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


                                      FORM 10-Q


                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934


                         For the quarter ended June 30, 1997


                            Commission File Number 0-19506


                           UNITED WISCONSIN SERVICES, INC.
                (Exact name of registrant as specified in its charter)


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


401 WEST MICHIGAN STREET, MILWAUKEE, WISCONSIN                  53203-2896
   (Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, including area code: (414) 226-6900


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
   ----      ----


Number of shares of Common Stock outstanding as of July 31, 1997 was 16,446,192.

                                       1
<PAGE>

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements


                           UNITED WISCONSIN SERVICES, INC.
                             CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)



                                                      JUNE 30,    DECEMBER 31,
               ASSETS                                   1997          1996
               ------                                 --------    -----------
                                                           (IN THOUSANDS)

Investments:
  Bonds available for sale, at market                $  390,616     $  394,615
  Bonds held to maturity, at amortized cost              12,801         12,823
                                                     ----------     ----------
       Total bonds                                      403,417        407,438

  Stocks, at market                                      62,707         59,685
                                                     ----------     ----------
       Total investments                                466,124        467,123

Cash and cash equivalents                                36,620         51,146

Receivables:
  Due from affiliates                                     2,846          2,641
  Other receivables                                      74,689         74,167
                                                     ----------     ----------
       Total receivables                                 77,535         76,808

Property and equipment - net                             48,520         53,103

Goodwill and other intangibles                          147,915        155,458

Other assets                                             34,995         32,482
                                                     ----------     ----------
       Total assets                                  $  811,709     $  836,120
                                                     ==========     ==========

            See Notes to Interim Consolidated Financial Statements

                                       2
<PAGE>
                           UNITED WISCONSIN SERVICES, INC.
                             CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)


                                                       JUNE 30,    DECEMBER 31,
       LIABILITIES AND SHAREHOLDERS' EQUITY              1997          1996
       ------------------------------------            --------    ------------
                                                           (IN THOUSANDS)

Liabilities:
  Medical and other benefits payable                  $  213,277    $  240,338
  Advance premiums                                        53,821        51,514
  Due to affiliates                                       84,066        74,005
  Payables and accrued expenses                           47,913        50,879
  Other liabilities                                       37,864        49,941
  Debt                                                    55,188        55,788
                                                      ----------    ----------
       Total liabilities                                 492,129       522,465

Shareholders' equity:
  Common stock (no par value, $1 stated value, 
    50,000,000 shares authorized, 16,429,018 and
    16,293,995 shares issued and outstanding at
    June 30, 1997 and December 31, 1996, respectively)    16,429        16,294
  Paid-in capital                                        184,992       184,019
  Retained earnings                                      112,066       107,073
  Unrealized gains on investments                          6,093         6,269
                                                      ----------    ----------
       Total shareholders' equity                        319,580       313,655
                                                      ----------    ----------
       Total liabilities and shareholders' equity     $  811,709    $  836,120
                                                      ==========    ==========

            See Notes to Interim Consolidated Financial Statements

                                       3
<PAGE>
                         UNITED WISCONSIN SERVICES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED             SIX MONTHS ENDED
                                                               JUNE 30,                      JUNE 30,
                                                      -------------------------     -------------------------
                                                         1997           1996           1997           1996
                                                      ----------     ----------     ----------     ----------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                   <C>            <C>            <C>            <C>
Revenues:
    Health services revenues:
       Premium revenue                                $  379,434     $  264,120     $  768,042     $  525,769
       Other revenue                                      15,576          6,842         31,419         14,108
    Investment results                                    11,363          9,750         21,208         22,239
                                                      ----------     ----------     ----------     ----------
            Total revenues                               406,373        280,712        820,669        562,116

Expenses:
    Medical and other benefits                           303,948        216,267        614,118        437,706
    Operating expenses                                    88,044         54,384        180,637        108,062
    Profit sharing on joint ventures                         257          3,973          1,102          8,393
    Interest expense                                       2,409            869          4,626          1,739
    Amortization of goodwill and other intangibles         2,464            158          4,905            316
                                                      ----------     ----------     ----------     ----------
            Total expenses                               397,122        275,651        805,388        556,216
                                                      ----------     ----------     ----------     ----------
Income before income tax expense                           9,251          5,061         15,281          5,900

Income tax expense                                         3,688          1,866          6,348          2,413
                                                      ----------     ----------     ----------     ----------
Net income                                            $    5,563     $    3,195     $    8,933     $    3,487
                                                      ==========     ==========     ==========     ==========
Earnings per common share                             $     0.34     $     0.26     $     0.55     $     0.28
                                                      ==========     ==========     ==========     ==========
</TABLE>

