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 SEPTEMBER 30, 1998
                                       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)

                                 (920) 661-1500
              (Registrant's telephone number, including area code)


                         United Wisconsin Services, Inc.
            401 West Michigan Street, Milwaukee, Wisconsin 53203-2896
                        (Former name and former address)


Indicate  by check  mark  whether  registrant  (1) has filed all  documents  and
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 October 31, 1998:
                               16,573,408 shares


<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.

                                      INDEX


PART I.     FINANCIAL INFORMATION

       Item 1.   Financial Statements

                 Condensed consolidated balance sheets--September 30, 1998 
                   and December 31, 1997.......................................3
                 Condensed consolidated statements of income--Three months 
                   ended September 30, 1998 and 1997; Nine months ended 
                   September 30, 1998 and 1997.................................5
                 Condensed consolidated statements of cash flows--Nine months 
                   ended September 30, 1998 and 1997...........................6
                 Notes to condensed consolidated financial statements--
                   September 30, 1998..........................................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...17


PART II.      OTHER INFORMATION

       Item 1.   Legal Proceedings............................................18

       Item 2.   Changes in Securities and Use of Proceeds....................18

       Item 3.   Defaults upon Senior Securities..............................18

       Item 4.   Submission of Matters to a Vote Security Holders.............18

       Item 5.   Other Information............................................18

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

       Signatures.............................................................20

 

                                                                               2
<PAGE>


PART I.       FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

<TABLE>

                                       AMERICAN MEDICAL SECURITY GROUP, INC.

                                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                                    (Unaudited)

<CAPTION>

                                                                          September 30, 1998     December 31, 1997
                                                                          ------------------------------------------
                                                                                       (000'S OMITTED)
<S>                                                                       <C>                    <C>   
ASSETS

Investments:
   Securities available for sale, at fair value:
       Fixed maturities                                                         $282,576               $266,976
       Equity securities--common                                                  15,014                      -
       Equity securities--preferred                                                2,469                    787
   Fixed maturity securities held to maturity, at amortized cost                   3,532                  3,804
                                                                          -----------------------------------------
                Total Investments                                                303,591                271,567

   Cash and Cash Equivalents                                                       8,532                 45,291

Other Assets:
   Property and equipment, net                                                    35,913                 37,169
   Goodwill and other intangibles, net                                           131,069                137,796
   Other assets                                                                   23,183                 32,697
                                                                          -----------------------------------------
                Total Other Assets                                               190,165                207,662

Net Assets of Discontinued Operations                                                  -                123,616
                                                                          -----------------------------------------
Total Assets                                                                    $502,288               $648,136
                                                                          =========================================



                             See notes to condensed consolidated financial statements
</TABLE>


                                                                               3
<PAGE>

<TABLE>

                                       AMERICAN MEDICAL SECURITY GROUP, INC.

                                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                                    (Unaudited)

<CAPTION>

                                                                          September 30, 1998       December 31, 1997
                                                                          ------------------------------------------
                                                                                       (000'S OMITTED)
<S>                                                                       <C>                    <C>     
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Medical and other benefits payable                                           $108,630               $126,882
   Advance premiums                                                               18,004                 19,986
   Payables and accrued expenses                                                  21,458                 28,930
   Notes payable                                                                  55,834                124,578
   Other liabilities                                                              22,610                 21,383
                                                                          ------------------------------------------
              Total Liabilities                                                  226,536                321,759

Redeemable preferred stock - Series A adjustable rate nonconvertible,
   $1,000 stated value, 25,000 shares authorized                                       -                      -

Shareholders' Equity:
   Preferred stock (no par value, 475,000 shares authorized)                           -                      -
   Common stock (no par value, $1 stated value, 50,000,000 shares
     authorized,  16,573,202 and 16,509,578 issued and outstanding
     at September 30, 1998 and December 31, 1997, respectively)                   16,573                 16,510
   Paid-in capital                                                               188,650                186,768
   Retained earnings                                                              66,181                117,331
   Unrealized gains on available for sale securities                               4,348                  5,768
                                                                          ------------------------------------------
              Total Shareholders' Equity                                         275,752                326,377
                                                                          ------------------------------------------
Total Liabilities and Shareholders' Equity                                      $502,288               $648,136
                                                                          ==========================================




                             See  notes  to  condensed   consolidated  financial statements.
</TABLE>


                                                                               4
<PAGE>

<TABLE>

                                       AMERICAN MEDICAL SECURITY GROUP, INC.

                                      CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                      (Unaudited)

<CAPTION>

                                                             Three Months Ended                        Nine Months Ended
                                                                September 30,                            September 30,
                                                     ------------------------------------     ------------------------------------
                                                           1998               1997                 1998                1997
                                                     ------------------------------------     ------------------------------------
                                                                          (000 OMITTED, EXCEPT PER SHARE DATA)
<S>                                                  <C>                <C>                   <C>                <C>    
Revenues:                                                  
   Insurance premiums                                      $224,160           $222,414              $686,075           $716,329
   Net investment income                                      6,167              6,044                17,971             16,582
   Other revenue                                              7,082              5,710                16,557             20,088
                                                     ------------------------------------     ------------------------------------
          Total Revenues                                    237,409            234,168               720,603            752,999

Expenses:
   Medical and other benefits                               168,513            168,931               522,123            546,993
   Selling, general and administrative                       61,832             57,495               178,567            187,806
   Interest expense                                           2,033              2,348                 6,739              6,975
   Amortization of goodwill and intangibles                   2,186              2,003                 6,621              6,027
                                                     ------------------------------------     ------------------------------------
          Total Expenses                                    234,564            230,777               714,050            747,801
                                                     ------------------------------------     ------------------------------------
Income From Continuing Operations,
   Before Income Taxes                                        2,845              3,391                 6,553              5,198

