SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


[X] Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
Act Of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
[ ] Transition Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange
Act Of 1934
For the transition period from _________________ to ________________

                         COMMISSION FILE NUMBER 1-13154


                      AMERICAN MEDICAL SECURITY GROUP, INC.
             (Exact name of Registrant as specified in its charter)

               WISCONSIN                                 39-1431799
        (State of Incorporation)            (I.R.S. Employer Identification No.)

           3100 AMS BOULEVARD
          GREEN BAY, WISCONSIN                             54313
(Address of principal executive offices)                (Zip Code)


Registrant's telephone number, including area code:  (920) 661-1111



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

           Yes __X__        No _____

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common stock, no par value, outstanding as of April 30, 2001: 14,058,783 shares



<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.

                                      INDEX


PART I.       FINANCIAL INFORMATION

     Item 1.      Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheets
                      March 31, 2001 and December 31, 2000.....................3

                  Condensed Consolidated Statements of Operations
                      Three months ended March 31, 2001 and 2000...............5

                  Condensed Consolidated Statements of Cash Flows
                      Three months ended March 31, 2001 and 2000...............6

                  Notes to Condensed Consolidated Financial Statements
                      March 31, 2001...........................................7

     Item 2.      Management's Discussion and Analysis of Financial Condition
                      and Results of Operations...............................12

     Item 3.      Quantitative and Qualitative Disclosures About Market Risk..16


PART II.      OTHER INFORMATION

     Item 1.      Legal Proceedings...........................................17

     Item 6.      Exhibits and Reports on Form 8-K............................18

     Signatures...............................................................19

     Exhibit Index..........................................................EX-1


                                                                               2
<PAGE>





PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                      AMERICAN MEDICAL SECURITY GROUP, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                     March 31,       December 31,
                                                                                        2001             2000
                                                                                   ---------------------------------
                                                                                            (IN THOUSANDS)
<S>                                                                                 <C>               <C>
ASSETS

Investments:
   Securities available for sale, at fair value:
     Fixed maturities                                                               $    261,136      $    262,428
     Equity securities-preferred                                                           2,278             2,368
   Fixed maturity securities held to maturity, at amortized cost                           4,312             4,320
   Trading securities, at fair value                                                         244               260
                                                                                   ---------------------------------

       Total investments                                                                 267,970           269,376

Cash and cash equivalents                                                                 10,484            15,606

Other assets:
   Property and equipment, net                                                            33,143            32,451
   Goodwill and other intangibles, net                                                   106,655           107,562
   Other assets                                                                           46,265            46,928
                                                                                   ---------------------------------

       Total other assets                                                                186,063           186,941
                                                                                   ---------------------------------

Total assets                                                                        $    464,517      $    471,923
                                                                                   =================================
</TABLE>










            See Notes to Condensed Consolidated Financial Statements
                                                                               3
<PAGE>



                      AMERICAN MEDICAL SECURITY GROUP, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                     March 31,       December 31,
                                                                                        2001             2000
                                                                                   ---------------------------------
                                                                                            (IN THOUSANDS)

<S>                                                                                 <C>               <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Medical and other benefits payable                                               $    133,285      $    145,310
   Advance premiums                                                                       18,013            17,568
   Payables and accrued expenses                                                          34,139            25,902
   Notes payable                                                                          40,958            41,258
   Other liabilities                                                                      19,828            20,708
                                                                                   ---------------------------------

       Total liabilities                                                                 246,223           250,746

Shareholders' equity:
   Common stock (no par value, $1 stated value, 50,000,000 shares authorized,
     16,654,315 issued and 14,084,683 outstanding at March 31, 2001,
     16,654,315 issued and 14,270,945 outstanding at December 31, 2000)                   16,654            16,654
   Paid-in capital                                                                       187,956           187,956
   Retained earnings                                                                      31,155            36,295
   Accumulated other comprehensive loss (net of tax benefit of $301,000
     at March 31, 2001 and $2,126,000 at December 31, 2000)                                 (556)           (3,948)
   Treasury stock (2,569,632 shares at March 31, 2001
     and 2,383,370 shares at December 31, 2000, at cost)                                 (16,915)          (15,780)
                                                                                   ---------------------------------

       Total shareholders' equity                                                        218,294           221,177
                                                                                   ---------------------------------

Total liabilities and shareholders' equity                                          $    464,517      $    471,923
                                                                                   =================================
</TABLE>












            See Notes to Condensed Consolidated Financial Statements
                                                                               4
<PAGE>



                      AMERICAN MEDICAL SECURITY GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                              March 31,
                                                                                   ---------------------------------
                                                                                        2001              2000
                                                                                   ---------------------------------
                                                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                                                 <C>              <C>
Revenues:
   Insurance premiums                                                               $    222,470      $    247,905
   Net investment income                                                                   4,487             4,883
   Other revenue                                                                           5,301             4,889
                                                                                   ---------------------------------
       Total revenues                                                                    232,258           257,677

