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


                                    FORM 10-Q


     [X]  Quarterly  Report  Pursuant  To Section 13 Or 15(d) Of The  Securities
     Exchange Act Of 1934
     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 October 31, 2001:
     13,952,689 shares


<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.

                                      INDEX


PART I.       FINANCIAL INFORMATION

     Item 1.      Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheets
                      September 30, 2001 and December 31, 2000.................3

                  Condensed Consolidated Statements of Operations
                      Three months ended September 30, 2001 and 2000;
                      Nine months ended September 30, 2001 and 2000............5

                  Condensed Consolidated Statements of Cash Flows
                      Nine months ended September 30, 2001 and 2000............6

                  Notes to Condensed Consolidated Financial Statements
                      September 30, 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 2.      Changes in Securities and Use of Proceeds...................18

     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>

                                                                                  September 30,      December 31,
                                                                                       2001              2000
                                                                                 -----------------------------------
                                                                                           (IN THOUSANDS)
<S>                                                                               <C>                 <C>
ASSETS

Investments:
   Securities available for sale, at fair value:
     Fixed maturities                                                             $    258,181        $    262,428
     Equity securities-preferred                                                         2,459               2,368
   Fixed maturity securities held to maturity, at amortized cost                         4,295               4,320
   Trading securities, at fair value                                                       388                 260
                                                                                 -----------------------------------

       Total investments                                                               265,323             269,376

Cash and cash equivalents                                                               23,307              15,606

Other assets:
   Property and equipment, net                                                          32,756              32,451
   Goodwill and other intangibles, net                                                 104,841             107,562
   Other assets                                                                         41,172              46,928
                                                                                 -----------------------------------

       Total other assets                                                              178,769             186,941
                                                                                 -----------------------------------

Total assets                                                                      $    467,399        $    471,923
                                                                                 ===================================
</table>






            See Notes to Condensed Consolidated Financial Statements

                                                                               3
<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                                  September 30,      December 31,
                                                                                       2001              2000
                                                                                 -----------------------------------
                                                                                           (IN THOUSANDS)
<S>                                                                               <C>                 <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Medical and other benefits payable                                             $    132,028        $    145,310
   Advance premiums                                                                     16,135              17,568
   Payables and accrued expenses                                                        30,358              25,902
   Notes payable                                                                        40,358              41,258
   Other liabilities                                                                    21,518              20,708
                                                                                 -----------------------------------

       Total liabilities                                                               240,397             250,746

Shareholders' equity:
   Common stock (no par value, $1 stated value, 50,000,000 shares authorized,
     16,654,315 issued and 13,954,189 outstanding at September 30, 2001,
     16,654,315 issued and 14,270,945 outstanding at December 31, 2000)                 16,654              16,654
   Paid-in capital                                                                     187,834             187,956
   Retained earnings                                                                    36,125              36,295
   Accumulated other comprehensive income (loss), net of tax benefit
       (expense) of ($2,145,000) at September 30, 2001 and $2,126,000
     at December 31, 2000                                                                3,984              (3,948)
   Treasury stock (2,700,126 shares at September 30, 2001
     and 2,383,370 shares at December 31, 2000, at cost)                               (17,595)            (15,780)
                                                                                 -----------------------------------

       Total shareholders' equity                                                      227,002             221,177
                                                                                 -----------------------------------

Total liabilities and shareholders' equity                                        $    467,399        $    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                  Nine Months Ended
                                                            September 30,                       September 30,
                                                   ---------------------------------   --------------------------------
                                                        2001              2000              2001             2000
                                                   ---------------------------------   --------------------------------
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                 <C>               <C>               <C>              <C>
Revenues:
   Insurance premiums                               $    204,399      $    231,963      $    640,514     $    720,405
   Net investment income                                   4,280             4,620            13,199           14,389
   Realized investment losses                               (660)              (90)             (839)            (202)
   Other revenue                                           5,369             5,263            16,078           15,167
                                                   ---------------------------------   --------------------------------
       Total revenues                                    213,388           241,756           668,952          749,759

Expenses:
   Medical and other benefits                            144,000           180,141           466,754          550,216
   Selling, general and administrative                    61,513            61,060           195,797          188,682
   Interest expense                                          687               890             2,307            2,669
   Amortization of goodwill and intangibles                  906               946             2,720            2,839
                                                   ---------------------------------   --------------------------------
       Total expenses                                    207,106           243,037           667,578          744,406
                                                   ---------------------------------   --------------------------------