Income Tax Expense                                            1,208              1,042                 2,973              2,209
                                                     ------------------------------------     ------------------------------------
Income From Continuing Operations (see Note B)                1,637              2,349                 3,580              2,989

Income From Discontinued Operations,
   Less Applicable Income Taxes                               4,289              4,062                10,003             12,355
                                                     ------------------------------------     ------------------------------------
Net Income                                                   $5,926             $6,411               $13,583            $15,344
                                                     ====================================     ====================================

Earnings Per Common Share - Basic
   Income from continuing operations (see Note B)             $0.10              $0.14                 $0.22              $0.18
   Income from discontinued operations                         0.26               0.25                  0.60               0.75
                                                     ------------------------------------     ------------------------------------
Net Income Per Common Share                                   $0.36              $0.39                 $0.82              $0.93
                                                     ====================================     ====================================

Earnings Per Common Share - Diluted
   Income from continuing operations (see Note B)             $0.10              $0.14                 $0.21              $0.18
   Income from discontinued operations                         0.26               0.24                  0.60               0.74
                                                     ------------------------------------     ------------------------------------
Net Income Per Common Share                                   $0.36              $0.38                 $0.81              $0.92
                                                     ====================================     ====================================



                                  See notes to condensed consolidated financial statements
</TABLE>


                                                                               5
<PAGE>

<TABLE>

                                       AMERICAN MEDICAL SECURITY GROUP, INC.

                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)

<CAPTION>

                                                                               Nine Months Ended September 30,
                                                                          -----------------------------------------
                                                                                   1998                   1997
                                                                          -----------------------------------------
                                                                                      (000'S OMITTED)
<S>                                                                       <C>                    <C>   
Operating Activities:                                                           
   Income from continuing operations                                               $3,580                $2,989
     Adjustments to reconcile income from continuing operations to
     net cash used in operating activities:
       Depreciation and amortization                                               11,619                13,333
       Realized investment gains                                                   (2,368)                 (591)
       Deferred income tax benefit                                                 (1,260)               (2,255)
       Changes in operating accounts:
           Other assets                                                             9,677                 9,354
           Medical and other benefits payable                                     (19,414)              (44,625)
           Advance premiums                                                        (2,157)               (6,314)
           Payables and accrued expenses                                           (8,110)               (1,201)
           Other liabilities                                                        2,452               (12,891)
                                                                          -----------------------------------------
             Net Cash Used in Operating Activities                                 (5,981)              (42,201)

Investing Activities:
   Acquisition of subsidiaries (net of cash and cash equivalents
      acquired of $2,773,000)                                                       2,623                     -
   Purchases of available for sale securities                                    (252,382)             (205,611)
   Proceeds from sale of available for sale securities                            224,376               222,829
   Purchases of held to maturity securities                                             -                (1,630)
   Proceeds from maturity of held to maturity securities                              400                     -
   Purchases of property and equipment                                             (2,630)               (1,524)
   Proceeds from sale of property and equipment                                       235                 1,807
                                                                          -----------------------------------------
             Net Cash (Used in) Provided by Investing Activities                  (27,378)               15,871

Financing Activities:
   Cash dividends paid                                                             (5,956)               (5,915)
   Issuance of common stock                                                         1,941                 2,211
   Repayment of notes payable                                                     (46,174)                 (900)
   Proceeds on notes payable borrowings                                            45,158                     -
                                                                          -----------------------------------------
             Net Cash Used in Financing Activities                                 (5,031)               (4,604)

Net Cash Provided by Discontinued Operations                                        1,631                 9,809
                                                                          -----------------------------------------

Cash and Cash Equivalents:
   Net decrease                                                                   (36,759)              (21,125)
   Balance at beginning of year                                                    45,291                31,999
                                                                          -----------------------------------------
             Balance at End of Period                                              $8,532               $10,874
                                                                          =========================================



                             See  notes  to  condensed   consolidated  financial statements.
</TABLE>


                                                                               6
<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


                               September 30, 1998


NOTE A.   BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles 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  only  normal  recurring   adjustments)   considered  necessary  for  a  fair
presentation have been included.  Operating results for the three and nine month
periods ended September 30, 1998 are not  necessarily  indicative of the results
that may be expected  for the year ended  December  31,  1998.  These  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated  financial  statements and footnotes thereto included in the United
Wisconsin  Services,  Inc.  (UWS) annual  report on Form 10-K for the year ended
December 31, 1997.


NOTE B.   DISCONTINUED OPERATIONS

     On May 27, 1998,  the Board of Directors of UWS approved a plan to spin off
its  managed  care   companies   and  specialty   management   business  to  its
shareholders.  In connection with the spin-off, UWS changed its name to American
Medical Security Group,  Inc. (AMSG or the Company).  On September 25, 1998, the
distribution date,  shareholders of AMSG received one share of common stock of a
newly formed company,  Newco/UWS, Inc. (Newco), for every share of AMSG owned as
of September  11, 1998,  the record date.  The net assets of Newco  consisted of
assets and  liabilities  of the managed care and specialty  management  business
along with $70.0 million in debt. Newco was renamed United  Wisconsin  Services,
Inc. AMSG has obtained a private ruling from the Internal  Revenue  Service that
the spin-off is tax free to AMSG, Newco and to AMSG shareholders. The operations
of Newco,  along with direct costs associated with the spin-off of $4.9 million,
have  been  reflected  in  discontinued  operations.  All prior  periods  of the
condensed  consolidated  financial  statements  of AMSG  have been  restated  to
reflect Newco  operations as discontinued  operations.  Interest  expense on the
$70.0  million in debt assumed by Newco is reflected  in  continuing  operations
through September 11, 1998.