            See Notes to Interim Consolidated Financial Statements

                                       4
<PAGE>

                           UNITED WISCONSIN SERVICES, INC.
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (Unaudited)


                                                          SIX MONTHS ENDED
                                                              JUNE 30,
                                                     -------------------------
                                                         1997          1996
                                                     -----------    ----------
                                                           (IN THOUSANDS)

Operating activities:
  Net income                                          $  8,933       $  3,487
  Adjustments to reconcile net income to net cash
    used in operating activities:
     Depreciation and amortization                      11,080            898
     Realized investment gains                          (6,189)        (7,484)
     Deferred income tax expense (benefit)                (920)         2,134
     Changes in other operating accounts:
       Medical and other benefits payable              (27,061)        (8,788)
       Advance premiums                                  2,307          5,143
       Due to/from affiliates                            9,856         23,846
       Other receivables                                  (522)        (3,326)
       Funds held on behalf of affiliated reinsurers         -        (25,720)
       Other - net                                     (10,373)        (7,218)
                                                       -------        -------
         Net cash used in operating activities         (12,889)       (17,028)

Investing activities:
  Purchases of available for sale investments         (246,206)      (366,838)
  Proceeds from sale of available for sale
   investments                                         245,827        359,742
  Proceeds from maturity of available for sale
   investments                                           6,420         50,450
  Purchases of held to maturity investments             (1,266)          (970)
  Proceeds from maturity of held to maturity
   investments                                           1,275            280
  Proceeds from sale of property and equipment           1,117              -
  Additions to property and equipment                   (1,878)          (559)
  Change in investment in unconsolidated affiliates     (2,294)          (116)
  Change in other investments                                -           (249)
                                                       -------        -------
        Net cash provided by investing activities        2,995         41,740

Financing activities:
  Cash dividends paid                                   (3,940)        (3,024)
  Common stock issued for options exercised                811              -
  Common stock withheld for taxes on options
   exercised                                            (1,019)             -
  Tax benefit of options exercised                       1,316              -
  Repayment of debt                                       (600)           (10)
  Net borrowings under line of credit agreement         (1,200)         6,690
  Repayment of note with affiliate                           -        (50,000)
                                                       -------        -------

        Net cash used in financing activities           (4,632)       (46,344)
                                                       -------        -------
Cash and cash equivalents:
  Decrease during period                               (14,526)       (21,632)
  Balance at beginning of year                          51,146         38,290
                                                       -------        -------

  Balance at end of period                             $36,620        $16,658
                                                       =======        =======

            See Notes to Interim Consolidated Financial Statements

                                       5
<PAGE>

                           UNITED WISCONSIN SERVICES, INC.
                  NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)

1.  SIGNIFICANT ACCOUNTING POLICIES
    -------------------------------

    BASIS OF PRESENTATION - The accompanying consolidated financial statements
    for United Wisconsin Services, Inc. (the Company) have been prepared in
    accordance with generally accepted accounting principles. The financial
    information included herein has been prepared by management without audit
    by independent certified public accountants.

    The unaudited financial statements include all adjustments and accruals
    consisting only of normal recurring accrual adjustments which are,
    in the opinion of management, necessary for a fair presentation of 
    the consolidated financial position and results of operations for 
    the interim periods. The results of operations for any interim period
    are not necessarily indicative of results for the full year. The 
    unaudited interim consolidated financial statements should
    be read in conjunction with the consolidated financial statements and
    notes thereto for the year ended December 31, 1996, incorporated by
    reference or included in the Company's Form 10-K, as filed with the
    Securities and Exchange Commission.

    EARNINGS PER COMMON SHARE - Earnings per common share are computed by
    dividing net income by the weighted average number of common
    shares outstanding. Weighted average common shares outstanding were
    16,422,332 and 12,599,715 for the three months ended June 30, 1997
    and 1996, respectively, and 16,380,208 and 12,599,715 for the 
    six months ended June 30, 1997 and 1996, respectively.

    RECLASSIFICATIONS - Certain reclassifications have been made to the
    consolidated financial statements for 1996 to conform with the 1997
    presentation.

2.  RECENT ACCOUNTING PRONOUNCEMENT
    -------------------------------

    In February 1997, the Financial Accounting Standards Board (the FASB)
    issued Statement of Financial Accounting Standards (SFAS) No. 128
    "Earnings per Share", which becomes effective for financial statements
    issued for periods ending after December 15, 1997. While management
    continues to evaluate the impact of this new pronouncement, it is not
    expected to have a material impact on the Company's disclosure of
    earnings per share.

