<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q



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

For the quarterly period ended September 30, 1996

                             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 0-21223


                PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP
             (Exact name of registrant as specified in its charter)


                Michigan                               38-3273911
        (State of Incorporation)          (I.R.S. Employer Identification No.)

4295 Okemos Road, Box 2510, Okemos,
             Michigan                                  48805-9510
(Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code:  (517) 349-6500



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 / /

The number of shares of the registrant's common stock, no par value per share,
outstanding as of November 11, 1996 was 3,188,146.



<PAGE>   2



                              TABLE OF CONTENTS


                                                                        PAGE NO.
PART I.  FINANCIAL INFORMATION                                         

         Item 1. Financial Statements

                   Condensed Consolidated Balance Sheets at 
                   September 30, 1996 (Unaudited) and 
                   December 31, 1995                                         3

                   Condensed Consolidated Statements of Income 
                   for the Nine Months and Three Months Ended 
                   September 30, 1996 and 1995 (Unaudited)                   4

                   Condensed Consolidated Statements of Cash 
                   Flows for the Nine Months Ended September 
                   30, 1996 and 1995 (Unaudited)                             5

                   Notes to Condensed Consolidated Financial 
                   Statements (Unaudited)                                   6-7

         Item 2. Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                        8-12

PART II. OTHER INFORMATION

         Item 4. Submission of Matters to a Vote of Security Holders       13-14

         Item 6. Exhibits and Reports on Form 8-K                            15
         
         Signatures                                                          16



                                     -2-
<PAGE>   3



PART I.         FINANCIAL INFORMATION
Item 1.         Financial Statements

                PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP
                                 AND SUBSIDIARY
                     Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                           September 30,            December 31,
                                         Assets                                                1996                     1995
                                         ------                                            ---------------          ---------------
Investments:                                                                                (Unaudited)
<S>                                                                                        <C>                      <C>
   Fixed maturities - available for sale, at market value
      (amortized cost:  $263,209,000 and $257,129,000)                                        $260,779,000             $259,979,000
   Equity securities available for sale, at market value
      (cost:  $5,130,000 and $2,608,000)                                                         5,410,000                2,641,000
   Short-term investments, at cost                                                              20,152,000               17,512,000
   Real estate, at cost, net of accumulated depreciation                                           460,000                  475,000
                                                                                           ---------------          ---------------
               Total investments                                                               286,801,000              280,607,000
Cash                                                                                             1,805,000                1,279,000
Premiums due from policyholders                                                                 10,616,000                7,618,000
Amounts due from reinsurers                                                                     14,203,000               12,264,000
Deferred federal income taxes                                                                   17,979,000               18,264,000
Other assets                                                                                    14,762,000               10,680,000
                                                                                           ---------------          ---------------
               Total assets                                                                   $346,166,000             $330,712,000
                                                                                           ===============          ===============

                          Liabilities and Shareholders' Equity
Liabilities:
   Loss and loss adjustment expense reserves                                                  $209,876,000             $199,605,000
   Reserve for extended reporting period claims                                                 14,482,000               14,082,000
   Unearned premiums                                                                            30,193,000               23,122,000
   Accrued expenses and other liabilities                                                        8,144,000               15,492,000
                                                                                           ---------------          ---------------
               Total liabilities                                                               262,695,000              252,301,000
                                                                                           ---------------          ---------------
Shareholders' equity:
   Preferred stock, no par value; 5,000,000 shares authorized;
      no shares issued and outstanding                                                           -                        -
   Common stock, no par value; 25,000,000 shares authorized;
      3,188,146 and 3,238,959 shares issued and outstanding,
      including treasury shares in 1995                                                          3,188,000                3,239,000
   Additional paid-in capital                                                                    7,979,000                8,417,000
   Retained earnings                                                                            73,876,000               66,994,000
   Net unrealized appreciation (depreciation) on investments,
      net of deferred federal income taxes                                                      (1,572,000)               1,882,000
                                                                                           ---------------          ---------------
                                                                                                83,471,000               80,532,000
   Less cost of common stock in treasury; 123,244 shares                                         -                       (2,121,000)
                                                                                           ---------------          ---------------
               Total shareholders' equity                                                       83,471,000               78,411,000
                                                                                           ---------------          ---------------
               Total liabilities and shareholders' equity                                     $346,166,000             $330,712,000
                                                                                           ===============          ===============
</TABLE>

See accompanying notes to the unaudited condensed consolidated financial
statements.