                                                                               7
<PAGE>


     The following pro forma  information  presents the consolidated  results of
AMSG's  continuing  operations  assuming  the  debt was  assumed  by Newco as of
January 1, 1997:

<TABLE>
<CAPTION>

                                                     Three Months Ended             Nine Months Ended
                                                       September 30,                  September 30,
                                                 ---------------------------    ---------------------------
                                                     1998          1997             1998          1997
                                                 ---------------------------    ---------------------------
                                                          (000'S OMITTED, EXCEPT PER SHARE DATA)
<S>                                              <C>           <C>              <C>           <C>    
Total Revenues                                      $237,409     $234,168         $720,603       $752,999
Total Expenses                                       233,588      229,531          710,642        744,149
                                                 ---------------------------    ---------------------------
   Income From Continuing Operations,
     Before Income Taxes                               3,821        4,637            9,961          8,850
Income Tax Expense                                     1,549        1,478            4,165          3,487
                                                 ---------------------------    ---------------------------
   Income From Continuing Operations                  $2,272       $3,159           $5,796         $5,363
                                                 ===========================    ===========================

Earnings Per Common Share:
   Basic                                               $0.14        $0.19            $0.35          $0.33
   Diluted                                             $0.14        $0.19            $0.35          $0.32
</TABLE>


NOTE C.   NET INCOME PER SHARE

     Basic  earnings per common share are computed by dividing net income by the
weighted  average  number of common  shares  outstanding.  Diluted  earnings per
common share are computed by dividing net income 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              Nine Months Ended
                                                       September 30,                   September 30,
                                                 ---------------------------     --------------------------
                                                     1998          1997              1998         1997
                                                 ---------------------------     --------------------------
<S>                                              <C>           <C>               <C>           <C>   
Weighted average common shares
   outstanding                                     16,571,502   16,448,225        16,544,517    16,403,129
Potentially dilutive stock options                     48,816      229,424           126,173       187,397
                                                 ---------------------------     --------------------------
Weighted average common and potentially
   dilutive shares outstanding                     16,620,318   16,677,649        16,670,690    16,590,526
                                                 ===========================     ==========================
</TABLE>


     Other options to purchase  shares were not included in the  computation  of
earnings per diluted  common share  because the  options'  exercise  prices were
greater than the average market price of the  outstanding  common shares for the
period.


 NOTE D.  ADOPTION OF NEW GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

     Effective  January 1, 1998,  the Company  adopted  Statement  of  Financial
Accounting  Standards  No. 130,  "Reporting  Comprehensive  Income"  (SFAS 130),
issued by the FASB in June 1997.  Comprehensive income is defined therein as all
changes in equity  during the period  except those  resulting  from  shareholder
equity  contributions and  distributions.  Comprehensive  income from continuing
operations  totaled  $4.1  million and $1.8  million for the three  months ended
September 30, 1998  and 1997, respectively,  and  $5.4 million and  $2.1 million

                                                                               8
<PAGE>

for  the nine  months  ended  September  30, 1998 and 1997. Comprehensive income
from discontinued operations totaled $3.0 million and $5.1 million for the three
months ended  September  30, 1998 and 1997,  respectively,  and $6.8 million and
$13.6 million for the nine months ended September 30, 1998 and 1997.


NOTE E.   SEGMENTS OF THE BUSINESS

     In June 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  131,  "Disclosures  About  Segments of an
Enterprise and Related  Information" (SFAS 131). SFAS 131 establishes  standards
for the  reporting of operating  segment  information  in both annual  financial
reports and interim financial reports issued to shareholders. Operating segments
are  components  of an  entity  for  which  separate  financial  information  is
available and is evaluated regularly by the entity's chief operating management.
SFAS 131 is effective for fiscal years  beginning after December 15, 1997 and is
not required to be adopted in interim financial reports during the first year of
adoption.

     AMSG has two reportable segments:  1) health insurance products and 2) life
insurance  products.  AMSG's health insurance  products consist of the following
coverages related to small group preferred provider organization (PPO) products:
fully insured medical,  self funded medical,  dental and short-term  disability.
Life products  consist  primarily of group term-life  insurance.  The reportable
segments  are  managed  separately  because  they  differ  in the  nature of the
products offered and in profit margins.

     AMSG evaluates segment  performance based on profit or loss from operations
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  AMSG's  consolidated  financial  statements.  Intercompany
transactions  have  been  eliminated  prior  to  reporting   reportable  segment
information.

     A  reconciliation  of segment  income before  income taxes to  consolidated
income from continuing operations before income taxes is as follows:
<TABLE>
<CAPTION>


                                    Three Months Ended                  Nine Months Ended
                                      September 30,                       September 30,
                              -------------------------------     ------------------------------
                                   1998            1997               1998            1997
                              -------------------------------     ------------------------------
                                                        (000'S OMITTED)
            <S>               <C>             <C>                 <C>            <C>   
            Health                 $1,391          $2,437              $1,419         $2,976
            Life                    1,872           2,586               7,359          8,695
            All other                (418)         (1,632)             (2,225)        (6,473)
                              -------------------------------     ------------------------------
                                   $2,845          $3,391              $6,553         $5,198
                              ===============================     ==============================


</TABLE>
                                                                               9
<PAGE>

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

<TABLE>
<CAPTION>

                                                      Three Months Ended              Nine Months Ended
                                                        September 30,                   September 30,
                                                  ---------------------------     ---------------------------
                                                      1998          1997              1998          1997
                                                  ---------------------------     ---------------------------
                                                         (000'S OMITTED, EXCEPT FINANCIAL STATISTICS)
<S>                                               <C>           <C>               <C>           <C>  
HEALTH SEGMENT

