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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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

For the quarterly period ended March 31, 2006

OR



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

For the transition period from            to

No. 000-50926

(Commission File
Number)



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FREMONT MICHIGAN INSURACORP, INC.

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Michigan                                                       |  | 42-1609947                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|933 E. Main St.                                                |  | 49412                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(231) 924-0300

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated
filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Securities Exchange Act of 1934).    Yes ̈No  x

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



|                            |  |                                                       
|--------------------------- |  | ------------------------------------------------------
|COMMON STOCK (No Par Value) |  | Number of Shares Outstanding as of May 9, 2006 862,128
|(Title of Class)            |  | (Outstanding Shares)                                  



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PART IFINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Balance Sheets (Unaudited)

March 31, 2006 and December 31, 2005



|                                                                                                       |  |               |            |   |                  |   |            |  
|------------------------------------------------------------------------------------------------------ |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                       |  | March 31,2006 |            |   | December 31,2005 |  
|Assets                                                                                                 |  |               |            |   |                  |   |            |  
|                                                                                                       |  |              
|Investments:                                                                                           |  |               |            |   |                  |   |            |  
|Fixed maturities available for sale, at fair value                                                     |  | $             | 41,486,630 |   |                  | $ | 41,644,429 |  
|Equity securities available for sale, at fair value                                                    |  |               | 9,174,591  |   |                  |   | 9,508,185  |  
|Mortgage loans on real estate from related parties                                                     |  |               | 265,864    |   |                  |   | 262,294    |  
|                                                                                                       |  |               |            |   |                  |   |            |  
|Total investments                                                                                      |  |               | 50,927,085 |   |                  |   | 51,414,908 |  
|Cash and cash equivalents                                                                              |  |               | 1,388,992  |   |                  |   | 1,542,581  |  
|Receivable from sale of investments                                                                    |  |               | 342        |   |                  |   | 330        |  
|Premiums due from policyholders, net                                                                   |  |               | 6,454,678  |   |                  |   | 7,143,537  |  
|Amounts due from reinsurers                                                                            |  |               | 6,469,598  |   |                  |   | 7,499,227  |  
|Accrued investment income                                                                              |  |               | 437,571    |   |                  |   | 402,937    |  
|Deferred policy acquisition costs                                                                      |  |               | 2,825,620  |   |                  |   | 3,092,618  |  
|Deferred federal income taxes                                                                          |  |               | 3,782,017  |   |                  |   | 3,774,445  |  
|Property and equipment, net of accumulated depreciation                                                |  |               | 1,225,427  |   |                  |   | 1,082,547  |  
|Other assets                                                                                           |  |               | 8,484      |   |                  |   | 7,497      |  
|                                                                                                       |  |               |            |   |                  |   |            |  
|                                                                                                       |  | $             | 73,519,814 |   |                  | $ | 75,960,627 |  
|                                                                                                       |  |               |            |   |                  |   |            |  
|Liabilities and Stockholders Equity                                                                   |  |               |            |   |                  |   |            |  
|                                                                                                       |  |              
|Liabilities:                                                                                           |  |               |            |   |                  |   |            |  
|Losses and loss adjustment expenses                                                                    |  | $             | 18,966,988 |   |                  | $ | 18,866,814 |  
|Unearned premiums                                                                                      |  |               | 18,419,980 |   |                  |   | 20,437,157 |  
|Reinsurance funds withheld and premiums ceded payable                                                  |  |               | 15,698     |   |                  |   | 1,026,340  |  
|Accrued expenses and other liabilities                                                                 |  |               | 5,793,481  |   |                  |   | 6,903,968  |  
|Surplus notes                                                                                          |  |               | 2,890,288  |   |                  |   | 2,890,288  |  
|                                                                                                       |  |               |            |   |                  |   |            |  
|Total liabilities                                                                                      |  |               | 46,086,435 |   |                  |   | 50,124,567 |  
|                                                                                                       |  |               |            |   |                  |   |            |  
|Commitments and contingencies                                                                          |  |               |            |   |                  |   |            |  
|                                                                                                       |  |              
|Stockholders Equity                                                                                   |  |               |            |   |                  |   |            |  
|Preferred stock, no par value, authorized 4,500,000 shares, no shares issued and outstanding           |  |               |           |   |                  |   |           |  
|Class A common stock, no par value, authorized 5,000,000 shares, 862,128 shares issued and outstanding |  |               |           |   |                  |   |           |  
|Class B common stock, no par value, authorized 500,000 shares, no shares issued and outstanding        |  |               |           |   |                  |   |           |  
|Additional paid-in capital                                                                             |  |               | 7,562,067  |   |                  |   | 7,550,304  |  
|Retained earnings                                                                                      |  |               | 19,957,329 |   |                  |   | 18,296,080 |  
|Accumulated other comprehensive income:                                                                |  |               |            |   |                  |   |            |  
|Net unrealized losses on investments, net of deferred federal income taxes                             |  |               | (86,017    | ) |                  |   | (10,324    | )
|                                                                                                       |  |               |            |   |                  |   |            |  
|Total stockholders equity                                                                             |  |               | 27,433,379 |   |                  |   | 25,836,060 |  
|                                                                                                       |  |               |            |   |                  |   |            |  
|Total liabilities and stockholders equity                                                             |  | $             | 73,519,814 |   |                  | $ | 75,960,627 |  
|                                                                                                       |  |               |            |   |                  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Statements of Operations (Unaudited)