                                     -3-
<PAGE>   4
                PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP
                                 AND SUBSIDIARY
                  Condensed Consolidated Statements of Income
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 Nine Months Ended                      Three Months Ended
                                                                   September 30,                           September 30,
                                                          ----------------------------------       --------------------------------
                                                              1996                  1995               1996                1995
                                                          -------------        -------------       ------------       -------------
<S>                                                       <C>                  <C>                 <C>                 <C>
Revenues and other income:
   Premiums earned, net                                     $42,544,000          $41,405,000        $14,120,000         $13,722,000
   Investment income, net                                    11,558,000           10,630,000          3,853,000           3,910,000
   Net realized investment gains (losses)                      (480,000)             389,000           (103,000)            478,000
   Other                                                        227,000                -                 55,000              -
                                                          -------------        -------------       ------------       -------------
      Total revenues and other income                        53,849,000           52,424,000         17,925,000          18,110,000
                                                          -------------        -------------       ------------       -------------
                                                                                                                  
Expenses:                                                                                                         
   Losses and loss adjustment expenses                       36,172,000           35,408,000         11,691,000          10,891,000
   Increase in reserve for extended reporting                                                                     
      period claims                                             400,000            1,231,000            300,000             450,000
   Policy acquisition and other underwriting                                                                      
     expenses                                                 8,099,000            7,076,000          2,683,000           2,908,000
                                                          -------------        -------------       ------------       -------------
      Total expenses                                         44,671,000           43,715,000         14,674,000          14,249,000
                                                          -------------        -------------       ------------       -------------
                                                                                                                  
      Income from operations before federal income                                                                
         taxes and cumulative effect of change in                                                                 
         accounting method                                    9,178,000            8,709,000          3,251,000           3,861,000
Federal income taxes                                         (2,296,000)          (2,961,000)          (855,000)         (1,313,000)
                                                          -------------        -------------       ------------       -------------
      Income before cumulative effect of change                                                                   
         in accounting method                                 6,882,000            5,748,000          2,396,000           2,548,000
                                                                                                                  
Cumulative effect of change in accounting method,                                                                 
   elimination of loss and loss adjustment expense                                                                
   reserve discount                                             -                 (8,125,000)            -                   -
                                                          -------------        -------------       ------------       -------------
      Net income (loss)                                      $6,882,000          ($2,377,000)        $2,396,000          $2,548,000
                                                          =============        =============       ============       =============
                                                                                                                  
Net income (loss) per common share:                                                                               
   Income before cumulative effect of change in                                                                   
      accounting method                                           $2.18                $1.82              $0.75               $0.85
   Cumulative effect of change in accounting method                0.00                (2.57)              0.00                0.00
                                                          -------------        -------------       ------------       -------------
      Net income (loss) per common share                          $2.18               ($0.75)             $0.75               $0.85
                                                          =============        =============       ============       =============
                                                                                                                  
Weighted average shares outstanding                           3,162,709            3,156,818          3,188,183           2,995,215
                                                          =============        =============       ============       =============

</TABLE>

See accompanying notes to the unaudited condensed consolidated financial
statements.



                                     -4-


<PAGE>   5
                PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP
                                 AND SUBSIDIARY
                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Nine Months Ended September 30,
                                                                                      --------------------------------------
                                                                                         1996                      1995
                                                                                      -------------            -------------
<S>                                                                                    <C>                      <C>
Net cash provided by operating activities                                               $17,886,000              $16,356,000
                                                                                      -------------            -------------

Cash flows from investing activities:
   Proceeds from sale or maturity of short-term investments                             227,853,000              472,612,000
   Purchases of short-term investments                                                 (230,065,000)            (504,304,000)
   Proceeds from maturity of securities available for sale                                1,500,000                4,009,000
   Proceeds from sale of securities available for sale                                   84,854,000              115,463,000
   Purchases of securities available for sale                                           (97,080,000)            (102,365,000)
   Proceeds from maturity of securities held to maturity                                   -                      16,397,000
   Proceeds from sale of securities held to maturity                                       -                         758,000
   Purchases of securities held to maturity                                                -                     (12,861,000)
   Payable for securities                                                                (3,205,000)               -
   Purchases of property and equipment                                                     (323,000)                (441,000)
   Payment on liability for purchased book of business                                     (894,000)                (894,000)
                                                                                      -------------            -------------
      Net cash used in investing activities                                             (17,360,000)             (11,626,000)
                                                                                      -------------            -------------