Income (loss) before income taxes                          6,282            (1,281)            1,374            5,353

Income tax expense                                         2,778                95             1,544            2,810
                                                   ---------------------------------   --------------------------------

Net income (loss)                                   $      3,504      $     (1,376)     $       (170)    $      2,543
                                                   =================================   ================================


Net income (loss) per common share:
   Basic                                            $       0.25      $      (0.09)     $      (0.01)    $       0.17
   Diluted                                          $       0.25      $      (0.09)     $      (0.01)    $       0.17
</table>









            See Notes to Condensed Consolidated Financial Statements

                                                                               5

<PAGE>



                      AMERICAN MEDICAL SECURITY GROUP, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                            September 30,
                                                                                   ---------------------------------
                                                                                        2001              2000
                                                                                   ---------------------------------
                                                                                            (IN THOUSANDS)
<S>                                                                                 <C>               <C>
OPERATING ACTIVITIES:
Net income (loss)                                                                   $       (170)     $      2,543
Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
     Depreciation and amortization                                                         7,757             7,325
     Net realized investment losses                                                          839               202
     Increase in trading securities                                                         (128)             (127)
     Deferred income tax expense (benefit)                                                  (702)            5,261
     Changes in operating accounts:
       Other assets                                                                        2,186            11,825
       Medical and other benefits payable                                                (13,282)          (32,098)
       Advance premiums                                                                   (1,433)            3,503
       Payables and accrued expenses                                                       4,456             2,515
       Other liabilities                                                                     949            (9,553)
                                                                                   ---------------------------------
         Net cash provided by (used in) operating activities                                 472            (8,604)


INVESTING ACTIVITIES:
Purchases of available for sale securities                                               (87,078)          (13,838)
Proceeds from sale of available for sale securities                                       93,594            13,335
Proceeds from maturity of available for sale securities                                    8,030             2,645
Proceeds from maturity of held to maturity securities                                          -               630
Purchases of property and equipment                                                       (4,349)           (3,539)
Proceeds from sale of property and equipment                                                   8                10
                                                                                   ---------------------------------
         Net cash provided by (used in) investing activities                              10,205              (757)


FINANCING ACTIVITIES:
Issuance of common stock                                                                       -                 4
Purchase of treasury stock                                                                (2,102)           (6,950)
Issuance of treasury stock                                                                    26                 -
Borrowings under line of credit agreement                                                      -            39,158
Repayment on line of credit agreement                                                          -           (39,158)
Repayment of notes payable                                                                  (900)             (965)
                                                                                   ---------------------------------
         Net cash used in financing activities                                            (2,976)           (7,911)
                                                                                   ---------------------------------

Cash and cash equivalents:
   Net increase (decrease)                                                                 7,701           (17,272)
   Balance at beginning of year                                                           15,606            17,266
                                                                                   ---------------------------------
Balance at end of period                                                            $     23,307      $         (6)
                                                                                   =================================
</table>
            See Notes to Condensed Consolidated Financial Statements

                                                                               6

<PAGE>


                      AMERICAN MEDICAL SECURITY GROUP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


                               September 30, 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 accounting  principles  generally
accepted in the United States ("GAAP") 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 and nine month periods ended September 30, 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                  Nine Months Ended
                                                     September 30,                      September 30,
                                            --------------------------------   --------------------------------
                                                 2001             2000              2001             2000
                                            --------------------------------   --------------------------------

<S>                                            <C>              <C>               <C>              <C>
     Weighted average common
        shares outstanding - basic             13,992,446       14,562,275        14,080,760       15,054,086

     Effect of dilutive stock options              70,597                -                 -           87,624
                                            --------------------------------   --------------------------------

     Weighted average common                   14,063,043       14,562,275        14,080,760       15,141,710
        shares outstanding - diluted
                                            ================================   ================================
</table>

     The effect of dilutive  securities  was excluded from the diluted  earnings
(loss) per common share  computation  for the three months ended  September  30,
2000 and the nine months ended  September 30, 2001 because the Company had a net
loss in those periods,  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

     Comprehensive  income is defined as net income  (loss)  plus or minus other
comprehensive   income,  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 for the
Company is calculated as follows:

<table>
<caption>
                                                  Three Months Ended                  Nine Months Ended
                                                     September 30,                      September 30,
                                            --------------------------------   --------------------------------
                                                 2001             2000              2001             2000
                                            --------------------------------   --------------------------------
                                                                      (IN THOUSANDS)
<S>                                          <C>              <C>               <C>              <C>
     Net income (loss)                       $      3,504     $     (1,376)     $       (170)    $      2,543

     Change in unrealized gain/loss on
        available for sale securities               4,944            2,634             7,932            2,752
                                            --------------------------------   --------------------------------

     Comprehensive income                    $      8,448     $      1,258      $      7,762     $      5,295
                                            ================================   ================================
</table>

NOTE D. DEBT

     At September  30,  2001,  the Company  maintained a revolving  bank line of
credit agreement ("Credit Agreement") with a maximum commitment of $35.2 million
and a $10.0 million  sublimit for swingline  loans.  At September 30, 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 April 2001 to revise the  Company's  applicable  interest rate on
outstanding  loans and the schedule of mandatory  future  commitment  reductions
including a $4.8 million  maximum  commitment  reduction  from $40.0  million to
$35.2 million on April 27, 2001. Revised future annual principal amounts due for
all of the Company's  debt,  including  debt under the Credit  Agreement,  as of
September  30, 2001 are $0.3  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.  Following an adverse decision
from  the  Court of  Appeals  on March  12,  2001,  the  Company  recognized  an
additional  accrual  during  the first  quarter  of 2001  representing  the full
potential  loss  including  punitive  damages  and other  expenses.  The Company
petitioned  the United States Supreme Court to review the case. In July 2001, at
the  direction  of the district  court,  the Company paid the full amount of the
verdict plus  interest.  In October 2001, the United States Supreme Court denied
the Company's request to review the Court of Appeals' decision.  The case is now
closed

     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 March 29,  2001,  the Ohio
Court  of  Appeals  affirmed  a  portion  of the  verdict,  with  modifications,
representing  approximately  $3.0 million in damages,  and reversed and remanded
the  remaining  issue in the case  representing  approximately  $2.4  million in
damages.  The Company  appealed the $3.0  million  portion of the damages to the
Ohio  Supreme  Court,  which  declined  to take the  appeal.  Briefs  have  been
submitted for the remanded  portion of the case and the parties are awaiting the
trial court's  decision.  Management  believes  that the Company has  adequately
provided for losses that may result from this case.

                                                                               8
<page>

     The  Company is  involved in various  other  legal and  regulatory  matters
occurring in the normal  course of its business.  While the ultimate  outcome of
the legal and  regulatory  matters  cannot be  determined  at this time,  in the
opinion of  management,  adequate  provision  has been made for losses which may
result  from such  matters;  accordingly,  the  outcome of these  matters is not
expected  to  have a  material  adverse  effect  on the  consolidated  financial
statements.  The Company's financial results for the nine months ended September
30, 2001 reflect a first  quarter  pre-tax  charge of $9.0 million ($5.9 million
after-tax) to cover estimated  potential  losses and related  expenses for legal
related matters.

NOTE F. NEW ACCOUNTING STANDARDS

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial  Accounting  Standards No. 141,  BUSINESS  COMBINATIONS,  and No. 142,
GOODWILL AND OTHER INTANGIBLE  ASSETS (the  "Statements"),  effective for fiscal
years  beginning  after  December 15, 2001.  Under the new rules,  goodwill (and
intangible  assets deemed to have indefinite  lives) will no longer be amortized
but  will  be  subject  to  annual  impairment  tests  in  accordance  with  the
Statements.  Other  intangible  assets will continue to be amortized  over their
useful lives.  Based on the  Company's  current  accounting  policy of measuring
goodwill  impairment  based on  undiscounted  cash  flows,  there is no goodwill
impairment indicated.

     The Company will apply the new rules on  accounting  for goodwill and other
intangible  assets  beginning in the first quarter of 2002.  Application  of the
nonamortization  provisions  of the  Statements  is  expected  to  result  in an
increase in net income of approximately $2.4 million ($0.17 per share) per year.
The Company will perform the first of the required  impairment tests of goodwill
and intangible  assets deemed to have indefinite  lives as of January 1, 2002 by
comparing  the fair value of the  Company's  reporting  units to their  carrying
amounts (book value),  including goodwill.  In determining the fair value of the
Company's reporting units, management will consider valuation techniques such as
the quoted market price of the Company's stock, the present value of future cash
flows and market  comparison of similar assets and liabilities.  As of September
30, 2001, the Company's book value per share was  significantly  higher than the
quoted market value of a share of stock. The Company has not yet determined what
the effect of these tests will be on the earnings and financial  position of the
Company.  If it is determined  that an impairment  exists as of January 1, 2002,
the charge  recognized would be reported as the cumulative effect of a change in
accounting  principle in the Company's  consolidated  financial  statements  and
would have no impact on cash flows or the statutory basis capital and surplus of
the Company's insurance subsidiaries.