Expenses:
   Medical and other benefits                                                            166,580           188,063
   Selling, general and administrative                                                    71,411            64,938
   Interest expense                                                                          876               896
   Amortization of goodwill and intangibles                                                  907               946
                                                                                   ---------------------------------
       Total expenses                                                                    239,774           254,843
                                                                                   ---------------------------------

Income (loss) before income taxes                                                         (7,516)            2,834

Income tax expense (benefit)                                                              (2,376)            1,175
                                                                                   ---------------------------------

Net income (loss)                                                                   $     (5,140)     $      1,659
                                                                                   =================================


Net income (loss) per common share:
   Basic                                                                            $      (0.36)     $       0.11
   Diluted                                                                          $      (0.36)     $       0.11
</TABLE>












            See Notes to Condensed Consolidated Financial Statements
                                                                               5
<PAGE>



                      AMERICAN MEDICAL SECURITY GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Three Months Ended
                                                                                              March 31,
                                                                                   ---------------------------------
                                                                                        2001              2000
                                                                                   ---------------------------------
                                                                                            (IN THOUSANDS)
<S>                                                                                 <C>               <C>
OPERATING ACTIVITIES:
Net income (loss)                                                                   $     (5,140)     $      1,659
Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
     Depreciation and amortization                                                         2,427             2,371
     Net realized investment losses                                                           27                 -
     Decrease in trading securities                                                           16                 -
     Deferred income tax expense (benefit)                                                (2,571)            1,226
     Changes in operating accounts:
       Other assets                                                                        1,408             9,414
       Medical and other benefits payable                                                (12,025)          (18,605)
       Advance premiums                                                                      445             5,558
       Payables and accrued expenses                                                       8,237               202
       Other liabilities                                                                    (880)           (7,337)
                                                                                   ---------------------------------
         Net cash used in operating activities                                            (8,056)           (5,512)


INVESTING ACTIVITIES:
Purchases of available for sale securities                                               (40,470)          (13,274)
Proceeds from sale of available for sale securities                                       43,679             2,041
Proceeds from maturity of available for sale securities                                    3,050               150
Proceeds from maturity of held to maturity securities                                          -               630
Purchases of property and equipment                                                       (1,891)           (2,580)
Proceeds from sale of property and equipment                                                   -                 7
                                                                                   ---------------------------------
         Net cash provided by (used in) investing activities                               4,368           (13,026)


FINANCING ACTIVITIES:
Issuance of common stock                                                                       -                 4
Purchase of treasury stock                                                                (1,134)             (702)
Borrowings under line of credit agreement                                                      -            35,158
Repayment on line of credit agreement                                                          -           (35,158)
Repayment of notes payable                                                                  (300)             (365)
                                                                                   ---------------------------------
         Net cash used in financing activities                                            (1,434)           (1,063)
                                                                                   ---------------------------------

Cash and cash equivalents:
   Net decrease                                                                           (5,122)          (19,601)
   Balance at beginning of year                                                           15,606            17,266
                                                                                   ---------------------------------
Balance at end of period                                                            $     10,484      $     (2,335)
                                                                                   =================================
</TABLE>

            See Notes to Condensed Consolidated Financial Statements

                                                                               6
<PAGE>






                      AMERICAN MEDICAL SECURITY GROUP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


                                 March 31, 2001


NOTE A. BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments  (consisting of normal recurring  adjustments)  considered necessary
for a fair  presentation  have been  included.  Operating  results for the three
month periods ended March 31, 2001 are not necessarily indicative of the results
that may be expected  for the year ending  December 31,  2001.  These  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated financial statements and footnotes thereto included in the American
Medical  Security Group,  Inc.  ("AMSG" or the "Company")  annual report on Form
10-K for the year ended December 31, 2000.


NOTE B. EARNINGS (LOSS) PER COMMON SHARE

     Basic earnings  (loss) per common share are computed by dividing net income
(loss) by the weighted  average  number of common  shares  outstanding.  Diluted
earnings  (loss) per common share are computed by dividing net income  (loss) by
the  weighted  average  number of common  shares  outstanding,  adjusted for the
effect of dilutive employee stock options.

     The following  table  provides a  reconciliation  of the number of weighted
average basic and diluted shares outstanding:

<TABLE>
<CAPTION>
                                                                                  Three Months Ended
                                                                                      March 31,
                                                                           ---------------------------------
                                                                                2001              2000
                                                                           ---------------------------------

         <S>                                                                  <C>               <C>
         Weighted average common shares outstanding - basic                   14,210,643        15,504,879

         Effect of dilutive stock options                                              -            68,026
                                                                           ---------------------------------

         Weighted average common shares outstanding - diluted                 14,210,643        15,572,905
                                                                           =================================
</TABLE>

     The effect of dilutive  securities  was excluded from the diluted  earnings
(loss) per common  share  computation  for the three months ended March 31, 2001
because the Company had a net loss in this  period,  therefore  their  inclusion
would have been  antidilutive.  Certain  options  to  purchase  shares  were not
included in the computation of diluted  earnings (loss) per common share because
the options'  exercise  prices were greater than the average market price of the
outstanding common shares for the period.