Cash flows from financing activities:
   Purchase of treasury shares                                                             -                      (4,385,000)
                                                                                      -------------            -------------
      Net cash used in financing activities                                                       0               (4,385,000)
                                                                                      -------------            -------------

Net increase in cash                                                                        526,000                  345,000

Cash, beginning of period                                                                 1,279,000                  940,000
                                                                                      -------------            -------------

Cash, end of period                                                                      $1,805,000               $1,285,000
                                                                                      =============            =============
Supplemental disclosure of non-cash investing
   and financing activities:
   Purchase of book of business:
      Intangible assets acquired                                                          $-                     ($3,587,000)
      Amount due                                                                           -                       3,587,000
   Issuance of treasury shares through stock bonus award                                    697,000                -
   Issuance of treasury shares for acquired company                                         935,000                -
                                                                                      =============            =============
</TABLE>

See accompanying notes to the unaudited condensed consolidated financial
statements.



                                     -5-


<PAGE>   6



                PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP
                                 AND SUBSIDIARY
        Notes to Condensed Consolidated Financial Statements (Unaudited)


(1)  Basis of Presentation

     Professionals Insurance Company Management Group (the "Professionals
     Group") is an insurance holding company incorporated under Michigan law on
     January 31, 1996.  Professionals Group owns all of the issued and
     outstanding common stock of PICOM Insurance Company, a stock insurance
     company incorporated under Michigan law ("PICOM").

     Effective August 31, 1996, and pursuant to a Reorganization Agreement
     dated May 13, 1996 (the "Reorganization Agreement"), and an Agreement and
     Plan of Merger dated May 13, 1996 (the "Plan of Merger"), among
     Professionals Group, PICOM Interim Insurance Company, a stock insurance
     company incorporated under Michigan law and a wholly-owned subsidiary of
     Professionals Group ("INSCO"), and PICOM, Professionals Group acquired all
     of the outstanding capital stock of PICOM through the merger of INSCO with
     and into PICOM (the "Merger").  As a result of the Merger (i) INSCO ceased
     to exist, (ii) PICOM, as the surviving corporation, became a wholly-owned
     subsidiary of Professionals Group, (iii) each issued and outstanding share
     of common stock of PICOM was converted into one share of common stock of
     Professionals Group, and (iv) all of the issued and outstanding shares of
     INSCO held by Professionals Group were converted into shares of common
     stock of PICOM.

     The Merger has been accounted for in a manner similar to a pooling of
     interests, whereby Professionals Group has carried forward to its accounts
     the assets and liabilities of PICOM at their respective amounts as
     reported by PICOM.  Because Professionals Group did not exist during 1995
     and its assets and results of operations are immaterial in relation to
     PICOM's consolidated assets and results of operations during 1996,
     disclosure of Professionals Group's separate assets and results of
     operations is not necessary.

     The accompanying unaudited condensed consolidated financial statements of
     Professionals Insurance Company Management Group (together with its
     subsidiary, the "Company") have been prepared in conformity with generally
     accepted accounting principles for interim financial information and with
     the instructions for Form 10-Q and Rule 10-01 of Regulation S-X.
     Accordingly, they do not include all of the information and footnotes
     required by generally accepted accounting principles for complete
     financial statements.  All significant intercompany transactions have been
     eliminated in consolidation.




                                     -6-
<PAGE>   7



     In the opinion of management, all adjustments (consisting of normal
     recurring adjustments) considered necessary for a fair presentation of
     financial position and results of operations have been included.  The
     operating results for the nine month period ending September 30, 1996 are
     not necessarily indicative of the results to be expected for the year
     ending December 31, 1996.

(2)  Net Income Per Share

     Net income per share is computed by dividing net income by the weighted
     average number of shares of common stock and common stock equivalents
     (stock options) outstanding during the period, calculated on a daily
     basis.