OPERATING RESULTS

Revenues:
  Insurance premiums                                  $212,159      $214,489          $650,680      $686,505
  Net investment income                                  2,162         2,385             6,450         8,503
  Other revenue                                          5,663         5,325            12,570        17,633
                                                  ---------------------------     ---------------------------
     Total Revenues                                    219,984       222,199           669,700       712,641

Expenses:
  Medical and other benefits                           160,906       165,654           502,938       533,786
  General and administrative                            34,187        31,710            95,795       102,912
  Commission                                            23,500        22,398            69,548        72,967
                                                  ---------------------------     ---------------------------
     Total Expenses                                    218,593       219,762           668,281       709,665
                                                  ---------------------------     ---------------------------
       Income Before Income Taxes                       $1,391        $2,437            $1,419        $2,976
                                                  ============= =============     ============= =============

FINANCIAL STATISTICS

Loss Ratio                                               75.8%         77.2%             77.3%         77.8%
Expense Ratio:
  General and administrative                             13.4%         12.3%             12.8%         12.5%
  Commission                                             11.1%         10.4%             10.7%         10.6%
                                                  ---------------------------     ---------------------------
     Total Expense Ratio                                 24.5%         22.7%             23.5%         23.1%
                                                  ---------------------------     ---------------------------
       Combined Ratio                                   100.3%         99.9%            100.8%        100.9%
                                                  ===========================     ===========================

Premiums per Member per Month:
  Fully insured medical                                   $123          $120              $123          $118
  Self funded                                 .             48            45                45            43
  Dental                                                    17            13                16            13
  Short-term disability                                     17            15                18            13

Benefits Cost per Member per Month:
  Fully insured medical                                    $95           $94               $95           $93
  Self funded                                               31            24                29            27
  Dental                                                    12            11                13            11
  Short-term disability                                     11             8                11             7

Membership at End of Period:
  AMS medical                                          460,062       478,000
  AMS self funded                                       49,092       112,214
  Pan Am medical                                        55,324             -
  Pan Am self funded                                    41,812             -
  HMO                                                   18,166             -
                                                  ---------------------------
  Total medical                                        624,456       590,214
  Dental                                               385,706       477,322
</TABLE>


                                                                              10
<PAGE>

<TABLE>
<CAPTION>

                                                      Three Months Ended              Nine Months Ended
                                                        September 30,                   September 30,
                                                  ---------------------------     ---------------------------
                                                      1998          1997              1998          1997
                                                  ---------------------------     ---------------------------
                                                         (000'S OMITTED, EXCEPT FINANCIAL STATISTICS)
<S>                                               <C>           <C>               <C>           <C>   
LIFE SEGMENT

OPERATING RESULTS

Revenues:
  Insurance premiums                                    $6,328        $6,758           $18,880       $22,811
  Net investment income                                     54            57               168           230
  Other revenue                                            107            59               185           191
                                                  ---------------------------     ---------------------------
     Total Revenues                                      6,489         6,874            19,233        23,232

Expenses:
  Medical and other benefits                             2,597         2,239             5,982         7,561
  General and administrative                               962           863             2,620         2,883
  Commission                                             1,058         1,186             3,272         4,093
                                                  ---------------------------     ---------------------------
     Total Expenses                                      4,617         4,288            11,874        14,537
                                                  ---------------------------     ---------------------------
       Income Before Income Taxes                       $1,872        $2,586            $7,359        $8,695
                                                  ===========================     ===========================

FINANCIAL STATISTICS

Loss ratio                                               41.0%         33.1%             31.7%         33.1%
Expense ratio:
  General and administrative                             13.5%         11.9%             12.9%         11.8%
  Commission                                             16.7%         17.5%             17.3%         17.9%
                                                  ---------------------------     ---------------------------
     Total expense ratio                                 30.2%         29.4%             30.2%         29.7%
                                                  ---------------------------     ---------------------------
       Combined ratio                                    71.2%         62.5%             61.9%         62.8%
                                                  ===========================     ===========================


Membership at end of period                            261,625       266,514
</TABLE>


NOTE F.   RECLASSIFICATIONS

     Certain  reclassifications  have  been made to the  consolidated  financial
statements for 1997 to conform with the 1998 presentation.



                                                                              11
<PAGE>


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



                      AMERICAN MEDICAL SECURITY GROUP, INC.



OVERVIEW

     American  Medical Security Group,  Inc.  formerly known as United Wisconsin
Services,  Inc.  (AMSG or the  Company),  is a provider of medical and specialty
health and life insurance products and administrative services for small groups.
The Company  offers a wide variety of health care insurance  products  including
medical, dental,  prescription drug, disability and life insurance products. The
Company's  products  are  actively  marketed  in 33 states and the  District  of
Columbia.

     On May 27,  1998,  the Board of  Directors of UWS approved a formal plan to
spin off its  managed  care  companies  and  specialty  managed  business to its
shareholders.  In connection with the spin-off, UWS changed its name to American
Medical  Security  Group,  Inc. On September 25, 1998,  the  distribution  date,
shareholders  of AMSG  received  one  share of  common  stock of a newly  formed
company,  Newco/UWS, Inc. (Newco), for every share of ASMG owned as of September
11, 1998,  the record date.  AMSG has received a private  letter ruling from the
Internal  Revenue Service that the  distribution is tax-free to AMSG,  Newco and
AMSG shareholders.

     As a  result  of the  spin-off,  the  revenues  and  expenses,  assets  and
liabilities, and cash flows of the managed care and specialty segments have been
classified  as  discontinued  operations in the interim  consolidated  financial
statements.  Accordingly,  the discussions of continuing  operations that follow
reflect the operations of the AMSG small group managed care and life products.