NOTE G. 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 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.

                                                                               9

<PAGE>


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

<table>
<caption>
                                                  Three Months Ended                  Nine Months Ended
                                                     September 30,                      September 30,
                                            --------------------------------   --------------------------------
                                                 2001             2000              2001             2000
                                            --------------------------------   --------------------------------
                                                                      (IN THOUSANDS)
<S>                                          <C>              <C>              <C>               <C>
     Health segment                          $      5,788     $     (3,956)    $      (1,397)    $     (2,692)
     Life segment                                   1,615            2,006             4,963            7,036
     All other                                     (1,121)             669            (2,192)           1,009
                                            --------------------------------   --------------------------------
        Income (loss) before income taxes    $      6,282     $     (1,281)     $      1,374     $      5,353
                                            ================================   ================================
</table>

     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,
                                            --------------------------------   --------------------------------
                                                 2001             2000              2001             2000
                                            --------------------------------   --------------------------------
                                                                      (IN THOUSANDS)
<S>                                         <C>               <C>               <C>              <C>
     HEALTH SEGMENT

     OPERATING RESULTS

     Revenues:
        Insurance premium                   $     200,256     $    222,635      $    626,354     $    684,026
        Net investment income                       2,299            2,243             7,014            7,141
        Other revenue                               4,370            4,220            12,957           12,203
                                            --------------------------------   --------------------------------
          Total revenues                          206,925          229,098           646,325          703,370

     Expenses:
        Medical and other benefits                142,766          175,529           461,944          529,603
        Selling, general and administrative        58,371           57,525           185,778          176,459
                                            --------------------------------   --------------------------------
          Total expenses                          201,137          233,054           647,722          706,062
                                            --------------------------------   --------------------------------

     Income (loss) before income taxes       $      5,788     $     (3,956)     $     (1,397)    $     (2,692)
                                            ================================   ================================

     FINANCIAL STATISTICS

     Loss ratio                                     71.3%            78.8%             73.8%            77.4%
     Expense ratio                                  27.0%            23.9%             27.6%            24.0%
                                            --------------------------------   --------------------------------
        Combined ratio                              98.3%           102.7%            101.4%           101.4%
                                            ================================   ================================


     Membership at End of Period:
     Health:
        Fully insured medical                     363,912          475,706
        Self funded medical                        45,180           54,948
        Stand-alone dental                        171,214          176,727
                                            --------------------------------
          Total health                            580,306          707,381
</table>

     (a)  Total  health  membership  for the  Company of 580,316  and 714,391 at
          September 30, 2001 and 2000  includes HMO  membership of 10 and 7,010,
          respectively.  HMO  operations  are not  included  in  health  segment
          operating results.

                                                                              10
<page>

<table>
<caption>
                                                  Three Months Ended                  Nine Months Ended
                                                     September 30,                      September 30,
                                            --------------------------------   --------------------------------
                                                 2001             2000              2001             2000
                                            --------------------------------   --------------------------------
                                                                      (IN THOUSANDS)
<S>                                          <C>              <C>               <C>             <C>
     LIFE SEGMENT

     OPERATING RESULTS

     REVENUES:
        Insurance premiums                   $      4,135     $      5,460      $     13,581     $     17,306
        Net investment income                         160              157               496              473
        Other revenue                                  38               57               120              171
                                            --------------------------------   --------------------------------
          Total revenues                            4,333            5,674            14,197           17,950

     Expenses:
        Medical and other benefits                  1,356            2,102             5,038            5,939
        Selling, general and administrative         1,362            1,566             4,196            4,975
                                            --------------------------------   --------------------------------
          Total expenses                            2,718            3,668             9,234           10,914
                                            --------------------------------   --------------------------------

     Income before income taxes              $      1,615     $      2,006      $      4,963     $      7,036
                                            ================================   ================================