(3)  Stock Options and Awards

     The Company has established the 1996 Long Term Stock Incentive Plan (the
     "Incentive Plan") under which, subject to adjustment, 300,000 shares of
     the Company's common stock are available to grant incentive and
     non-qualified stock options, stock appreciation rights (SARs), restricted
     stock, restricted stock units, performance awards, dividend equivalents,
     and other stock-based awards to employees of, including any officer or
     officer-director, or consultants to the Company and its subsidiaries.  All
     terms and conditions of any grants under the Incentive Plan are at the
     discretion of the Compensation Committee of the Company's Board of
     Directors.  As of September 30, 1996, no grants had been made under the
     Incentive Plan.

     The Company has also established the 1996 Non-Employee Directors Stock
     Option Plan (the "Directors Plan") under which non-qualified options for
     50,000 shares of the Company's common stock may be granted to non-employee
     directors (maximum of 5,000 shares to one individual) of the Company.
     Options are granted at or above the market price of the Company's common
     stock on the date of grant.  Options become exercisable one year from the
     date of grant and expire seven years from the date of grant.  No charges
     to operations are recorded with respect to authorization, grant or
     exercise of options.  Proceeds received upon exercise are credited to
     shareholders' equity.  As of September 30, 1996, stock options totaling
     4,500 shares of the Company's common stock had been granted under the
     Directors Plan.

     The Financial Accounting Standards Board has issued Statement of Financial
     Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
     which is effective for fiscal years beginning after December 15, 1995.
     The standard prescribes an optional method of accounting for stock-based
     compensation that determines compensation expense based on fair value
     measured at the grant date of options.  Because the Company adopted the
     disclosure-only requirements of this standard in 1996, there is no impact
     on the Company's results of operations for 1996.


                                     -7-

<PAGE>   8



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

General:

     Professionals Insurance Company Management Group (the "Company") is a
Michigan business corporation that serves as the holding company for PICOM
Insurance Company ("PICOM") and its subsidiaries.

     PICOM, which is a wholly-owned subsidiary of the Company, is a stock
insurance company incorporated under Michigan law in 1980.  PICOM, which is
licensed as a property and casualty insurer in Michigan, Illinois, Indiana,
Iowa, Ohio and Pennsylvania, began business on June 27, 1980 by assuming the
assets, liabilities and business of the Brown-McNeely Insurance Fund.  (The
Brown-McNeely Insurance Fund was created by the State of Michigan in 1975 to
provide doctors with an effective and reliable source of medical malpractice
insurance).  The principal product currently offered by PICOM is professional
liability insurance for providers of health care services in Michigan, Illinois
and Indiana.  Since 1994, PICOM has also offered professional liability
insurance to lawyers and law firms in Michigan.

     PICOM has five wholly-owned subsidiaries:  PICOM Insurance Agency ("PIA"),
PICOM Claims Services Corporation ("PCSC"), PICOM Financial Services
Corporation ("PFSC"), PICOM Insurance Company of Illinois ("PICOM-Illinois"),
and American Insurance Management Corporation ("AIMC").  PIA is an inactive
Michigan insurance agency incorporated under the laws of the State of Michigan
on March 31, 1981.  PCSC provides claims management services on a fee for
service basis and was incorporated under the laws of the State of Michigan on
December 10, 1985.  PFSC is an inactive business corporation incorporated under
the laws of the State of Michigan on May 29, 1986.  PICOM-Illinois is a stock,
property and casualty insurer incorporated under the laws of the State of
Illinois on December 5, 1994.  PICOM-Illinois provides medical malpractice
insurance to physicians and clinics in the State of Illinois.  AIMC is an
Indiana corporation that serves as the attorney-in-fact for American Medical
Insurance Exchange, an Indiana interinsurance reciprocal exchange.  R. Hardy &
Associates, Inc. was a wholly-owned subsidiary of PICOM, but was dissolved
during the third quarter of 1996.

Financial Position - September 30, 1996 versus December 31, 1995:

     Assets:  Total assets increased 4.7% to $346.2 million at September 30,
1996, as compared to $330.7 million at December 31, 1995.  The increase in
total assets at September 30, 1996 was primarily due to strong cash flows (which
have increased invested assets) and increases in premiums due from
policyholders and prepaid reinsurance premiums (included in other assets in the 
accompanying condensed consolidated balance sheets).  The increases in prepaid
reinsurance premiums and premiums due from policyholders were a result of the
timing of renewals for a significant portion of the Company's book of business,
which typically occurs during the third quarter.