SUMMARY OF CONTINUING OPERATING RESULTS

INSURANCE PREMIUMS

     Insurance  premiums for the three months ended September 30, 1998 increased
0.8% to $224.2  million  from $222.4  million  for the same period in 1997.  The
premium  increase  reflects  an  increase in the  Company's  health  maintenance
organization  (HMO)  premiums  offset by slight  declines in the health and life
insurance  premiums.  Average fully insured medical premium per member per month
during the three month period ending  September 30, 1998  increased 2.5% to $123
compared to $120 during the same period in 1997.

     Insurance  premiums for the nine months ending September 30, 1998 decreased
4.2% to $686.1  million  from $716.3  million  for the same period in 1997.  The
decline in premium  is the  result of a decline in average  membership  of 10.1%
during the nine month period in 1998 compared to 1997.  Membership  has declined
at a faster  rate than the  decline  in  premium  as a result  of a  significant
reduction  in self  funded  members,  which has a lower  premium per member than
other business.  Average fully insured medical premium per month during the nine
month period ending  September 30, 1998  increased 4.2% to $123 from $118 during
the same period in 1997.

     Medical membership at September 30, 1998 increased 5.8% from June 1998. The
increase  is the result of a  revitalized  sales  effort  along with a favorable
environment for health care benefit companies offering PPOs (preferred  provider
organizations).  Medical  membership  at  September  30, 1998 also  reflects two
acquired  blocks of business (one in October 1997 and one in July 1998) from Pan
American Life Insurance Company (Pan Am)



                                                                              12
<PAGE>

                                                                             

and HMO membership which is the result of acquiring  controlling interest in the
Florida HMO effective January 1, 1998.  The following table reflects the growth 
in medical membership during 1998:
<TABLE>
<CAPTION>

                                  September 30,                June 30,               September 30,
                                      1998                       1998                      1997
                            -------------------------- ------------------------- -------------------------
<S>                         <C>                        <C>                       <C>   

AMS medical                           460,062                   455,644                   478,000
AMS self funded                        49,092                    58,936                   112,214
Pan Am medical                         55,324                    46,536                         -
Pan Am self funded                     41,812                         -                         -
HMO                                    18,166                    16,404                         -
                            -------------------------- ------------------------- -------------------------
                                      624,456                   577,520                   590,214
                            ========================== ========================= =========================
</TABLE>


NET INVESTMENT INCOME

     Net  investment  income  includes  investment  income  and  realized  gains
(losses)  on  investments.  Net  investment  income for the three  months  ended
September  30, 1998  increased  2.0% to $6.2  million  from $6.0 million for the
three months ended September 30, 1997. Net investment income for the nine months
ended  September 30, 1998 increased 8.4% to $18.0 million from $16.6 million for
the same  period  one year ago.  Average  annual  investment  yields,  excluding
realized  gains and losses,  were 6.9% for the three months ended  September 30,
1998 and 1997 respectively. Average annual investment yields, excluding realized
gains and losses were 6.8% for the nine months ended September 30, 1998 compared
to 7.2% for the same period in the prior year.  Investment  gains and losses are
realized in the normal investment  process in response to market  opportunities.
Average  invested assets for the three months ended September 30, 1998 increased
3.3% to $307.3 million from $297.4 million for the three months ended  September
30, 1997.

OTHER REVENUE

     Other  revenue  increased  to $7.1  million  for  the  three  months  ended
September  30, 1998 from $5.7 million for the same period on 1997.  The increase
is primarily due to fee revenues associated with the Pan Am business acquired in
July 1998  offset by lower self  funded  fee  revenue  on  smaller  self  funded
membership.  Other revenue for the nine month period  decreased to $16.6 million
in 1998 from $20.1 million in 1997.  The decrease is primarily due to lower self
funded fee revenue in 1998 offset by additional fees related to Pan Am beginning
in the third quarter 1998.

LOSS RATIO

     The health loss ratio for the three  months  ended  September  30, 1998 was
75.8%  compared with 77.2% for the three months ended  September  30, 1997.  The
health  loss  ratio  for the nine  months  ended  September  30,  1998 was 77.3%
compared with 77.8% for the nine months ended  September 30, 1997.  The improved
loss ratio for the quarter and nine month period reflects  management's  efforts
to remove unprofitable business and add profitable new business.  Also, the 1998
health loss ratio reflects an improved  dental loss ratio which is the result of
the cancellation of the stand-alone dental business effective June 1, 1998.

     The life loss ratio for the three months ended September 30, 1998 was 41.0%
compared to 33.1% for the three months ended  September 30, 1997.  The life loss
ratio for the nine months ended  September 30, 1998 was 31.7%  compared to 33.1%
for the nine months  ended  September  30,  1997.  The higher loss ratio for the
three months ended  September 30, 1998 reflects a reserve  strengthening  in the
third quarter offsetting  favorable second quarter results.  The nine month loss
ratio is comparable to 1997 and is consistent with ongoing expectations.



  
                                                                              13
<PAGE>


SELLING, GENERAL AND ADMINISTRATIVE EXPENSE RATIO

     The selling,  general and  administrative  (SGA)  expense  ratio for health
products for the three months ended  September 30, 1998 was 24.5%  compared with
22.7% for the three months ended  September 30, 1997.  For the nine months ended
the SGA  ratio  for  health  products  was  23.5%  and  23.1% for 1998 and 1997,
respectively.  The increased  health expense ratio for the third quarter and the
nine month period in 1998 reflects higher  commission costs related to growth in
new business and an  investment  in the  Company's  distribution  network.  Also
contributing to the increase were expenses  related to the Year 2000 initiative,
and a one-time investment in re-engineering administrative work flow processes.