                                       6

<PAGE>

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

OVERVIEW

     United Wisconsin Services, Inc. (the Company) is a leading provider of
managed health care services and employee benefit products.  The Company's three
primary product lines are (i) Health Maintenance Organization (HMO) products,
including Compcare Health Services Insurance Corporation (Compcare), Valley
Health Plan, Inc. (Valley), Unity Health Plans Insurance Corporation (Unity) and
certain point-of-service (POS) and other related products managed by Compcare
and Valley; (ii) small group managed care and life products sold through
American Medical Security Holdings, Inc. (AMS), which holds United Wisconsin
Life Insurance Company (UWLIC) and the companies held by the Company's former
joint venture partner, American Medical Security Group, Inc., and (iii)
specialty managed care products and services, including dental, life, disability
and workers' compensation products, managed care consulting, electronic claim
submission, pharmaceutical management and managed behavioral health services. 
Operating results and statistics for these three product groups are presented
below for the periods noted.

SUMMARY OF OPERATING RESULTS AND STATISTICS


                                                             JUNE 30,
                                                         ----------------
                                                         1997        1996
                                                         ----        ----
Membership at end of period:
     HMO products                                       287,855     260,853
     AMS medical products                               666,584     932,620
                                                      ---------   ---------
         Total medical products                         954,439   1,193,473
     AMS life products                                  310,911     448,124
     Specialty managed care
       products and services                          1,280,694   1,127,113



                                               THREE MONTHS       SIX MONTHS
                                              ENDED JUNE 30,     ENDED JUNE 30,
                                             ---------------    ---------------
                                             1997      1996     1997      1996
                                             ----      ----     ----      ----
Health services revenues (As a
  percentage of the total):
     HMO products                            30.1%     38.6%    29.4%     38.8%
     AMS products                            63.2      51.3     64.0      51.1
     Specialty managed care 
       products and services                  7.7      11.2      7.6      11.2
     Intercompany eliminations               (1.0)     (1.1)    (1.0)     (1.1)
                                            -----     -----    -----     -----
          Total                             100.0%    100.0%   100.0%    100.0%
                                            -----     -----    -----     -----
                                            -----     -----    -----     -----


                                       7


<PAGE>

                                               THREE MONTHS       SIX MONTHS
                                              ENDED JUNE 30,     ENDED JUNE 30,
                                             ---------------     --------------
                                             1997      1996      1997      1996
                                             ----      ----      ----      ----

Operating statistics:
     HMO products:
       Medical loss ratio (1)                90.7%     90.5%     89.5%     90.4%
       Operating expense 
          ratio (2)                           9.2       9.0       9.4       9.2

     AMS products:
       Medical:
          Medical loss 
            ratio (1)                        78.0      79.2      78.5      81.4
          Operating expense
            ratio (2)                        22.5      23.9      22.5      23.8
       Life and other products:
          Loss ratio (1)                     47.6      35.2      45.1      37.9

     Specialty managed care
       products and services:
          Loss ratio (1)                     70.3      73.5      71.7      74.0

     Consolidated:
       Loss ratio (1)                        80.1      81.9      80.0      83.3
       Net income margin (3)                  1.4       1.1       1.1       0.6

(1) Medical and other benefits as a percentage of premium revenue.
(2) Operating expenses as a percentage of premium revenue.
(3) Net income as a percentage of total revenues. 

     Reclassifications have been made to the product line amounts shown above 
for 1996 to conform with the 1997 presentation.  The life products sold by 
AMS are now included in the AMS products category;  previously, they were 
included with specialty products and services.  This reclassification was 
made in conjunction with the AMS merger (AMS Merger), as discussed further 
below.

     The Company's revenues are derived primarily from premiums, while 
medical benefits constitute the majority of expenses.  Profitability is 
directly affected by many factors including, among others, premium rate 
adequacy, estimates of medical benefits, health care utilization, effective 
administration of benefit payments, operating efficiency, investment returns 
and federal and state laws and regulations.

RESULTS OF OPERATIONS

TOTAL REVENUES

     Total revenues for the three months ended June 30, 1997 increased 44.8% 
to $406.4 million from $280.7 million for the three months ended June 30, 
1996.  On a year-to-date basis, total revenues increased 46.0% to $820.7 
million from $562.1 million for the six months ended June 30, 1996.  These 
increases were due primarily to increased health services revenues (premium 
and other revenue) as a result of the AMS Merger, as discussed further below.


                                       8

<PAGE>

     HEALTH SERVICES REVENUES -- HMO health services revenues for the three 
months ended June 30, 1997 increased 13.7% to $119.0 million from $104.7 
million for the three months ended June 30, 1996.  Average HMO medical 
premium per member for the three months ended June 30, 1997 increased 3.1% 
from the same period in the prior year. The average number of HMO medical 
members for the three months ended June 30, 1997 increased 9.9% to 285,000 
from 260,000 for the three months ended June 30, 1996.