                                     -8-

<PAGE>   9
     Invested assets of $286.8 million represented approximately 83% of the
Company's total assets at September 30, 1996, compared to $280.6 million, or
approximately 85%, of the Company's total assets at December 31, 1995.  The
Company's investment portfolio continues to be dominated by fixed maturity
securities at September 30, 1996, and primarily consists of U.S. government and
agency bonds, high-quality corporate bonds and tax-exempt U.S. municipal bonds. 
The entire fixed maturity portfolio, which is classified as available-for-sale,
and is carried at market value, is sensitive to interest rate changes.  At
September 30, 1996, the fixed maturity portfolio had a market value that was
$2.4 million less than the $263.2 million amortized cost of such portfolio.  At
December 31, 1995, the fixed maturity portfolio had a market value that was
$2.9 million higher than the $257.1 million amortized cost of such portfolio. 
The decrease in market value as compared to amortized cost resulted from rising 
interest rates during 1996.

     Liabilities:  Loss and loss adjustment expense reserves represented 80% of
the Company's consolidated liabilities at September 30, 1996 and 79% of the
Company's consolidated liabilities at December 31, 1995.  These reserves are
determined on the basis of individual claims and actuarially determined
estimates of future losses based on the Company's past loss experience and
projections as to future claims frequency, severity, inflationary trends and
settlement patterns.  Estimating professional liability reserves is a complex
process which relies heavily on judgment and involves many uncertainties.  As a
result, reserve estimates may vary significantly from the eventual outcome.
The assumptions used in establishing the Company's reserves are reviewed and
updated as new data becomes available.  The loss and loss adjustment expense
reserves have been established on an undiscounted basis.

     Loss and loss adjustment expense reserves increased 5.1%, from $199.6
million at December 31, 1995 to $209.9 million at September 30, 1996.  This
increase was primarily attributable to an increase in outstanding claims at
September 30, 1996 related to the Company's Illinois book of business, and was
partially mitigated by favorable reserve development of prior years' reserves.
The loss and loss adjustment expense reserves correspond with the best estimate
of the Company's in-house actuary.

     The unearned premium reserve increased to $30.2 million at September 30,
1996, from $23.1 million at December 31, 1995.  The increase was due to the
timing of renewals for a significant portion of the Company's book of business,
which typically occurs during the third quarter.

     Shareholders' Equity:  Shareholders' equity was $83.5 million at September
30, 1996 versus $78.4 million at December 31, 1995.  Net income of $6.9 million
during the nine-month period ended September 30, 1996 was offset by $3.5
million of net unrealized depreciation on investments, net of deferred federal
income taxes, which resulted from rising interest rates in the bond market.
Treasury shares were also reissued during the nine-month period ended September
30, 1996, which increased shareholders' equity by $1.6 million.  The Company
expects to use retained earnings to increase its capital base and finance
future growth and will defer consideration of cash dividends for the
foreseeable future.



                                     -9-
<PAGE>   10




Results of Operations - Nine month and Three month periods ended September 30,
1996 and 1995:

     Premiums:  Net premiums written were $47.8 million for the nine months
ended September 30, 1996, a decrease of less than one percent, when compared to
net premiums written of $48.2 million for the nine months ended September 30,
1995.  For the three months ended September 30, 1996, net premiums written were
$19.4 million, or 5.8% less than net premiums written of $20.6 million for the
three months ended September 30, 1995.  The decrease in net premiums written
was primarily due to more selective underwriting practices being employed in
the Company's book of business as well as price-based competition.  The Company
constantly monitors its underwriting performance and adjusts its underwriting
practices as necessary to retain a profitable book of business.

     Investment Income and Capital Gains/Losses:  Investment income totaled
$11.6 million for the nine months ended September 30, 1996 compared to
investment income of $10.6 million for the nine months ended September 30,
1995, an increase of 8.7%.  The increase was primarily the result of an
increase in average invested assets during 1996 compared to 1995 due to strong
cash flows from operations. Investment income was $3.9 million for the three
months ended September 30, 1996 and was comparable to the three months ended
September 30, 1995 despite a shift in the Company's investment portfolio toward
municipal bonds which, due to their tax-exempt status, offer lower yields.  As
of September 30, 1996, 25% of the Company's fixed income portfolio was invested
in tax-exempt municipal bonds.  The Company had no tax-exempt municipal bonds
as of September 30, 1995. 