     FINANCIAL STATISTICS

     Loss ratio                                     32.8%            38.5%             37.1%            34.3%
     Expense ratio                                  32.0%            27.6%             30.0%            27.8%
                                            --------------------------------   --------------------------------
        Combined ratio                              64.8%            66.1%             67.1%            62.1%
                                            ================================   ================================


     Membership at End of Period                  196,035          259,000
</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 net income of $3.5 million or $0.25 per share for the
third quarter of 2001.  This compares to a net loss of $1.4 million or $0.09 per
share for the third quarter of 2000. The improvement in  profitability  from the
third quarter of the prior year primarily  reflects the results of  management's
strategic plan including  aggressive price increases,  significant growth in the
Company's  MedOne  business  and focused  sales to target  markets with the best
possible  returns.  Improving  performance from the Company's small group health
business  following  several  quarters of  aggressive  rate action  necessary to
counter rising claim costs also contributed to the Company's profitability.

     For the nine months ended  September 30, 2001,  the Company  reported a net
loss of $170,000 or $0.01 per share,  compared to net income of $2.5  million or
$0.17 per share for the same  period in 2000.  The nine month  results  for 2001
reflect an  after-tax  charge of $5.9  million  or $0.41 per share  taken in the
first  quarter  for  legal  related  matters.  See  "Part  II.,  Item  1.  Legal
Proceedings" for a detailed discussion.

     Excluding  the effect of the legal accrual  recorded in the first  quarter,
the  results  for the third  quarter of 2001  represent  the fourth  consecutive
quarter of improved  earnings for the Company.  The Company's  health loss ratio
has  declined for the fourth  consecutive  quarter and is at its lowest point in
more than two years.  Management anticipates that the trend of health loss ratio
and earnings improvement will continue during the remainder of 2001.  Management
now anticipates  earnings to be approximately  $0.65 per share for the full year
of 2001, excluding the first quarter legal accrual.

INSURANCE PREMIUMS AND MEMBERSHIP

     Insurance  premiums for the three months ended September 30, 2001 decreased
11.9% to $204.4 million from $232.0 million for the same period in 2000. For the
nine month period ended  September  30, 2001,  insurance  premiums  decreased to
$640.5  million from $720.4  million for the same period in the prior year.  The
decrease primarily resulted from a decline in membership in select  unprofitable
small group and exited markets,  partially offset by rising premium rates on the
continuing  block of business.  Average fully insured medical premium per member
per month for the third quarter of 2001 increased by 15.4% to $158,  compared to
the third  quarter of 2000,  reflecting  significant  rate actions  taken by the
Company.  As a result of the  Company's  actions  to  change  its  product  mix,
redefine its markets,  increase  profitability,  and  reposition  itself for the
future,  quarterly  insurance  premiums are expected to shrink  slightly  before
leveling out in mid-year 2002.

                                                                              12

<PAGE>


     Total  medical  and dental  membership  declined  from  714,391  members at
September  30, 2000 to 580,316  members at September  30, 2001.  The  membership
decrease  is  primarily  the  result of the  Company's  success  in  terminating
business in several  unprofitable  markets,  including exited markets, and lower
sales due to aggressive premium rate increases. The Company's MedOne product for
individuals  and families  continues to grow as a  percentage  of the  Company's
overall business reflecting management's strategy to change the Company's mix of
business.  MedOne  membership  now  accounts  for 43% of the  Company's  medical
membership in force. At the end of 1999 and 2000,  MedOne  membership  accounted
for 23% and 34%,  respectively.  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.

NET INVESTMENT INCOME

     Net  investment  income  for the three  months  ended  September  30,  2001
decreased to $4.3 million from $4.6 million for the three months ended September
30,  2000.  Net  investment  income was $13.2  million for the nine months ended
September 30, 2001  compared to $14.4 for the same period in 2000.  The decrease
in net  investment  income is due  primarily  to a decrease in average  invested
assets,  offset partially by an increase in the average annual investment yield.
Average  invested  assets at cost were $264.0  million for the third  quarter of
2001. In comparison,  average  invested assets were $291.6 million for the third
quarter of 2000.  The average  annual  investment  yield was 6.49% for the third
quarter of 2001 compared to 6.34% for the third quarter of 2000. Invested assets
have declined primarily as a result of the repurchase of Company stock.