                                                                               7
<PAGE>


NOTE C. COMPREHENSIVE INCOME (LOSS)

     Comprehensive  income  (loss) is defined as net income (loss) plus or minus
other  comprehensive  income  (loss),  which  for the  Company,  under  existing
accounting  standards,  includes  unrealized gains and losses, net of income tax
effects,  on certain  investments in debt and equity  securities.  Comprehensive
income (loss) for the Company is calculated as follows:

<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                March 31,
                                                                     --------------------------------
                                                                          2001             2000
                                                                     --------------------------------
                                                                             (IN THOUSANDS
         <S>                                                          <C>              <C>
         Net income (loss)                                            $     (5,140)    $      1,659

         Unrealized gain on available for sale securities                    3,392              318
                                                                     --------------------------------

         Comprehensive income (loss)                                  $     (1,748)    $      1,977
                                                                     ================================
</TABLE>

NOTE D. CREDIT AGREEMENT

     At March 31, 2001,  the Company  maintained a revolving bank line of credit
agreement ("Credit  Agreement") with a maximum commitment of $40.0 million and a
$10.0 million  sublimit for swingline  loans. At March 31, 2001, the outstanding
balance of advances  under the Credit  Agreement was $35.2  million.  The Credit
Agreement contains customary  covenants which, among other matters,  require the
Company to achieve minimum  financial results and restrict the Company's ability
to incur  additional  debt,  pay future  cash  dividends  and  dispose of assets
outside the ordinary  course of business.  The Credit  Agreement  was amended in
January  2001 and April 2001 to revise the  minimum  financial  requirements  of
certain  covenants.   The  April  2001  amendment  also  revised  the  Company's
applicable  interest  rate on  outstanding  loans and  revised  the  schedule of
mandatory  future  commitment  reductions  including a $4.8  million  commitment
reduction on April 27, 2001. Revised future annual principal amounts due for all
of the  Company's  debt as of March 31,  2001 are $0.9  million  for 2001,  $6.2
million for 2002,  $11.2  million for 2003,  $12.5  million for 2004,  and $10.2
million for 2005.

NOTE E. CONTINGENCIES

     On August 26, 1999, a $6.9 million  verdict was entered against the Company
in a  lawsuit  filed by  Skilstaf,  Inc.  which  principally  alleged  breach of
contract involving the timing of claims payments. On April 17, 2000, the Company
filed its notice of appeal of this  decision with the Eleventh  Circuit  Federal
Appeals  Court.  Based upon the nature of the case and  consultation  with legal
counsel,  management  had expected  the verdict to be reversed or  substantially
reduced following  appeal.  Consequently,  the Company initially  established an
immaterial accrual for this case reflecting potential  contractual damages only.
However,  on March 12, 2001, the Company received an adverse decision  affirming
the jury  verdict.  On May 4,  2001,  the  Eleventh  Circuit  Court  denied  the
Company's petition for a rehearing by the full court of appeals.  The Company is
preparing its appeal to the United States  Supreme  Court.  Management  believes
strongly in its position,  however,  given the current  status of the case,  the
Company  recognized  an  additional  accrual  during  the first  quarter of 2001
representing  the full  potential  loss  including  punitive  damages  and other
expenses.


     On February 7, 2000, a $5.4 million verdict was entered against the Company
in a lawsuit filed by Health Administrators, Inc., an insurance agency owned and
operated by a former  agent of the  Company,  which  alleged  breach of contract
involving  commission  amounts due to such agent. On April 18, 2000, the Company
filed a notice of appeal with an Ohio Appeals Court  requesting  reversal of the
decision.  On March 29, 2001, the Court of Appeals rendered a decision remanding
certain  agent  contract  issues  related to $2.4 million in damages back to the
lower court for further consideration. The Court of Appeals decision upheld $3.0
million awarded by the lower court in regard to a commission contract. On May 2,
2001,  the Company  filed an appeal with the Ohio

                                                                               8

<PAGE>

Supreme  Court  appealing the decision of the Appeals Court with respect to that
portion of the lower court's decision upheld by the Court of Appeals.

     The  Company is  involved in various  other  legal and  regulatory  matters
occurring in the normal course of its business.  The Company's financial results
for the three  months  ended  March 31,  2001  reflect a pre-tax  charge of $9.0
million ($5.9 million after-tax) to cover estimated potential losses and related
expenses  for legal  related  matters.  In the opinion of  management,  adequate
provision  has been made for losses  which may result from legal and  regulatory
actions;  accordingly,  the outcome of these  matters is not  expected to have a
material adverse effect on the consolidated financial statements.

NOTE F. SEGMENT INFORMATION

     The Company has two reportable segments: 1) health insurance products,  and
2) life insurance  products.  The Company's health insurance products consist of
the following  coverages related to small group preferred provider  organization
products:  MedOne (for  individuals and families) and small group medical,  self
funded  medical,  dental  and  short-term  disability.   Life  products  consist
primarily  of group  term-life  insurance.  The  "All  Other"  segment  includes
operations  not  directly  related  to the  business  segments  and  unallocated
corporate  items  (i.e.,  corporate  investment  income,   interest  expense  on
corporate  debt,  amortization  of  goodwill  and  intangibles  and  unallocated
overhead  expenses).  The Company's All Other segment also includes data for its
health maintenance organization ("HMO") subsidiary.  The reportable segments are
managed separately because they differ in the nature of the products offered and
in profit margins.