     The Company posted a $480 thousand net realized investment loss for the
nine months ended September 30, 1996 versus a $389 thousand net realized
investment gain during the same period in 1995.  For the three months ended
September 30, 1996, the Company posted a $103 thousand net realized investment
loss compared to a $478 thousand net realized investment gain for the three
months ended September 30, 1995.  The 1996 net realized investment loss was
taken in connection with the Company's plan to reposition the fixed maturity
portfolio to increase after-tax yield.

     Loss and Loss Adjustment Expenses:  Incurred loss and loss adjustment
expenses including the increase in reserves for extended reporting period
claims decreased to $36.6 million for the nine months ended September 30, 1996
from $36.7 million for the same period in 1995.  For the three months ended
September 30, 1996, incurred loss and loss adjustment expenses including the
increase in reserves for extended reporting period claims increased 5.7% to
$12.0 million from $11.3 million for the same period in 1995.  The increase
during the three-month period was due primarily to an increase in the number of
outstanding claims related to the Company's Illinois book of business, which
was partially mitigated by favorable reserve development of prior years'
reserves.





                                    -10-
<PAGE>   11



     Policy Acquisition and Underwriting Expenses:  Underwriting expenses were
$8.1 million for the nine months ended September 30, 1996, a 14.5% increase
over underwriting expenses of $7.1 million for the same period of 1995.  The
increase was attributable to a stock bonus award paid to employees in the first
quarter of 1996 and non-recurring legal, accounting and related expenses
incurred in the second quarter of 1996 associated with the reorganization of
PICOM into the Professionals Group holding company system.

     Underwriting expenses were $2.7 million for the three months ended
September 30, 1996, a 7.7% decrease compared to underwriting expenses of $2.9
million for the same period of 1995.  As a percentage of premiums earned, the
underwriting expense ratio was 19.0% for the three months ended September 30,
1996, down from an underwriting expense ratio of 21.2% for the same period of
1995.  The decrease was due primarily to a reduction in commissions paid by the
Company on its Illinois book of business.

     Federal Income Taxes:  The Company recorded $2.3 million in federal income
tax expense for the nine months ended September 30, 1996, compared to $3.0
million during the same period in 1995.  Federal income tax expense for the
three months ended September 30, 1996 was $855 thousand versus $1.3 million for
the three months ended September 30, 1995.  The effective tax rate approximated
25% for the nine and three months ended September 30, 1996 versus 34% for the
nine and three months ended September 30, 1995.  The lower effective tax rate
in 1996 was due to the shift in the Company's investment portfolio to
tax-exempt investment securities in order to increase after-tax yield.

     Net income:  Net income for the nine months ended September 30, 1996 was
$6.9 million, or $2.18 per share on revenues of $53.8 million, compared to a
net loss of $2.4 million, or ($0.75) per share on revenues of $52.4 million,
for the nine months ended September 30, 1995.  The net loss amount for 1995
includes an $8.1 million, or ($2.57) per share, cumulative effect loss for a
change in accounting method involving the elimination of the reserve discount
that was retroactively applied to January 1, 1995.  The improvement in earnings
is primarily attributable to improved net investment income and a reduction in
federal income taxes, as described above.

     Net income for the three months ended September 30, 1996 was $2.4 million,
or $0.75 per share on revenues of $17.9 million, compared to net income of $2.5
million, or $0.85 per share on revenues of $18.1 million, for the three months
ended September 30, 1995.  The reduction in earnings is attributable to a $0.13
per share difference in net realized investment gains or losses during the
respective periods, as described above.



                                    -11-
<PAGE>   12




Liquidity and Capital Resources:

     Liquidity describes the ability to generate sufficient cash flows to meet
the cash requirements of continuing operations.  There are typically two
distinct operations in an insurance company -- underwriting and investing.  Net
cash flows from underwriting operations are used to build an investment
portfolio, which in turn produces future cash from investment income.  The
Company continuously monitors available cash and short-term investment balances
in relation to projected cash needs to maintain adequate balances for current
payments while maximizing cash available for longer term investment
opportunities.