OTHER REVENUE

     Other revenue,  which primarily  consists of administrative fee income from
claims processing and other administrative  services,  increased to $5.4 million
for the quarter  compared to $5.3 million for the third quarter of 2000,  and to
$16.1  million for the nine months ended  September  30, 2001 from $15.2 million
for the same period in 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 third  quarter of 2001 was 71.3%  compared to
78.8% for the third  quarter of 2000.  The health loss ratio for the nine months
ended  September 30, 2001 was 73.8%  compared to 77.4% for the nine months ended
September 30, 2000. The significant  improvement was due to management's actions
and strategies to increase premiums and combat medical inflation.  These actions
included  premium rate increases,  claims cost control  initiatives and the exit
from  unprofitable  small group markets.  The reduction also reflects  increased
sales of MedOne  products,  which are  priced  for a lower  loss  ratio but have
higher selling and administrative costs. As anticipated,  claim costs per member
per month  have  increased  slightly,  but were more  than  offset by  increased
premiums per member per month.

     The life segment loss ratio for the three months ended  September  30, 2001
was 32.8%  compared to 38.5% for the three months ended  September 30, 2000. The
life segment loss ratio for the nine months ended  September  30, 2001 was 37.1%
compared  with 34.3% for the nine months  ended  September  30,  2000.  The life
segment  loss ratio tends to  fluctuate  from  quarter to quarter as actual life
claims  experience  fluctuates.  The life  segment loss ratio for the nine month
period ended  September  30, 2001 is  consistent  with  historical  averages and
anticipated average future results for this segment.

                                                                              13

<PAGE>


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.  The SG&A expense ratio for health  segment  products for the three
months ended  September 30, 2001 was 27.0%.  This compares to 23.9% reported for
the three months ended  September 30, 2000.  Excluding the  non-recurring  legal
accrual  recorded  during the first quarter of 2001,  the SG&A expense ratio for
health segment  products for the nine months ended  September 30, 2001 was 26.2%
compared with 24.0% for the same period in 2000. The increase largely reflects a
product  mix  change  driven by growth in the MedOne  business  which has higher
selling  and  administrative  costs but lower  claim  costs than the small group
product.  Lower  premium  volume also  contributed  to the  increase in the SG&A
ratio.

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  provided by  operations  was $0.5 million for the nine
months  ended  September  30,  2001,  including  payment of the  Skilstaf,  Inc.
judgment in the third quarter.  This compares to cash used in operations of $8.6
million for the nine months ended  September 30, 2000.  The  improvement in cash
flow primarily reflects increased  profitability of the Company.  Management now
expects cash flow to be positive for the fourth quarter and full year of 2001.

     The Company's  investment  portfolio consists primarily of investment grade
bonds and has limited  exposure to equity  securities.  At  September  30, 2001,
$262.5  million or 98.9% of the Company's  investment  portfolio was invested in
bonds. At December 31, 2000, $267.0 million or 99.0% of the Company's investment
portfolio  was  invested in bonds.  The bond  portfolio  had an average  quality
rating of Aa2 at September 30, 2001 and Aa3 at 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.

     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  75,100 shares of its outstanding  common stock
during the third quarter of 2001 at a cost of $456,000. During October 2001, the
Company reached its maximum authorized  purchase  threshold,  bringing the total
purchased under the program to 2.7 million shares at an aggregate purchase price
of $18.0 million.

                                                                              14

<PAGE>

     At September  30,  2001,  the Company  maintained a revolving  bank line of
credit agreement ("Credit Agreement") with a maximum commitment of $35.2 million
and a $10.0 million  sublimit for swingline  loans.  At September 30, 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 April 2001 to revise the  Company's  applicable  interest rate on
outstanding  loans and the schedule of mandatory  future  commitment  reductions
including a $4.8 million  maximum  commitment  reduction  from $40.0  million to
$35.2 million on April 27, 2001. Revised future annual principal amounts due for
all of the Company's  debt,  including  debt under the Credit  Agreement,  as of
September  30, 2001 are $0.3  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:

-    Unexpected  increases in health care costs  resulting from the aging of the
     population,  advances  in  medical  technology,  increased  utilization  of
     medical  services and  prescription  drugs  resulting from  bioterrorism or
     otherwise, health care inflation (particularly technology-driven procedures
     and drug costs),  possible  epidemics and natural or man-made 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 its 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, competitive factors such as the entrance of additional competitors
     into the Company's markets,  competitive  pricing practices,  the Company's
     ability  to  generate  new sales,  sell new  products  and retain  existing
     customers,  the Company's ability to predict future health care cost trends
     and  adequately  price its products,  and the Company's  ability to control
     expenses during a time of declining revenue and membership.

