event that the committee for the Stock Option Plans determines that it will
   or can not make a Restricted Stock Award recommended by the Committee for
   this Plan, the Committee may declare an additional Cash Award to Participants
   in this Plan.

         (E) PAYMENT OF CASH AWARDS. The Company shall pay Cash Awards to
   Participants in three installments, with the first installment being paid no
   later than March 1 of the calendar year following the end of the applicable
   Performance Period and the second and third installments being paid no later
   than March 1 of the next two succeeding years. The second and third
   installments shall be credited with interest at the Crediting Rate,
   determined as of the beginning of each calendar year.

         (F) TAX WITHHOLDING. The Company shall withhold from the payment of any
   Bonus Awards the amount of any Tax Withholding Liability that the Committee
   determines is due upon the declaration of the Bonus Award.

         (G) EFFECT OF TERMINATION OF EMPLOYMENT. In the event of a
   Participant's termination of employment with the Company and its
   Subsidiaries, the payment of Cash Awards, Restricted Stock and Bonus Awards
   shall be subject to one of the following two subsections.

             (i) Termination for Cause or Voluntary Termination. In the event a
         Participant's employment with the Company and its Subsidiaries is
         terminated by the Company or its Subsidiaries for Cause or the
         employment with Company and its Subsidiaries is terminated by the
         Participant without Good Reason, the Participant shall (i) not be
         entitled to the payment of any Cash Award previously declared by the
         Committee that has not yet been paid to the Participant; (ii) except as
         otherwise provided in a Restricted Stock Agreement, forfeit all shares
         of Restricted Stock that have not become vested; and (iii) not be
         entitled to any Bonus Award for the Performance Period in which such
         termination of employment occurs.

             (ii) Retirement, Death, Disability or Termination with Good Reason
         or by Company without Cause. In the event a Participant's employment
         with the Company and its Subsidiaries is terminated by the Company or
         its Subsidiaries without Cause, by the Participant for Good Reason or
         due to the Participant's death, Disability, Retirement, the Participant
         (or the Participant's beneficiary) shall (i) be entitled to the payment
         of any Cash Award previously declared by the Committee that has not yet
         been paid to the Participant, such payment to occur, unless otherwise
         determined by the Committee, at the same time as such payments would
         have been made pursuant to 5(e); (ii) except as otherwise provided in a
         Restricted Stock Agreement, become vested in all shares of Restricted
         Stock that have not yet become vested; and (iii) be entitled to a pro
         rata portion


                                  Page 7 of 8
<PAGE>




   of the Bonus Award for the Performance Period in which such termination of
   employment occurs.

         (H) EFFECT OF HOSTILE CHANGE IN CONTROL. In the event of a Hostile
   Change in Control of the Company, Participants shall immediately following
   the effective date of the Hostile Change in Control be entitled to the
   payment of (i) a pro rata portion of the Bonus Award for the Performance
   Period in which the Hostile Change in Control occurs based on the Company's
   ROE as of such date; (ii) Cash Awards that have not yet been paid for a
   Performance Period ending prior to the effective date of the Hostile Change
   in Control; and (iii) to the extent provided in a Restricted Stock Agreement,
   all shares of Restricted Stock shall become fully vested and nonforfeitable.
   The Committee may, in its discretion, determine that a change in control that
   is not otherwise a Hostile Change in Control, nonetheless invokes the
   provisions of subsections 5(h)(i) through (iii) of this Plan.

6. AMENDMENT AND DISCONTINUANCE. The Committee may amend, and the Board may
suspend or discontinue, this Plan at any time provided that no action of the
Committee shall alter or impair any Bonus Award previously granted under this
Plan without the consent of such affected Participant.

7. PLAN BINDING UPON SUCCESSORS. This Plan shall be binding upon and inure to
the benefit of the Company, its Subsidiaries, and their respective successors
and assigns, and Participants and their respective assigns, personal
representatives, heirs, legatees and beneficiaries.

8. NOT A CONTRACT OF EMPLOYMENT. Nothing in this Plan shall obligate a
Participant to continue to in the employment of the Company or its Subsidiaries,
or require the Company or its Subsidiaries to employ the Participating executive
in any capacity.

9. GOVERNING LAW. This Plan will be governed by, and construed in accordance
with, the laws of the State of Michigan, without regard to its conflict of laws
provisions.

10. COPIES OF PLAN. A copy of this Plan will be delivered to each Participant at
or before the time he or she is designated as a Participant in this Plan.

Date Plan Adopted by Board of Directors: February 13, 2004



                                  Page 8 of 8