     The payment of losses, loss adjustment expenses and operating expenses in
the ordinary course of business remains the Company's principal need for liquid
funds.  Payments for loss and loss adjustment expenses are distributed fairly
evenly throughout the year.  Payments for reinsurance are made within 30 days
subsequent to the end of each quarter, with adjustments made after each
reinsurance year.  Cash used to pay these items has been provided by
operations.  The Company did not borrow any funds in the nine month periods
ended September 30, 1996 or 1995, and currently does not intend to borrow funds
in the foreseeable future.  In October 1996, the Company entered into a $4.5
million commitment to build a new home office facility.  No other material
commitments for capital expenditures exist.  Management believes the Company's
present liquidity, combined with cash flow from future operations, will be
adequate to fund the cost of constructing the new home office facility.

     In a transaction aggregating $1.2 million, the Company paid $309 thousand
and issued 44,000 shares of common stock held in treasury (valued at $935
thousand) in exchange for all of the issued and outstanding shares of American
Insurance Management Corporation, a privately held Indiana corporation that
serves as the attorney-in-fact for American Medical Insurance Exchange, an
Indiana interinsurance reciprocal exchange.

Effects of New Accounting Pronouncements:

     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" which is
effective for fiscal years beginning after December 15, 1995.  The standard
prescribes an optional method of accounting for stock-based compensation that
determines compensation expense based on fair value measured at the grant date
of options.  Because the Company adopted the disclosure-only requirements of
this standard in 1996, there is no impact on the Company's results of
operations for 1996.


                                    -12-

<PAGE>   13




PART II.  OTHER INFORMATION

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

     On August 26, 1996, at the First Annual Meeting of Shareholders of the
Company, pursuant to the unanimous vote of the then sole shareholder of the
Company, the Board of Directors of the Company was expanded and now consists of
ten directors who are divided into three classes as follows:


<TABLE>
<CAPTION>
                     Name                  Class   Term Expiring
               --------------------------- ------  -------------
               <S>                          <C>     <C>

               Victor T. Adamo, Esq., CPCU  I       1997
               John F. McCaffery            I       1997
               Isaac J. Powell, M.D.        I       1997

               John F. Dodge, Jr., Esq.     II      1998
               H. Harvey Gass, M.D.         II      1998
               Ann F. Putallaz, Ph.D.       II      1998

               Jerry D. Campbell            III     1999
               W. Peter McCabe, M.D.        III     1999
               Donald S. Young, Esq.        III     1999
               William H. Woodhams, M.D.    III     1999
</TABLE>


         In connection with the consummation of the Merger, the following
committees of the Company's Board of Directors were established:  (i) an
Executive Committee, (ii) an Audit Committee, and (iii) a Compensation
Committee.  The members of the Executive Committee are W. Peter McCabe, M.D.
(Chairman), Victor T. Adamo, Esq., CPCU, John F. Dodge, Jr., Esq., H. Harvey
Gass, M.D. and Donald S. Young, Esq.  The members of the Audit Committee are
Isaac J. Powell, M.D. (Chairman), William H. Woodhams, M.D., Donald S. Young,
Esq. and W. Peter McCabe, M.D. (ex officio).  The members of the Compensation
Committee are H. Harvey Gass, M.D. (Chairman), Jerry D. Campbell, John F.
Dodge, Jr., Esq., John F.  McCaffery, and W. Peter McCabe, M.D. (ex officio).

         The Executive Committee is authorized to exercise the powers and
authority of the Company's Board of Directors in the management and affairs of
the Company, if the Company's Board of Directors is not meeting, except as
limited by the Michigan Business Corporation Act, as amended, and the First
Amended and Restated Articles of Incorporation and Bylaws of the Company.  The
Audit Committee is authorized to confer with the external auditors and
financial officers of the Company and its subsidiaries, review reports
submitted by the external auditors, establish or review, and monitor compliance
with, codes of conduct of the Company and its subsidiaries, inquire about
procedures for compliance with laws and regulations relating to the management
of the Company and its subsidiaries, and report and make recommendations to the



                                    -13-

<PAGE>   14

Company's Board of Directors.  The Compensation Committee is responsible for
recommending to the Company's Board of Directors policies and levels of
compensation with respect to compensation and benefits of all executive
officers of the Company and all key employees of the Company and its
subsidiaries.  Except as otherwise described in the applicable plan document,
the Compensation Committee will also serve as the administrative committee
under the Company's 1996 Long Term Stock Incentive Plan and the Company's 1996
Non-Employee Directors Stock Option Plan, and will be responsible for
administering such plans, including designating employees to be granted
options, prescribing the terms and conditions of options granted under the
plans, interpreting the plans and making all other determinations deemed
necessary for the administration of the plans.