     The Company  evaluates  segment  performance based on profit or loss before
income  taxes,  not  including  gains  and  losses on the  Company's  investment
portfolio.  The accounting  policies of the reportable  segments are the same as
those  used  to  report  the  Company's   consolidated   financial   statements.
Intercompany  transactions  have been eliminated  prior to reporting  reportable
segment information.

     A   reconciliation   of  segment  income  (loss)  before  income  taxes  to
consolidated income (loss) before income taxes is as follows:


<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                March 31,
                                                                     --------------------------------
                                                                          2001             2000
                                                                     --------------------------------
                                                                             (IN THOUSANDS)
         <S>                                                          <C>              <C>
         Health segment                                               $     (8,506)    $        716
         Life segment                                                        1,750            2,240
         All other                                                            (760)            (122)
                                                                     --------------------------------
            Income (loss) before income taxes                         $     (7,516)    $      2,834
                                                                     ================================
</TABLE>

                                                                               9
<PAGE>


     Operating results and statistics for each of the Company's  segments are as
follows:

<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                March 31,
                                                                     --------------------------------
                                                                          2001             2000
                                                                     --------------------------------
                                                                             (IN THOUSANDS)
         <S>                                                         <C>               <C>
         HEALTH SEGMENT

         OPERATING RESULTS

         Revenues:
            Insurance premiums                                       $     216,974     $    232,954
            Net investment income                                            2,450            2,545
            Other revenue                                                    4,230            3,963
                                                                     --------------------------------
              Total revenues                                               223,654          239,462

         Expenses:
            Medical and other benefits                                     164,197          178,505
            Selling, general and administrative                             67,963           60,241
                                                                     --------------------------------
              Total expenses                                               232,160          238,746
                                                                     --------------------------------

         Income (loss) before income taxes                            $     (8,506)    $        716
                                                                     ================================

         FINANCIAL STATISTICS

         Loss ratio                                                          75.7%            76.6%
         Expense ratio                                                       29.4%            24.2%
                                                                     --------------------------------
            Combined ratio                                                  105.1%           100.8%
                                                                     ================================


         Membership at End of Period:
         Health:
            Fully insured medical                                          424,632          520,710
            Self funded medical                                             49,260           49,810
            Stand-alone dental                                             178,283          188,565
                                                                     --------------------------------
              Total health                                                 652,175          759,085
</TABLE>
     (a)  Total  health  membership  for the  Company of 652,683  and 776,639 at
          March 31, 2001 and 2000  includes  HMO  membership  of 508 and 17,554,
          respectively.  HMO  operations  are not  included  in  health  segment
          operating results.

                                                                              10
<PAGE>



<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                March 31,
                                                                     --------------------------------
                                                                          2001             2000
                                                                     --------------------------------
                                                                             (IN THOUSANDS)
         <S>                                                          <C>              <C>
         LIFE SEGMENT

         OPERATING RESULTS

         REVENUES:
            Insurance premiums                                        $      4,963     $      6,072
            Net investment income                                              174              159
            Other revenue                                                       42               56
                                                                     --------------------------------
              Total revenues                                                 5,179            6,287

         Expenses:
            Medical and other benefits                                       1,992            2,290
            Selling, general and administrative                              1,437            1,757
                                                                     --------------------------------
              Total expenses                                                 3,429            4,047
                                                                     --------------------------------

         Income before income taxes                                   $      1,750     $      2,240
                                                                     ================================

         FINANCIAL STATISTICS

         Loss ratio                                                          40.1%            37.7%
         Expense ratio                                                       28.1%            28.0%
                                                                     --------------------------------
            Combined ratio                                                   68.2%            65.7%
                                                                     ================================


         Membership at End of Period                                       230,426          280,893
</TABLE>

                                                                              11
<PAGE>

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


OVERVIEW

     American  Medical  Security  Group,  Inc.,  together  with  its  subsidiary
companies  ("AMSG" or the "Company"),  is a provider of health care benefits and
insurance  products for  individuals  and small employer  groups.  The Company's
principal  product  offerings are (1) health insurance for small employer groups
and (2) health  insurance for individuals and families  ("MedOne").  The Company
also offers life,  dental,  prescription  drug,  disability and accidental death
insurance,  and provides  stop-loss  reinsurance and benefit  administration for
self funded employer groups.  The Company's products are actively marketed in 32
states and the District of Columbia through  independent  agents.  The Company's
products generally provide discounts to insureds that utilize preferred provider
organizations  ("PPOs").  AMSG  owns  a  preferred  provider  network  and  also
contracts  with other networks to ensure  cost-effective  health care choices to
its customers.