     HMO health services revenues for the six months ended June 30, 1997 
increased 12.1% to $234.8 million from $209.3 million for the same period in 
the prior year. Average HMO medical premium per member for the six months 
ended June 30, 1997 increased 3.1% from the same period in the prior year. 
The average number of HMO medical members for the six months ended June 30, 
1997 increased 8.4% to 281,000 from 259,000 for the same period in the prior 
year. 

     Health services revenues for AMS products for the three months ended 
June 30, 1997 increased 79.7% to $249.8 million from $139.0 million for the 
three months ended June 30, 1996.  The increase in AMS health services 
revenues was due primarily to the acquisition of the 88% of AMS that the 
Company did not already own. Prior to the merger of the Company and AMS 
effective December 3, 1996, the Company retained 50% of the premium revenue 
and 50% of the profit (loss) on small group managed care and life business 
sold by AMS.  Following the AMS Merger, the Company retained 100% of the 
health services revenues and 100% of the profit (loss) on small group managed 
care and life business sold by AMS. The additional health services revenues 
due to the AMS Merger accounted for $131.0 million of the increase in health 
services revenues for the three months ended June 30, 1997.  Excluding the 
effects of the AMS Merger, AMS health services revenues for the three months 
ended June 30, 1997 decreased 14.6% to $118.8 million from $139.0 million for 
the three months ended June 30, 1996. While average medical premium per 
member increased 15.5% for the three months ended June 30, 1997, compared 
with the same period in the prior year, the average number of small group 
medical members outstanding decreased 25.6% for the three months ended June 
30, 1997 to 704,000 from 947,000 for the three months ended June 30, 1996.  
Much of this membership decline was the result of AMS' efforts to return this 
block of business to profitability.  These steps included exiting 
unprofitable markets in Texas and Kentucky and implementing substantial rate 
increases for certain product lines which resulted in membership losses but 
improved profitability on renewed business.  Major sales initiatives are 
underway at AMS in an effort to reverse this membership decline. As part of 
that effort, AMS recently announced a strategic alliance with a marketer of 
medical insurance to the small group market.  Old Northwest Agents, Inc. 
(ONA) of Minneapolis will be the exclusive marketer of AMS products in North 
Carolina, South Carolina, Mississippi, Arkansas, and Louisiana.  AMS and ONA 
are also contemplating an expansion into new geographic areas where AMS does 
not currently have a presence.

     Health services revenues for AMS products for the six months ended June 
30, 1997 increased 85.7% to $512.0 million from $275.7 million for the six 
months ended June 30, 1996.  The increase in AMS health services revenues was 
due primarily to the acquisition of the


                                       9


<PAGE>


88% of AMS that the Company did not already own, as previously discussed.  
The additional health services revenues due to the AMS Merger accounted for 
$267.8 million of the increase in health services revenues for the six months 
ended June 30, 1997.  Excluding the effects of the AMS Merger, AMS health 
services revenues for the six months ended June 30, 1997 decreased 11.4% to 
$244.2 million from $275.7 million for the six months ended June 30, 1996.  
While average medical premium per member increased 14.3% for the six months 
ended June 30, 1997, compared with the same period in the prior year, the 
average number of small group medical members outstanding decreased 22.1% for 
the six months ended June 30, 1997 to 744,000 from 954,000 for the six months 
ended June 30, 1996.  As previously discussed, this membership decline was 
the result of AMS' turnaround strategy.  Major sales initiatives are underway 
at AMS in an effort to reverse this membership decline.  

     Health services revenues for specialty managed care products and 
services for the three months ended June 30, 1997 decreased 0.6% to $30.2 
million from $30.4 million for the three months ended June 30, 1996.  This 
decrease was due primarily to a decrease of $2.4 million in premiums assumed 
under certain federal and state reinsurance programs.  While participation in 
these programs added premium revenue to the financial statements of the 
Company, their contribution to net income was nominal.  Excluding the impact 
of the withdrawal from these government-sponsored reinsurance programs, 
health services revenues for specialty managed care products and services for 
the three months ended June 30, 1997 increased 7.9% to $29.8 million from 
$27.6 million for the same period in the prior year.  This increase was due 
primarily to an increase of $1.0 million in managed behavioral health 
revenues, an increase of $0.7 million in workers' compensation premiums, and 
an increase of $0.6 million in dental premiums, all of which were driven by 
membership increases.

     Health services revenues for specialty managed care products and 
services for the six months ended June 30, 1997 increased 0.8% to $60.7 
million from $60.2 million for the six months ended June 30, 1996, due 
primarily to a decrease of $4.7 million in premiums assumed under the 
aforementioned reinsurance programs.  Excluding the impact of the withdrawal 
from these programs, health services revenues for specialty managed care 
products and services for the six months ended June 30, 1997 increased 9.6% 
to $59.9 million from $54.7 million for the same period in the prior year.  
This increase was due primarily to an increase of $1.7 million in managed 
behavioral health revenues, an increase of $1.4 million in workers' 
compensation premiums, and an increase of $1.4 million in dental premiums, 
all of which were driven by membership increases.