     The SGA expense  ratio for life  products for the third quarter of 1998 was
30.2% compared with 29.4% for the same period in the prior year. The SGA expense
ratio for life  products for the nine months ended  September 30, 1998 was 30.2%
compared to the nine months ended September 30, 1997 of 29.7%.

     The Company's  distribution  system consists of a network of sales managers
located in offices  throughout the United States.  The Company's  sales managers
support  approximately 38,000 independent agents. The Company has made continued
investments in its distribution channel during 1997 and 1998 to reorganize sales
managers, sales offices and products. Management is currently studying its agent
distribution  system and  expects to  complete  its  analysis  during the fourth
quarter  of  1998.  Depending  on the  results  of  this  study,  the  Company's
distribution  system  intangible asset with a carrying value of $13.9 million at
September 30, 1998, may be considered impaired.

OTHER EXPENSES

     Interest  expense  decreased  to $2.0  million for the three  months  ended
September 30, 1998 from $2.3 million for the same period in the prior year.  For
the nine months ended  September 30, 1998,  interest  expense  decreased to $6.7
million  from $7.0  million for the nine months ended  September  30, 1997.  The
decrease in interest expense for the quarter and nine month periods reflects the
assumption  of $70.0 million in debt by Newco on September 11, 1998 as described
in Note B to the condensed consolidated financial statements.

     Amortization of goodwill and other intangibles totaled $2.2 million for the
third quarter of 1998,  compared with $2.0 million of  amortization  expense for
the third quarter of 1997. On a year to date basis, amortization of goodwill and
intangibles  increased  to $6.6  million  from $6.0  million for the nine months
ended  September  30,  1997.  The  increase in  amortization  expense in 1998 is
primarily due to recorded  intangibles  related to the Pan American  small group
business acquired in October 1997.

     The effective  tax rate was 42.5% for the three months ended  September 30,
1998  compared  with 30.7% for the three months ended  September  30, 1997.  The
effective  tax rate for the nine  months  ended  September  30,  1998 was  45.4%
compared with 42.5% for the nine months ended  September 30, 1997. The effective
tax  rate  is  impacted  significantly  by the  amortization  of  non-deductible
goodwill in relation to pretax  income.  In addition,  in 1997 the Company fully
utilized certain state net operating loss  carryforwards  and, as a result,  has
incurred higher state income tax expense in 1998.

INCOME FROM CONTINUING OPERATIONS

     Income from continuing  operations for the three months ended September 30,
1998 decreased 30.3% to $1.6 million or $.10 per share from $2.3 million or $.14
per share for the three months ended  September 30, 1997.  The decline in income
from  continuing  operations  for the quarter is the result of an increased life
loss ratio and a higher SGA  expense  ratio  offset by an  improved  health loss
ratio. Income from continuing operations for the nine months ended September 30,
1998 increased 19.8% to $3.6 million or $.22 per share from $3.0 million or $.18
per share for the nine months ended  September 30, 1997.  The increase in income
from continuing  operations for the nine month period is due to an improved loss
ratio partially  offset by higher expenses.  Income from continuing  operations,
excluding  debt service costs  assumed by Newco on the $70.0  million debt,  was
$2.3



                                                                              14
<PAGE>

million or $.14 per share and $5.8 million or $.35 per share for the three
and nine months ended September 30, 1998, respectively.


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 medical and other benefits and operating expense payments. Positive cash
flows are invested  pending  future  payments of medical and other  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.

     Cash flow from operations for the three months ended September 30, 1998 was
$4.4 million.  The Company generated negative cash flows from operations of $6.0
million for the nine months ended  September 30, 1998.  Negative cash flows from
operations  is  principally  the  result of the  decline  in  medical  and other
benefits  payable of $19.4  million  for 1998.  The decline in medical and other
benefits payable results  primarily from a reduction in inventory claims pending
adjudication  and the decline in overall  membership.  The Company believes cash
flow from  operations  will  continue to improve due to a leveling of the claims
inventory,  growth in membership and lower debt service costs as a result of the
assumption of $70.0 million in debt by Newco in September 1998.

     The Company's  investment  portfolio from  continuing  operations  consists
primarily  of  investment  grade  bonds  and  has  limited  exposure  to  equity
securities.  At September  30, 1998,  $286.1  million or 94.2% of the  Company's
total investment  portfolio was invested in bonds. At December 31, 1997,  $270.8
million or 99.7% of the  Company's  total  investment  portfolio was invested in
bonds. The bond portfolio had an average quality rating of Aa3 at both September
30, 1998 and December 31, 1997 as measured by Moody's Investor Service,  and the
majority of the bond  portfolio was classified as available for sale. The market
value of the  total  investment  portfolio  from  continuing  operations,  which
includes  stocks and bonds,  exceeded  amortized  cost by $2.8  million and $3.9
million at September 30, 1998 and December 31, 1997,  respectively.  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.

     From  time  to  time,  the  Company  makes  capital  contributions  to  its
subsidiaries  to assist them in  maintaining  appropriate  levels of capital and
surplus for regulatory and rating purposes.  Insurance subsidiaries are required
to maintain certain levels of statutory  capital and surplus.  As of the balance
sheet date presented,  statutory capital and surplus for each of these insurance
subsidiaries exceeded required levels.