RESULTS OF OPERATIONS

     The Company  reported a net loss of $5.1 million or $0.36 per share for the
first quarter of 2001. The first quarter results reflect an after-tax  charge of
$5.9 million or $0.41 per share in response to an adverse  decision  rendered by
the Eleventh  Circuit  Federal Court of Appeals in a lawsuit brought against the
Company.  See "Part II., Item 1. Legal Proceedings" for a detailed discussion of
the case.

     Excluding the  non-recurring  charge,  income for the first quarter of 2001
was $710,000 or $0.05 per share.  This compares to net income of $1.7 million or
$0.11 per share  reported for the first quarter of the prior year.  The decrease
in income from the first quarter of the prior year  primarily  reflects a higher
selling,  general and adminstrative  expense ratio from higher agent commissions
and issue  costs  resulting  from the  company's  change in product  mix,  lower
premium  revenues,   and  lower  investment  income,   partially  offset  by  an
improvement in the health loss ratio.

     INSURANCE PREMIUMS AND MEMBERSHIP

     Insurance  premiums  for the three  months  ended March 31, 2001  decreased
10.2%  to  $222.5  million  from  $247.9  million  for the same  period  in 2000
primarily as a result of a decline in  membership in select  unprofitable  small
group and exited  markets,  partially  offset by rising  MedOne  membership  and
rising premium rates on the continuing block of business.  Average fully insured
medical  premium per member per month for the first quarter of 2001 increased by
11.5% to $146,  compared to the first  quarter of 2000,  reflecting  significant
rate actions taken by the Company.  Insurance  premiums for the Company's MedOne
product  increased  30.0% from the first  quarter of the prior year.  Management
considers the MedOne product to be a key strategic product and continues to take
steps to  accelerate  membership  and premium  growth in this market  through an
expanded  agent  force  and  additional   regional  and  national   distribution
agreements.

     Total medical and dental membership  declined from 776,639 members at March
31, 2000 to 652,683  members at March 31,  2001.  The  membership  decrease is a
result  of  (1)  the  Company's  success  in  terminating  business  in  several
unprofitable  markets,   including  exited  markets,  (2)  lower  sales  due  to
aggressive  premium  rate  increases  and (3) the  run-off of the block of group
health business  acquired on January 1, 1999 from Continental  Assurance Company
("CNA").  Based on the most recent sales  projections and the rate of membership
terminations,   management   anticipates   membership  to  continue  to  decline
approximately 10% during the remainder of 2001 and insurance premiums to decline
by 5% to 10%.

                                                                              12
<PAGE>


     NET INVESTMENT INCOME

     Net investment  income  includes  investment  income and realized gains and
losses on  investments.  Investment  gains and losses are realized in the normal
investment  process in response to market  opportunities.  Net investment income
for the three  months  ended March 31, 2001  decreased to $4.5 million from $4.9
million  for the  three  months  ended  March  31,  2000.  The  decrease  in net
investment  income is due  primarily to a decrease in average  invested  assets.
Average  invested  assets at cost were $272.1 million for the three months ended
March 31, 2001. In comparison,  average  invested assets were $297.4 million for
the same period one year prior.

     OTHER REVENUE

     Other revenue,  which primarily  consists of administrative fee income from
claims processing and other administrative  services,  increased to $5.3 million
for the quarter  compared to $4.9  million  for the first  quarter of 2000.  The
increase from the prior year is primarily due to an increase in fees charged for
administrative services.

     LOSS RATIO

     The health loss ratio for the first  quarter of 2001 was 75.7%  compared to
76.6% for the first  quarter of 2000.  The  significant  improvement  was due to
management's  actions and  strategies  to increase  premiums and manage  medical
inflation.  These actions included  premium rate increases,  claims cost control
initiatives and the exit from unprofitable small group markets.  The improvement
also reflects  increased sales of MedOne products,  which are priced for a lower
loss ratio due to its increased  deductibles  and  copayments.  As  anticipated,
claim costs have  increased  slightly,  but were more than  offset by  increased
premiums.  Management  believes its pricing  strategies  will  maintain  premium
increases  ahead of expected claim costs which should  further  improve the loss
ratio during 2001.

     The life  segment  loss ratio for the three months ended March 31, 2001 was
40.1%  compared to 37.7% for the three months ended March 31, 2000. The increase
in the life segment loss ratio was due to an unexpected  increase in life claims
experience during the period.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSE RATIO

     The selling,  general and  administrative  ("SG&A")  expense ratio includes
commissions and selling expenses, administrative expenses, and premium taxes and
assessments.  Excluding the non-recurring legal accrual,  the SG&A expense ratio
for health segment products for the three months ended March 31, 2001 was 25.2%.
This compares to 24.2%  reported for the three months ended March 31, 2000.  The
increase is due to higher agent  commissions  and issue costs resulting from the
Company's change in product mix and the effects of lower premium volume.

FUTURE EXPECTATIONS

     Management  continues  to take  actions  to improve  profitability  through
aggressive pricing,  product redesign,  new product  introduction,  and targeted
focus on  profitable  markets and  products.  Management  expects the  Company's
profitability to improve during 2001 as a result of the continued implementation
of management's  strategic plan. Based on current revenue and cost  projections,
management  expects second quarter earnings to be  approximately  $0.06 to $0.08
per share. For the full year 2001, management anticipates earnings between $0.35
and $0.45  per  share,  excluding  the  non-recurring  charge.  See  "Cautionary
Factors"  below for a detailed  discussion of risks and  uncertainties  that may
cause actual results to differ materially from management's expectations.