     INVESTMENT RESULTS -- Investment results include investment income and 
realized gains (losses) on investments.  Investment results for the three 
months ended June 30, 1997 increased 16.5% to $11.4 million from $9.8 million 
for the three months ended June 30, 1996.  On a year-to-date basis, 
investment results decreased 4.6% to $21.2 million from $22.2 million for the 
same


                                      10


<PAGE>

period in the prior year.  Average annual investment yields, excluding net 
realized gains, were 6.2% and 5.8% for the three months ended June 30, 1997 
and 1996, respectively.  On a year-to-date basis, average annual investment 
yields, excluding net realized gains, were 6.0% and 5.7% for the six months 
ended June 30, 1997 and 1996, respectively.  Investment gains are realized in 
the normal investment process in response to market opportunities.  Average 
invested assets for the three months ended June 30, 1997 decreased 6.0% to 
$492.7 million from $523.9 million for the three months ended June 30, 1996.  
On a year-to-date basis, average invested assets decreased 5.6% to $499.7 
million from $529.3 million for the six months ended June 30, 1996.  The 
decrease in average invested assets is due primarily to the decrease in 
medical and other benefits payable resulting from the membership decline for 
AMS products over the past year.

EXPENSE RATIOS

     LOSS RATIO -- The consolidated loss ratio represents the ratio of 
medical and other benefits to premium revenue for the Company on a 
consolidated basis, and is therefore a blended ratio for medical, life, 
dental, disability and other product lines.  The consolidated loss ratio 
improved to 80.1% for the second quarter of 1997, compared with 81.9% for the 
second quarter of 1996.  On a year-to-date basis, the consolidated loss ratio 
improved to 80.0% for the first six months of 1997, compared with 83.3% for 
the first six months of 1996.  The consolidated loss ratio is influenced by 
the component loss ratios for each of the Company's primary product lines, as 
discussed below.  
     
     The medical loss ratio for HMO products for the three months ended June 
30, 1997 was 90.7%, which was reasonably consistent with 90.5% for the same 
period in the prior year.  On a year-to-date basis, the medical loss ratio 
for HMO products decreased to 89.5% from 90.4% for the same period in the 
prior year.  A more favorable pricing environment in 1997 and improved 
results from medical management efforts produced lower loss ratios in the HMO 
products division.  
     
     The medical loss ratio for AMS products for the three months ended June 
30, 1997 was 78.0%, compared with 79.2% for the same period in 1996.  On a 
year-to-date basis, the medical loss ratio for AMS products was 78.5%, 
compared with 81.4% for the same period in 1996.  The lower loss ratios in 
1997 reflect improvements in medical cost trends and pricing changes achieved 
by AMS since the first quarter of 1996.  AMS continues to re-price its 
products and eliminate unprofitable business.

     The loss ratio for AMS life and other products for the three months 
ended June 30, 1997 was 47.6%, compared with 35.2% for the same period in 
1996.  On a year-to-date basis, the loss ratio for AMS life and other 
products was 45.1%, compared with 37.9% for the same period in 1996.  This 
product category also includes accidental death and dismemberment (AD&D) 
coverage.  The increased loss ratio in 1997 is due to higher AD&D loss 
experience on AMS' Texas occupational business.  AMS is currently


                                      11


<PAGE>


exiting that product line in Texas.

     The loss ratio for specialty managed care products and services for the 
three months ended June 30, 1997 was 70.3%, compared with 73.5% for the same 
period in 1996.  On a year-to-date basis, the loss ratio for specialty 
managed care products and services decreased to 71.7%, compared with 74.0% 
for the same period in 1996.  The lower loss ratios in 1997 are due primarily 
to the Company's withdrawal from the government-sponsored reinsurance 
programs discussed previously, which were recorded at a near-100% loss ratio.

     OPERATING EXPENSE RATIO - The operating expense ratio includes 
commissions, administrative expenses, and premium taxes and other 
assessments.  The operating expense ratio for HMO products increased slightly 
to 9.2% for the second quarter of 1997, compared with 9.0% for the second 
quarter of 1996. On a year-to-date basis, the operating expense ratio for HMO 
products also increased slightly to 9.4% from 9.2% for the six months ended 
June 30, 1996.
     