     On July 31, 1998, in anticipation of the spin-off transactions, the Company
refinanced its  subordinated  notes  outstanding in the amount of $44.9 million.
The  subordinated  notes,   including  accrued  interest,   were  replaced  with
borrowings of $45.2 million on a bank line of credit with a maximum indebtedness
of $70.0 million.  The line of credit contains certain  covenants  which,  among
other matters,  require the Company to maintain a minimum tangible net worth and
restrict  the  Company's  ability to incur  additional  debt,  pay  future  cash
dividends and transfer assets.

     In addition to internally  generated  funds and periodic  borrowings on its
bank  line  of  credit,  the  Company  believes  that  additional  financing  to
facilitate  long-term  growth could be obtained through equity  offerings,  debt
offerings, or bank borrowings, as market conditions may permit or dictate.

     The Company does not expect to pay any cash  dividends  in the  foreseeable
future and intends to employ its earnings in the  continued  development  of its
business.  The future  dividend  policy will depend on the  Company's  earnings,
capital requirements,  financial condition and other factors considered relevant
by the Board of Directors.



                                                                              15
<PAGE>

YEAR 2000

     The Year 2000 issue is the result of computer  programs being written using
two digits rather than four to define the applicable  year.  Computer  equipment
and software  devices  with  embedded  technology  that are  time-sensitive  may
recognize  a date using "00" as the Year 1900  rather  than the Year 2000.  This
could  result in a system  failure or  miscalculations  causing  disruptions  of
operations,  including,  among other  things,  a temporary  inability to process
transactions or engage in similar normal business activities.

     The Company has divided the Year 2000 issues facing the  organization  into
three major sections:  1) software  applications  developed  in-house  (In-house
Applications);  2) software  applications  acquired from a third party that have
been  customized  by the  Company  (Customized  Applications);  and 3)  software
applications  acquired  from a third party that have not been  customized by the
Company and those products and services provided to the Company by third parties
(Third Party Products).

     In-house  Applications  represent  the  primary  operating  software of the
Company and includes  premium,  claims and commission  processing  applications.
In-house  Applications  are expected to be Year 2000 compliant by November 1998.
The deletion of temporary bridges and workfiles used to facilitate communication
between  compliant  and  non-compliant  computer  codes during the course of the
implementation will be completed in March of 1999.

     All Customized  Applications  software include electronic data interchange,
publishing  systems,  fax  capabilities,  accounting  packages and other special
application  software as well as ancillary software packages that serve as links
among  the  various  software  packages.  Each of these  software  packages  are
currently  being  upgraded or replaced.  It is  anticipated  that all Customized
Applications will be compliant during the third quarter of 1999.

     With respect to Third Party Products, the Company has reviewed its business
processes  that may have Year 2000  concerns  performed  by,  with,  or  through
external  business  associates.  This  includes  computer  hardware,   telephone
systems,  security  system and other  numerous  products  as well as third party
software  applications that have not been customized by the Company. The Company
has evaluated  various third parties that provide products or services,  such as
printing  companies,  power  and  utility  companies  and other  vendors.  Where
appropriate, agreements with third party vendors have been amended and Year 2000
compliance certifications have been obtained.  Significant business partners and
vendors  will be  required  to  provide  the  Company  with Year 2000  certified
products or services. Such products and services are being tested by the Company
to  validate  the  compliance  certification.  This  portion  of the plan is 65%
complete,  is on  schedule,  and is  planned  for  completion  during the second
quarter of 1999.
<TABLE>
<CAPTION>

       YEAR 2000 PLAN                                 PERCENT COMPLETE                 COMPLETION DATE
       <S>                                                  <C>                        <C>   

       In-house Applications                                72%                          March 1999

       Customized Applications                              42%                        September 1999

       Third Party Products                                 65%                           June 1999
</TABLE>

     The total cost associated with required  modifications  to become Year 2000
compliant is not expected to be material to the  Company's  financial  position.
The estimated total cost of the Year 2000 project is approximately $6.2 million,
of which $3.1  million are costs from outside  consultants  and $3.1 million are
costs related to modifying and/or replacing  existing systems.  The total amount
expended on the project  through  September 30, 1998,  was $2.6  million.  Costs
associated with the Year 2000 plan will be funded from operating cash flows.

     The Company is  developing  a  comprehensive  analysis  of the  operational
problems  and costs  (including  loss of  revenues)  that could  result from the
unlikely  failure by the Company and certain third  parties to complete  



                                                                              16
<PAGE>

efforts
necessary to achieve Year 2000 compliance on a timely basis. The majority of the
contingency  plans have been developed and documented for dealing with the worst
case scenarios with the highest chance of occurring. The Company currently plans
to complete such analysis and contingency  planning during the second quarter of
1999.

     The  costs  of the  project  and the  date on which  the  Company  plans to
complete the necessary Year 2000  modifications  are based on management's  best
estimates,  which were  derived  using  numerous  assumptions  of future  events
including  the  continued   availability  of  certain  resources,   third  party
remediation  plans  and other  factors.  There can be no  guarantee  that  these
timelines or estimates will be achieved.  Actual results could differ materially
from those planned.  Specific factors that might cause such material differences
to occur include, but are not limited to, the availability and cost of personnel
trained in this area;  the ability to locate and correct all  relevant  computer
codes;  and the ability of the Company's  significant  suppliers,  customers and
others  with which it  conducts  business,  including  federal,  state and local
governmental  agencies,  to identify and resolve  their own Year 2000 issues and
similar uncertainties.  Due to these uncertainties, the Company may face certain
claims,  the impact of which is not  currently  estimable.  No assurance  can be
given that the cost of defending  and  resolving  such claims,  if any, will not
significantly  affect the Company's results of operations.  Although the Company
has some  agreements  with  third  party  vendors  and  suppliers  that  contain
indemnification  provisions that protect the Company under certain circumstances
relating  to  Year  2000  issues,   there  can  be  no   assurances   that  such
indemnification provisions will cover all of the Company's liabilities and costs
related to Year 2000 claims by third parties.