                                                                              13
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     The Company's sources of cash flow consist primarily of insurance premiums,
administrative  fee  revenue and  investment  income.  The primary  uses of cash
include  payment of medical and other  benefits,  SG&A expenses and debt service
costs.  Positive cash flows are invested pending future payments of benefits and
other  operating  expenses.  The Company's  investment  policies are designed to
maximize yield,  preserve  principal and provide  liquidity to meet  anticipated
payment obligations.

     The Company's cash used in operations was $8.1 million for the three months
ended March 31, 2001.  This  compares to cash used in operations of $5.5 million
for the three  months  ended  March 31,  2000.  The  decrease  in cash  flows is
primarily  the result of a reduction in the claims  backlog  during the quarter,
along with faster claim  submission  and payment  patterns,  and lower new sales
volume. Management expects cash flow from operations to be positive for the year
2001.

     The Company's  investment  portfolio consists primarily of investment grade
bonds and has limited exposure to equity  securities.  At March 31, 2001, $265.4
million or 99.1% of the Company's investment portfolio was invested in bonds. At
December 31, 2000, $267.0 million or 99.1% of the Company's investment portfolio
was invested in bonds.  The bond portfolio had an average  quality rating of Aa3
at March 31,  2001 and  December  31,  2000,  as  measured  by Moody's  Investor
Service.  The majority of the bond  portfolio  was  classified  as available for
sale.  The Company has no  investment  in mortgage  loans,  non-publicly  traded
securities  (except for principal  only strips of U.S.  Government  securities),
real estate held for investment or financial derivatives.

     The Company's insurance subsidiaries operate in states that require certain
levels of  regulatory  capital and surplus and may  restrict  dividends to their
parent companies. Based upon the financial statements of the Company's insurance
subsidiaries as of December 31, 2000, as filed with the insurance regulators, no
dividends may be paid by these  subsidiaries  without prior regulatory  approval
prior to December  2001, at which time the aggregate  amount  available  without
regulatory approval is $7.3 million.

     The National Association of Insurance  Commissioners has adopted risk-based
capital ("RBC")  standards for health and life insurers designed to evaluate the
adequacy of statutory  capital and surplus in relation to various business risks
faced by such insurers. The RBC formula is used by state insurance regulators as
an early  warning tool to identify  insurance  companies  that  potentially  are
inadequately  capitalized.   At  December  31,  2000,  the  Company's  principal
insurance company  subsidiaries had RBC ratios that were substantially above the
levels which would require regulatory action.

     During 2000, the Company's Board of Directors authorized an increase to the
Company's share repurchase  program to a maximum  allowable  repurchase of $18.0
million.  The Company purchased  186,262 shares of its outstanding  common stock
during the first  quarter of 2001,  bringing the total  purchased to 2.6 million
shares at an aggregate purchase price of $16.9 million.

     In determining  when and whether to purchase  future shares under the stock
repurchase  program,  management  considers  market price,  the number of shares
actively  traded in the market,  indications of seller  interest,  the number of
shares held by large shareholders,  the effect of purchases on shareholder value
and other relevant factors. Because of the unpredictability of these factors, no
assurance can be given as to how many, if any,  shares may be repurchased in the
future.

     At March 31, 2001,  the Company  maintained a revolving bank line of credit
agreement ("Credit  Agreement") with a maximum commitment of $40.0 million and a
$10.0 million  sublimit for swingline  loans. At March 31, 2001, the outstanding
balance of advances  under the Credit  Agreement was $35.2  million.  The Credit
Agreement contains customary  covenants which, among other matters,  require the
Company to achieve minimum  financial results and restrict the Company's ability
to incur  additional  debt,  pay future  cash  dividends  and  dispose of assets
outside the ordinary  course of business.  The Credit  Agreement  was amended in
January  2001 and April 2001 to revise the  minimum  financial  requirements  of
certain  covenants.   The  April  2001  amendment  also  revised  the  Company's
applicable  interest  rate on  outstanding  loans and  revised  the  schedule of
mandatory future


                                                                              14
<PAGE>
commitment reductions including a $4.8 million commitment reduction on April 27,
2001.  Revised future annual principal amounts due for all of the Company's debt
as of March 31, 2001 are $0.9  million for 2001,  $6.2  million for 2002,  $11.2
million for 2003, $12.5 million for 2004, and $10.2 million for 2005.