     The operating expense ratio for AMS medical products decreased to 22.5% 
for the three months ended June 30, 1997 from 23.9% for the three months 
ended June 30, 1996, due primarily to a decrease in commissions as a 
percentage of premium revenue.  On a year-to-date basis, the operating 
expense ratio for AMS medical products decreased to 22.5% for the six months 
ended June 30, 1997 from 23.8% for the six months ended June 30, 1996.  The 
operating expense ratio for AMS life products declined to 30.0% for the 
second quarter of 1997, compared with 32.0% for the same period in the prior 
year.  On a year-to-date basis, the operating expense ratio for AMS life 
products also declined to 29.9% for the six months ended June 30, 1997, 
compared with 31.9% for the same period in the prior year.  AMS products are 
sold exclusively through independent agents who are compensated through 
commissions.  Over time, renewal business has gradually represented a larger 
proportion of the total AMS medical and life business. Since renewal 
commissions are typically lower than commissions on new sales, this has 
contributed to the decrease in the ratios.  AMS also continues to focus on 
efforts to improve operating efficiency through process re-engineering and to 
reduce staff commensurate with the decline in gross premium revenue.

     Operating expenses related to specialty managed care products and 
services increased 15.9% for the three months ended June 30, 1997 to $14.3 
million from $12.3 million for the same period in the prior year.  On a 
year-to-date basis, operating expenses related to specialty managed care 
products and services increased 19.2% for the six months ended June 30, 1997 
to $28.7 million from $24.1 million for the same period in the prior year.  
Increases in operating expenses are tied to health services revenues which 
increased 7.9% for the three months ended June 30, 1997 over the same period 
in 1996 and 9.6% for the six months ended June 30, 1997 over the same period 
in 1996, excluding the impact of the decrease in assumed premiums related to 
certain federal and state reinsurance programs.  Of the remaining


                                      12


<PAGE>


increase in operating expenses that is not due to growth in health services 
revenues, the majority is due to higher expenses for services rendered by 
behavioral health providers related to the Company's managed behavioral 
health business.

OTHER EXPENSES

     Profit sharing on joint ventures was $0.3 million for the three months 
ended June 30, 1997, compared with $4.0 million for the three months ended 
June 30, 1996.  Of these balances, $0.3 million and $0.7 million for the 
three months ended June 30, 1997 and 1996, respectively, represented profit 
sharing expenses related primarily to the Unity and Valley joint ventures.  
The remaining $3.3 million for the three months ended June 30, 1996 was due 
to investment income and realized investment gains on funds held by the 
Company on behalf of an insurance subsidiary of AMS.  Following the AMS 
Merger, the reinsurance agreement, which gave rise to this funds held 
balance, was terminated effective December 31, 1996.  On a year-to-date 
basis, profit sharing on joint ventures was $1.1 million for the six months 
ended June 30, 1997 and $8.4 million for the six months ended June 30, 1996.  
Of these balances, $1.1 million and $1.5 million for the six months ended 
June 30, 1997 and 1996, respectively, represented profit sharing expenses 
related primarily to the Unity and Valley joint ventures.  The remaining $6.9 
million for the six months ended June 30, 1996 was due to investment income 
and realized investment gains on funds held by the Company on behalf of an 
insurance subsidiary of AMS, as previously discussed.  

     Interest expense increased to $2.4 million for the three months ended 
June 30, 1997, compared with $0.9 million for the same period in the prior 
year. Interest expense increased to $4.6 million for the six months ended 
June 30, 1997, compared with $1.7 million for the same period in the prior 
year.  The increase is due primarily to interest expense on the $70.0 million 
of borrowings from Blue Cross & Blue Shield United of Wisconsin (BCBSUW) to 
fund the cash portion of the consideration for the AMS Merger.  In 
conjunction with the AMS Merger, the Company also recorded $150.0 million of 
goodwill and other intangibles and $22.2 million of related deferred taxes.  
Amortization of goodwill and other intangibles for the second quarter of 1997 
totaled $2.5 million, including $2.3 million related to the AMS Merger plus 
$0.2 million related to other acquisitions, compared with $0.2 million of 
amortization expense for the three months ended June 30, 1996.  On a 
year-to-date basis, amortization of goodwill and other intangibles totaled 
$4.9 million, including $4.6 million related to the AMS Merger plus $0.3 
million related to other acquisitions, compared with $0.3 million of 
amortization expense for the six months ended June 30, 1996.

NET INCOME

     Consolidated net income for the three months ended June 30, 1997 
increased to $5.6 million or $0.34 per share from $3.2 million or $0.26 per 
share for the three months ended June 30,


                                      13


<PAGE>


1996.  Consolidated net income for the six months ended June 30, 1997 
increased to $8.9 million or $0.55 per share from $3.5 million or $0.28 per 
share for the six months ended June 30, 1996.  The results for 1997 reflect 
100% of the profit on the small group managed care and life business sold by 
AMS, compared with 50% in 1996.  The 1997 earnings per share calculation also 
reflects the new shares issued in conjunction with the AMS Merger.