     The officers of the Company are W. Peter McCabe, M.D. (Chairman), Victor
T. Adamo, Esq., CPCU (President and Chief Executive Officer), R. Kevin Clinton,
FCAS, MAAA (Vice President, Treasurer and Chief Financial Officer), and Annette
E. Flood, Esq., R.N. (Secretary).

     It is currently anticipated that the Company's 1997 Annual Meeting of
Shareholders will be held on or about June 4, 1997.  Any shareholder who wishes
to submit a proposal for presentation to such annual meeting, and for
inclusion, if appropriate, in the Company's proxy statement and the form of
proxy relating to such annual meeting, must comply with the rules and
regulations of the Securities and Exchange Commission then in effect and the
First Amended and Restated Articles of Incorporation and the Bylaws of the
Company and must submit such proposal to the Secretary of the Company at the
principal office of the Company.  Any non-binding shareholder proposal
submitted pursuant to Rule 14a-8 of the Commission's rules and regulations must
be received by the Secretary of the Company a reasonable time before the
solicitation of proxies for such annual meeting is made.  (The Company will
consider a non-binding shareholder proposal submitted pursuant to said Rule
14a-8 to have been received a reasonable time before any such solicitation if
such proposal was received at least sixty days prior to the commencement of
such solicitation).  Under the Company's First Amended and Restated Articles of
Incorporation, all other shareholder proposals must be delivered to and
received at the Company's principal executive offices not later than February
1, 1997.



                                    -14-
<PAGE>   15





Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits.

<TABLE>
<CAPTION>
    Item 601
 Regulation S-K
Exhibit Reference
     Number        Exhibit Description
-----------------  -------------------
<S>                <C>
     (4)(c)        Specimen certificate for the registrant's common stock.*
     (4)(d)        Specimen Stock Option issued under the Professionals
                   Insurance Company Management Group 1996 Non-Employee
                   Directors Stock Option Plan.*
      (27)         Financial Data Schedule of registrant.*
</TABLE>

*        Filed herewith.

         (b)  Reports on Form 8-K.

              On September 12, 1996, the Company filed a Current Report on 
Form 8-K disclosing under Item 2 (Acquisition or Disposition of Assets) of that
form the Company's acquisition of PICOM.  Included in that Current
Report on Form 8-K under Item 7 (Financial Statements, Pro Forma Financial
Information and Exhibits) of that form were the financial statements of PICOM
that follow: Independent Auditors' Report -- KPMG Peat Marwick LLP; Independent
Auditors' Report -- Coopers & Lybrand LLP; Consolidated Balance Sheets as of
December 31, 1995 and December 31, 1994; Consolidated Statements of Income for
the Years Ended December 31, 1995, 1994 and 1993; Consolidated Statements of
Shareholders' Equity for the  Years Ended December 31, 1995, 1994 and 1993;
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993; Notes to Consolidated Financial Statements for the Years Ended
December 31, 1995, 1994 and 1993; Condensed Consolidated Balance Sheets as of
June 30, 1996 (unaudited) and December 31, 1995; Condensed Consolidated
Statements of Income for the Six Months Ended June 30, 1996 and 1995
(unaudited); Condensed Consolidated Statements of Shareholders' Equity for the
Six Months Ended June 30, 1996 and 1995 (unaudited); Condensed Consolidated
Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995
(unaudited); and Notes to Condensed Consolidated Financial Statements for the
Six Months Ended June 30, 1996 and 1995 (unaudited), and December 31, 1995.




                                    -15-
<PAGE>   16



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.

                        PROFESSIONALS INSURANCE COMPANY 
                        MANAGEMENT GROUP


DATE: November 12, 1996 /s/ R. Kevin Clinton
                        -----------------------------
                        R. Kevin Clinton
                        Vice President, Treasurer,
                        Chief Financial Officer and
                        Chief Accounting Officer




                                    -16-