-    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.

                                                                              15

<PAGE>

-    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.

-    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.

-    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 employment,  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, professional and technical employees.

-    Other business or investment considerations that may be disclosed from time
     to time in the Company's  Securities and 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. On August 1, 2001, the Company filed a
petition with the United States Supreme Court for a writ of certiorari to review
the  decision of the Court of Appeals.  In July 2001,  at the  direction  of the
district  court,  the Company paid the full amount of the verdict plus interest.
In October 2001,  the United States  Supreme Court denied the Company's  writ of
certiorari to review the Court of Appeals' decision.  This case is now closed.

     On February 7, 2000,  a $5.4 million  verdict was entered  against AMS Inc.
and United Wisconsin Life Insurance Company ("UWLIC"),  the Company's  insurance
subsidiary,  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. On March 29, 2001, the
Court  of  Appeals  affirmed  a  portion  of the  verdict,  with  modifications,
representing  approximately  $3.0 million in damages,  and reversed and remanded
the  remaining  issues in the case  representing  approximately  $2.4 million in
damages.  On May 2, 2001, the Company  appealed the $3.0 million  portion of the
damages to the Ohio Supreme Court, which, on July 25, 2001, declined to take the
appeal.  Briefs have been submitted for the remanded portion of the case and the
parties are awaiting the trial court's decision. Management believes the Company
has adequately provided for losses that may result from this case.

     The  Company is  involved in various  other  legal and  regulatory  matters
occurring in the normal  course of its business.  While the ultimate  outcome of
the legal and  regulatory  matters  cannot be  determined  at this time,  in the
opinion of  management,  adequate  provision  has been made for losses which may
result  from such  matters;  accordingly,  the  outcome of these  matters is not
expected  to  have a  material  adverse  effect  on the  consolidated  financial
statements.

                                                                              17

<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     On July 9,  2001,  the  Company  issued  25,000  restricted  shares  of the
Company's common stock ("Common Stock") to its Chief Executive  Officer,  Samuel
V. Miller, in a private placement  transaction  without  registration  under the
Securities  Act of 1933, as amended,  (the "Act") in reliance upon the exemption
from registration provided by Section 4(2) of that Act.  Consideration  received
by the Company for the shares  consisted of the  surrender for  cancellation  of
nonqualified  stock options granted to the Chief  Executive  Officer in 1995 and
1996 to purchase a total of 433,857  shares of Common Stock.  The 25,000 shares,
which were issued from the Company's  treasury shares, are subject to forfeiture
restrictions for a period of up to five years.

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  August 9,  2001,  was filed by the  Company to report the
adoption of a shareholder rights plan. A Form 8-K dated September 10, 2001, also
was  submitted by the Company to furnish Item 9,  Regulation  FD  Disclosure,  a
financial presentation included on the Company's website.

                                                                              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:  NOVEMBER 13, 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 September 30, 2001


<table>
<caption>
                                                            INCORPORATED HEREIN                        FILED
EXHIBIT NO.    DESCRIPTION                                  BY REFERENCE TO                            HEREWITH
<S>            <C>                                          <C>                                            <C>

       3       Articles of Amendment to Restated Articles   Exhibit 3 of the Registrant's Form 10-Q
               of    Incorporation    with   Respect   to   for the quarter ended June 30, 2001.
               Designation,  Preferences, Limitations and
               Relative   Rights   of   Series  B  Junior
               Cumulative Preferred Stock.

       4       Rights  Agreement,  dated as of August  9,   Exhibit  1    to    the     Registrant's
               2001,  between  American  Medical Security   Registration Statement on Form 8-A filed
               Group,  Inc.  and Firstar  Bank, N.A.,  as   August  14, 2001  and  Exhibit  4 to the
               Rights Agents, including the form of Right   Registrant's Current  Report on Form 8-K
               Certificate as Exhibit B thereto.            dated  August 9,  2001,   and  filed  on
                                                            August 14, 2001.

       10      Restricted   Stock   Agreement with  Chief                                                  X
               Executive Officer dated July 9, 2001.
</table>

                                                                            EX-1