     The Company's effective tax rate was 39.9% for the three months ended 
June 30, 1997, compared with 36.9% for the three months ended June 30, 1996. 
Excluding the impact of non-deductible goodwill related to the AMS Merger and 
other acquisitions, the Company's effective tax rate for the three months 
ended June 30, 1997 and 1996 was 37.1% and 36.1%, respectively.  On a 
year-to-date basis, the Company's effective tax rate was 41.5% for the six 
months ended June 30, 1997, compared with 40.9% for the six months ended June 
30, 1996.  Excluding the impact of non-deductible goodwill related to the AMS 
merger and other acquisitions, the Company's effective tax rate for the six 
months ended June 30, 1997 and 1996 was 38.1% and 39.4%, respectively.  
Deferred tax benefits have been recognized for identified intangibles related 
to the AMS Merger.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's sources of cash flow consist primarily of health services 
revenues 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. 

     Historically, the Company has generated positive cash flow from 
operations. For the six months ended June 30, 1997 and 1996, however, net 
cash used in operating activities amounted to a use of $12.9 million and 
$17.0 million, respectively.  The decrease in cash flow is due primarily to 
the decrease in medical and other benefits payable resulting from the 
membership decline for AMS products over the past year.  Due to periodic cash 
flow requirements of certain subsidiaries, the Company made borrowings under 
its bank line of credit ranging up to $8.5 million during the first six 
months of 1997 to meet short-term cash needs.  No balance was outstanding at 
June 30, 1997.

     The Company's investment portfolio consists primarily of investment 
grade bonds and has a limited exposure to equity securities.  At December 31, 
1996, $407.4 million or 87.2% of the Company's total investment portfolio was 
invested in bonds.  At June 30, 1997, $403.4 million or 86.5% of the 
Company's total investment portfolio was invested in bonds.  The bond 
portfolio had an average quality rating of Aa3 at December 31, 1996 and a 
rating of A1 at June 30, 1997 by Moody's Investor Service, and the majority 
of the bond portfolio was classified as available


                                      14


<PAGE>


for sale.  In accordance with Statement of Financial Accounting Standards 
(SFAS) No. 115, bonds classified as available for sale are recorded on the 
Company's balance sheet at market value.  The market value of the total 
investment portfolio, which includes stocks and bonds, exceeded amortized 
cost by $10.1 million and $9.5 million at December 31, 1996 and June 30, 
1997, respectively.  Unrealized holding gains and losses on bonds classified 
as available for sale are included as a component of shareholders' equity, 
net of applicable deferred taxes.  The Company has no investments 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.

     Prior to the AMS Merger the Company owned 12% of the common stock of 
AMS, which was recorded at cost of $1.4 million.  Effective December 3, 1996, 
the Company acquired the remaining 88% interest in AMS that it did not 
already own. The acquisition was accomplished through the merger of AMS with 
and into the Company pursuant to the terms of an Agreement and Plan of Merger 
dated July 31, 1996, by and between AMS, BCBSUW, the Company and the two 
principal AMS shareholders (individually and as trustees under a voting trust 
for the other AMS shareholders).  The Company was the surviving corporation 
in the merger. The aggregate consideration for the merger was cash of $71.8 
million, including expenses, and $98.7 million representing the market value 
of 3,694,280 newly issued shares of Company common stock and options to 
purchase Company common stock.  Most of the cash came from $70.0 million 
borrowed from BCBSUW, which, after the merger, owns approximately 38% of the 
Company's common stock.  

     In December 1995, United Wisconsin Insurance Company (UWIC) borrowed 
$65.0 million from BCBSUW under a Surplus Note Agreement, which was 
guaranteed by the Company.  The Surplus Note provided UWIC with regulatory 
capital needed to replace capital paid to the Company in the form of a 
dividend in December 1995. The dividend and Surplus Note were part of a 
capital restructuring plan designed to transfer capital from UWIC to UWLIC to 
support UWLIC's retention of the AMS medical business beginning in 1996.  The 
Company repaid $25.0 million in each of the first and second quarters of 1996 
and the remainder was repaid in the third quarter of 1996.

     The Company's anticipated expansion of its business requires capital 
levels sufficient to support premium growth.  The Company's compound annual 
growth rate in premium revenue for the five years ended December 31, 1996 was 
28.8%, due principally to the growth of AMS products.  While the future rate 
of growth is uncertain, growth in premium revenue is expected to continue.

     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.  In 
Wisconsin, where a large percentage of the Company's premium is written, 
these levels are


                                      15


<PAGE>


based upon the amount and type of premiums written and are calculated 
separately for each subsidiary.  As of June 30, 1997, statutory capital and 
surplus for each of these insurance subsidiaries exceeded required levels.