FORWARD LOOKING STATEMENTS

     Statements  contained  in this report  which are not  historical  facts are
forward-looking  statements subject to inherent risks and uncertainties that may
cause actual results or events to differ  materially from those  contemplated by
such forward-looking statements. The terms "anticipate",  "believe", "estimate",
"expert", "objective", "plan", "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 may  cause  actual  results  or  events to  differ  materially  from  those
contemplated by such forward looking statements,  include, among others, product
and policy demand and market responses,  the effect of economic conditions,  the
impact of  competitive  products,  policies  and  pricing,  product  and  policy
development,  development of claims reserves,  rising health care costs, changes
in regulatory  conditions,  rating  agency  policies and  practices,  investment
portfolio  developments and changes in market conditions,  the actual closing of
contemplated  transactions and agreements and other factors that may be referred
to in the Company's  reports filed with the Securities  and Exchange  Commission
from time to time.


ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not applicable to the Company at this time.



                                                                              17
<PAGE>


PART II.  OTHER INFORMATION


ITEM 1.       LEGAL PROCEEDINGS

         None

ITEM 2.       CHANGES IN SECURITIES

         None

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

         None

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

     At a special  meeting of shareholders of the Company held on July 24, 1998,
shareholders  approved (i) the amendment of the  Company's  Restated and Amended
Articles  of  Incorporation  to  change  the  name of the  Company  from  United
Wisconsin Services,  Inc. to American Medical Security Group, Inc., and (ii) the
amendment  of the  Company's  1995  Director  Stock  Option Plan to increase the
number of shares  that may be granted  to  individual  participants.  The voting
results for the proposals were as follows:

          Amendment of Restated and Amended Articles of Incorporation:
                   For                                         15,721,901 Shares
                   Against                                          6,906 Shares
                   Abstained                                       10,041 Shares
                   Broker Non-votes                                26,083 Shares

          Amendment of 1995 Director Stock Option Plan:
                   For                                         13,717,286 Shares
                   Against                                      2,036,395 Shares
                   Abstained                                       11,250 Shares
                   Broker Non-votes                                     0 Shares

ITEM 5.       OTHER INFORMATION

         None

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  Current  Report  dated  September  25,  1998,  was filed by the
Company on September  30, 1998,  to report  (under Item 2) the  distribution  of
shares  of  common  stock  of  Newco  to   shareholders   of  the  Company  (the
Distribution)  and to include  (under Item 7) unaudited  pro forma  consolidated
financial  statements of the Company  reflecting the Distribution.  The Form 8-K
also  included a  description  of the  business of the  Company,  the  Company's
business strategy and the Company's dividend policy, in each instance, following
the 



                                                                              18
<PAGE>

Distribution.  In  addition,  the  Form  8-K  identifie  the executive  officers
and directors of the Company following the Distribution.



                                                                              19
<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:  November 12, 1998



                       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)
                           


                                                                              20
<PAGE>

<TABLE>
                      AMERICAN MEDICAL SECURITY GROUP, INC.
                                    ("AMSG")
                          (COMMISSION FILE NO. 1-13154)

                                  EXHIBIT INDEX
                                       TO
                           FORM 10-Q QUARTERLY REPORT
                      for quarter ended September 30, 1998

<CAPTION>


                                                            INCORPORATED HEREIN                   FILED
EXHIBIT NO.          DESCRIPTION                            BY REFERENCE TO                       HEREWITH
<S>                  <C>                                    <C>                                   <C>    
2.1                  Distribution and Indemnity Agreement   Exhibit 2.1 to Newco/UWS, Inc.'s
                     between United Wisconsin Services,     Registration Statement on Form 10,
                     Inc. and Newco/UWS, Inc., dated as     as amended (the "Registration
                     of September 11, 1998                  Statement") (File No. 1-14177)

2.2                  Employee Benefits Agreement, dated     Exhibit 10.1 to the Registration
                     as of September 11, 1998, by and       Statement
                     between United Wisconsin Services,
                     Inc. and Newco/UWS, Inc.

2.3                  Tax Allocation Agreement, entered      Exhibit 10.2 to the Registration
                     into as of September 11, 1998, by      Statement
                     and between United Wisconsin
                     Services, Inc. and Newco/UWS, Inc.

3.1                  Restated and Amended Articles of       Exhibit 3.1 to AMSG's Current
                     Incorporation of American Medical      Report on Form 8-K dated September
                     Security Group, Inc. (f/k/a United     25, 1998
                     Wisconsin Services, Inc.), as          (the "9/25/98 8-K")
                     amended through September 28, 1998

3.2                  Bylaws of American Medical Security    Exhibit 3.2 to the 9/25/98 8-K
                     Group, Inc. (f/k/a United Wisconsin
                     Services, Inc.), as amended and
                     restated through September 25, 1998

4                    Amended and Restated Credit                                                          X
                     Agreement dated as of October  15,
                     1998 among AMSG, United Wisconsin
                     Life Insurance Company and the First
                     National Bank of Chicago and other
                     Lenders

10.1                 Equity Incentive Plan as amended and                                                 X
                     restated September 25, 1998

10.2                 1995 Director Stock Option Plan as                                                   X
                     amended and restated September 25,
                     1998.

10.3                 Deferred Compensation Plan for                                                       X
                     Directors as amended and restated
                     September 25, 1998

10.4                 Change of Control Severance Benefit                                                  X
                     Plan

27.1                 Financial Data Schedule                                                              X

27.2                 Restated Financial Data Schedule                                                     X
                     (nine months ended 9/30/97)

</TABLE>