CAUTIONARY FACTORS

     This report and other documents or oral presentations prepared or delivered
by and on  behalf  of  the  Company  contain  or  may  contain  "forward-looking
statements"  within the  meaning  of the safe  harbor  provisions  of the United
States  Private  Securities  Litigation  Reform  Act  of  1995.  Forward-looking
statements are statements based upon management's  expectations at the time such
statements are made and are subject to risks and uncertainties  that could cause
the Company's actual results to differ materially from those contemplated in the
statements.   Readers  are  cautioned  not  to  place  undue   reliance  on  the
forward-looking   statements.   When   used  in   written   documents   or  oral
presentations,   the  terms  "anticipate,"   "believe,"   "estimate,"  "expect,"
"objective," "plan," "possible,"  "potential," "project" and similar expressions
are  intended  to  identify  forward-looking  statements.  In  addition  to  the
assumptions  and other factors  referred to specifically in connection with such
statements,  factors  that could cause the  Company's  actual  results to differ
materially from those contemplated in any  forward-looking  statements  include,
among others, the following:

-    Increasing  health care costs  resulting from the aging of the  population,
     advances in medical technology,  increased  utilization of medical services
     and drugs, health care inflation (particularly technology-driven procedures
     and pharmacy  costs),  possible  epidemics and natural  disasters and other
     factors  affecting the delivery and cost of health care that are beyond the
     Company's control.

-    The  Company's  ability to  profitably  distribute  and sell its  products,
     including,  changes in business  relationships  with independent agents who
     sell the Company's products,  the Company's ability to retain key producing
     sales agents, the Company's ability to expand its distribution  network for
     MedOne  products,  competitive  factors such as the entrance of  additional
     competitors into the Company's markets,  competitive pricing practices, the
     Company's ability to sell new products and retain existing  customers,  and
     the  Company's  ability  to  predict  future  health  care cost  trends and
     adequately price its products.

-    Federal  and state  health  care  reform  laws  adopted  in  recent  years,
     currently  proposed (such as the "Patients' Bill of Rights") or that may be
     proposed  in  the  future,   which  affect  or  may  affect  the  Company's
     operations,  products,  profitability  or business  prospects.  Reform laws
     adopted in recent years  generally limit the ability of insurers and health
     plans to use risk  selection  as a method  of  controlling  costs for small
     group business.

-    Regulatory  factors,  including  delays  in  regulatory  approvals  of rate
     increases and policy forms; regulatory action resulting from market conduct
     activity and general administrative compliance with state and federal laws;
     restrictions on the ability of the Company's subsidiaries to transfer funds
     to the  Company or its other  subsidiaries  in the form of cash  dividends,
     loans or advances without prior approval or notification;  the granting and
     revoking  of  licenses  to  transact  business;  the  amount  and  type  of
     investments  that  the  Company  may  hold;  minimum  reserve  and  surplus
     requirements; and risk-based capital requirements.

-    Factors related to the Company's  efforts to deal with adverse medical loss
     ratio in its  small  group  health  business  (which  include  implementing
     significant rate increases,  terminating business in unprofitable  markets,
     and  introducing   redesigned  products),   including  the  willingness  of
     employers and individuals to accept rate increases,  premium  repricing and
     redesigned products.

-    The development of and changes in claims reserves,  particularly for highly
     regulated  markets and exited  markets  where  insureds  may be inclined to
     increase utilization prior to termination of their policies.

-    The  effectiveness of the Company's  strategy to expand sales of its MedOne
     products  for  individuals  and  families,  to focus its small group health
     product sales in core markets and to grow its ancillary products, including
     its life, dental and self-funded benefit administration business.

                                                                              15
<PAGE>
-    The  cost  and  other  effects  of legal  and  administrative  proceedings,
     including the expense of investigating,  litigating and settling any claims
     against the  Company,  and the general  increase  in  litigation  involving
     managed care and medical insurers.

-    Adverse outcomes of litigation against the Company.

-    Possible  restrictions  on cash  flow  resulting  from a  denial  by  state
     regulators of the payment of dividends by the Company's  insurance  company
     subsidiaries.

-    Restrictions  imposed by financing  arrangements  that limit the  Company's
     ability to incur  additional  debt,  pay future cash dividends and transfer
     assets.

-    Changes in rating  agency  policies  and  practices  and the ability of the
     Company's insurance subsidiaries to maintain or exceed their A- (Excellent)
     rating by A.M. Best.

-    General  economic  conditions,  including  changes  in  interest  rates and
     inflation  that may  impact the  performance  on the  Company's  investment
     portfolio  or  decisions  of  individuals  and  employers  to purchase  the
     Company's products.

-    The Company's ability to maintain  attractive  preferred  provider networks
     for its insureds.

-    The Company's ability to integrate effectively the operational,  managerial
     and financial aspects of future acquisitions.

-    Factors  affecting the Company's  ability to hire and retain key executive,
     managerial and technical employees.

-    Other business or investment considerations that may be disclosed from time
     to time in the  Company's  Securities & Exchange  Commission  filings or in
     other publicly disseminated written documents.

     The Company  undertakes  no  obligation  to  publicly  update or revise any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's market risk has not substantially changed from the year ended
December 31, 2000.