     In compliance with applicable state insurance regulations, certain 
insurance subsidiaries have deposited securities with various states 
aggregating $6.0 million at June 30, 1997.  In addition, HMOs are required to 
maintain a deposit with the State of Wisconsin for future assessments for HMO 
insolvencies. As of June 30, 1997, the aggregate deposit for the Company's 
consolidated HMOs was $4.8 million.  States in which the insurance 
subsidiaries are licensed to do business independently establish deposit 
requirements.  Increases in deposit levels, resulting in the segregation of 
certain investments, may adversely affect the Company's liquidity.

     The National Association of Insurance Commissioners (NAIC) has adopted 
risk-based capital guidelines for both life and health insurers and for 
property and casualty insurers.  These guidelines currently apply only to 
certain of the Company's subsidiaries.  Those subsidiaries exceed the company 
action level for NAIC risk-based capital guidelines.  The NAIC is also 
developing risk-based capital guidelines for health organizations, which 
would apply to the Company's HMO subsidiaries.  In addition, the Office of 
the Commissioner of Insurance of the State of Wisconsin (OCI) and other state 
regulators have the authority to establish capital and surplus requirements 
for individual companies and may propose stricter capital and surplus 
requirements.

     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, financings from BCBSUW or other bank borrowings, as market 
conditions may permit or dictate.

FORWARD LOOKING STATEMENTS

     This report contains certain forward looking statements with respect to 
the financial condition, results of operations and business of the Company.  
Such forward looking statements are subject to inherent risks and 
uncertainties that may cause actual results to differ materially from those 
contemplated by such forward looking statements.  Factors that may cause 
actual results to differ materially from those contemplated by such forward 
looking statements include, among others, rising health care costs, business 
conditions and competition in the managed care industry, developments in 
health care reform and other regulatory issues.


                                      16

<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

          The Annual Meeting of Shareholders of the Company was held on May 28,
          1997 for the purpose of electing four directors.  Proxies for the
          meeting were solicited pursuant to Section 14 (a) of  the Securities
          Exchange Act of 1934, as amended, and there was no solicitation in
          opposition to the Board of Directors' solicitation.

          All four of the Company's nominees were elected, each receiving the
          vote indicated below:

          Richard A. Abdoo:                       Thomas R. Hefty:
          For                 15,428,014          For                15,428,039
          Withheld                27,581          Withheld               27,556
          Abstain                      0          Abstain                     0
          Broker Non-Votes             0          Broker Non-Votes            0

          William R. Johnson:                     Carol N. Skornicka:
          For                 15,428,039          For                15,427,014
          Withheld                27,556          Withheld               28,581
          Abstain                      0          Abstain                     0
          Broker Non-Votes             0          Broker Non-Votes            0

ITEM 5.   OTHER INFORMATION

          None




                                      17

<PAGE>


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               3      Restated and Amended Bylaws of United Wisconsin Services, 
                      Inc. dated May 28, 1997.                
                    
               10.1   UWSI/BCBSUW 401(k) Plan (as amended and restated effective
                      January 1, 1997).

               10.2   UWSI/BCBSUW Union Employees 401(k) Plan (as amended and
                      restated effective January 1, 1997). 

               11     Statement regarding computation of per share earnings.
                      (See Note 1 of Notes to Interim Consolidated Financial
                      Statements).

          (b)  Reports on Form 8-K

               (1)    Current Report on Form 8-K dated June 12, 1997, including
                      under Item 7 certain proforma financial information
                      contained in Registrant's Registration Statement on Form
                      S-3 (Registration No. 333-29425) filed June 17, 1997.



                                      18

<PAGE>
                                   SIGNATURE

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:   8/11/97
      --------------------------


\                        UNITED WISCONSIN SERVICES, INC.




                        /s/ C. Edward Mordy
                        -------------------------------------------
                        C. Edward Mordy
                        Vice President and Chief Financial Officer
                        (Principal Financial Officer and
                         Chief Accounting Officer)

                                       19

<PAGE>


                         UNITED WISCONSIN SERVICES, INC.
                                INDEX TO EXHIBITS


                                                             Sequential
Exhibit                                                         Page
Number                  Document Description                   Number
------                  --------------------                   ------
  3       Restated and Amended Bylaws of United Wisconsin
          Services, Inc. dated May 28, 1997.                     21

  10.1    UWSI/BCBSUW 401(k) Plan (as amended and restated
          effective January 1, 1997).                            53

  10.2    UWSI/BCBSUW Union Employees 401(k) Plan (as
          amended and restated effective January 1, 1997).      122

  11      Statement regarding computation of per share
          earnings.  (See Note 1 of Notes to Interim
          Consolidated Financial Statements).




                                      20