                                                                              16
<PAGE>


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On August 26,  1999, a $6.9 million  verdict was entered  against  American
Medical  Security,  Inc. ("AMS Inc."),  the Company's third party  administrator
("TPA") subsidiary,  in the United States District Court for the Middle District
of  Alabama.  The  decision  was made in a lawsuit  brought  against AMS Inc. by
Skilstaf,  Inc.  ("Skilstaf"),  an Alabama employee leasing company,  in January
1998  alleging  that AMS Inc.  delayed  claims  payments  under a contract  with
Skilstaf.  Skilstaf sought unspecified damages. The contract,  which was entered
into in 1992  and  terminated  by  Skilstaf  in  1996,  was a TPA  contract  for
Skilstaf's self funded employee benefit plan. AMS Inc. has argued that this case
is governed by the Employee  Retirement Income Security Act of 1974, as amended,
which  preempts  all state law causes of action and limits  damages to  contract
damages. AMS Inc.'s post-trial motion to set aside the jury's finding was denied
by the court on March 20, 2000. As a result,  AMS Inc.  filed a notice of appeal
with the Eleventh  Circuit Federal Appeals Court on April 17, 2000. On March 12,
2001, the Company received the Court of Appeal's decision,  rendered on March 9,
2001,  affirming the decision of the District Court. On March 30, 2001, AMS Inc.
filed a petition  with the Court of Appeals for a rehearing by the full Court of
Appeals,  which was denied on May 4, 2001.  The Company is preparing to petition
the United States Supreme Court for a writ of certiorari and intends to continue
its strenuous appeal of this decision.

     On February 7, 2000,  a $5.4 million  verdict was entered  against AMS Inc.
and UWLIC in the Common Pleas Court of Delaware County, Ohio, Civil Division, in
a lawsuit brought against AMS Inc. and UWLIC in 1996 by Health Administrators of
America, Inc. ("Health Administrators"),  an insurance agency owned and operated
by a former  agent of AMS Inc.  The lawsuit  alleges  breach of written and oral
contracts involving commission amounts and fraud. The case was heard and decided
by a magistrate who awarded damages to Health Administrators, based on breach of
written  commission and agent contracts and ruled in favor of AMS Inc. and UWLIC
on breach of oral contracts and fraud.  On February 22, 2000, AMS Inc. and UWLIC
filed  objections with the Common Pleas Court  requesting that the  magistrate's
decision against AMS Inc. and UWLIC be reversed. The Common Pleas Court approved
the  magistrate's  decision on April 10, 2000.  As a result,  AMS Inc. and UWLIC
filed a notice of appeal with the Court of Appeals, Delaware County, Ohio, Fifth
Appellate District on April 18, 2000. Health Administrators filed a cross-appeal
on July 10, 2000.  Oral  arguments  were heard on October 5, 2000.  On March 29,
2001, the Court of Appeals rendered a decision  remanding certain agent contract
issues  related to $2.4  million in damages  back to the lower court for further
consideration.  The Court of Appeals decision upheld $3.0 million awarded by the
lower court in regard to a commission  contract.  On May 2, 2001,  AMS and UWLIC
filed an appeal  with the  Supreme  Court for the  State of Ohio  appealing  the
decision  of the Court of  Appeals  with  respect  to that  portion of the lower
court's decision upheld by the Court of Appeals.

     The Company is involved in various legal and regulatory  actions  occurring
in the normal course of its  business.  In the opinion of  management,  adequate
provision  has  been  made  for  losses  which  may  result  from  the  Skilstaf
litigation,  the Health Administrators litigation and other legal and regulatory
actions;  accordingly,  the outcome of these  matters is not  expected to have a
material adverse effect on the consolidated financial statements.

                                                                              17
<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) EXHIBITS

     See the Exhibit Index following the Signature page of this report, which is
incorporated herein by reference.

     (b) REPORTS ON FORM 8-K

     A Form 8-K dated  February 21,  2001,  was filed by the Company to disclose
under Item 9, Regulation FD Disclosure, a financial presentation included on the
Company's website.

The Company also filed a Form 8-K dated March 12, 2001,  to report under Item 5,
Other Events, the Company's announcement to take a nonrecurring charge resulting
from an adverse decision in the Skilstaf litigation.


                                                                              18
<PAGE>


SIGNATURES


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


DATE:  MAY 14, 2001


                       AMERICAN MEDICAL SECURITY GROUP, INC.


                       /s/  Gary D. Guengerich
                       Gary D. Guengerich
                       Executive Vice President and Chief Financial Officer
                       (Principal Financial Officer and Chief Accounting Officer
                       and duly authorized to sign on behalf of the Registrant)



                                                                              19
<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.
                          (COMMISSION FILE NO. 1-13154)

                                  EXHIBIT INDEX
                                       TO
                           FORM 10-Q QUARTERLY REPORT
                        for quarter ended March 31, 2001


<TABLE>
<CAPTION>
                                                              INCORPORATED HEREIN                     FILED
EXHIBIT NO.       DESCRIPTION                                 BY REFERENCE TO                         HEREWITH

<S>               <C>                                                                                        <C>
4                 Fourth  Amendment  dated as of  April  27,                                                 X
                  2001  to  Credit  Agreement  dated  as  of
                  March  24,  2000  among  the   Registrant,
                  LaSalle  Bank  National   Association  and
                  other Lenders
</TABLE>




                                                                            EX-1