For the Three Months Ended March 31, 2006 and 2005



|                                                   |  |      |            |      |   |          
|-------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------
|                                                   |  | 2006 |            | 2005
|Revenues:                                          |  |      |            |      |   |          
|Net premiums earned                                |  | $    | 9,553,595  |      | $ | 9,110,678
|Net investment income                              |  |      | 419,768    |      |   | 422,423  
|Net realized gains on investments                  |  |      | 318,503    |      |   | 20,309   
|Other income, net                                  |  |      | 96,213     |      |   | 95,255   
|                                                   |  |      |            |      |   |          
|Total revenues                                     |  |      | 10,388,079 |      |   | 9,648,665
|                                                   |  |      |            |      |   |          
|Expenses:                                          |  |      |            |      |   |          
|Losses and loss adjustment expenses, net           |  |      | 4,534,193  |      |   | 5,823,257
|Policy acquisition and other underwriting expenses |  |      | 3,308,146  |      |   | 3,038,855
|Interest expense                                   |  |      | 76,663     |      |   | 77,606   
|                                                   |  |      |            |      |   |          
|Total expenses                                     |  |      | 7,919,002  |      |   | 8,939,718
|                                                   |  |      |            |      |   |          
|Income before federal income tax expense           |  |      | 2,469,077  |      |   | 708,947  
|                                                   |  |     
|Federal income tax expense                         |  |      | 807,828    |      |   | 236,550  
|                                                   |  |      |            |      |   |          
|Net income                                         |  | $    | 1,661,249  |      | $ | 472,397  
|                                                   |  |      |            |      |   |          
|Net income per common share                        |  |      |            |      |   |          
|Basic                                              |  | $    | 1.93       |      | $ | .55      
|Diluted                                            |  | $    | 1.90       |      | $ | .55      

The accompanying notes are an integral part of the consolidated financial statements.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Statement of Stockholders Equity (Unaudited)

For the Three Months Ended March 31, 2006



|                                                                           |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   |         |   |  |   |            |  
|-------------------------------------------------------------------------- |  | --------------- | ------- | ------------ | ------- | ------------------------- |  | ----------------- | - | ------------------------------------------- | - | --------- | ----- | - | ---------- |  | - | ------- | - |  | - | ---------- | -
|                                                                           |  | Preferred Stock |         | Common Stock |         | AdditionalPaid-in Capital |  | Retained Earnings |   | AccumulatedOtherComprehensive Income (Loss) |   |           | Total |  
|                                                                           |  |                 | Class A |              | Class B |                           |  |                   |  
|Balance, December 31, 2005                                                 |  | $               |        |              | $       |                          |  | $                 |  |                                             | $ | 7,550,304 |       | $ | 18,296,080 |  | $ | (10,324 | ) |  | $ | 25,836,060 |  
|Comprehensive income:                                                      |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   |         |   |  |   |            |  
|Net income                                                                 |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   | 1,661,249  |  |   |         |   |  |   | 1,661,249  |  
|Net unrealized losses on investments, net of deferred federal income taxes |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   | (75,693 | ) |  |   | (75,693    | )
|                                                                           |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   |         |   |  |   |            |  
|Total comprehensive income                                                 |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   |         |   |  |   | 1,585,556  |  
|Issuance of stock options                                                  |  |                 |         |              |         |                           |  |                   |   |                                             |   | 11,763    |       |   |            |  |   |         |   |  |   | 11,763     |  
|                                                                           |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   |         |   |  |   |            |  
|Balance, March 31, 2006                                                    |  | $               |        |              | $       |                          |  | $                 |  |                                             | $ | 7,562,067 |       | $ | 19,957,329 |  | $ | (86,017 | ) |  | $ | 27,433,379 |  
|                                                                           |  |                 |         |              |         |                           |  |                   |   |                                             |   |           |       |   |            |  |   |         |   |  |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2006 and 2005



|                                                                           |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                           |  | 2006 |            |   | 2005 |  
|Cash flows from operating activities:                                      |  |      |            |   |      |   |            |  
|Net income                                                                 |  | $    | 1,661,249  |   |      | $ | 472,397    |  
|Adjustments to reconcile net income to net cash from operating activities: |  |      |            |   |      |   |            |  
|Depreciation                                                               |  |      | 89,250     |   |      |   | 39,305     |  
|Deferred federal income taxes                                              |  |      | 31,421     |   |      |   |           |  
|Stock based compensation expense                                           |  |      | 11,763     |   |      |   | 9,500      |  
|Net realized gains on investments                                          |  |      | (318,503   | ) |      |   | (20,309    | )
|Net amortization of premiums on investments                                |  |      | 55,419     |   |      |   | 58,813     |  
|Changes in assets and liabilities:                                         |  |      |            |   |      |   |            |  
|Premiums due from policyholders                                            |  |      | 688,859    |   |      |   | 572,699    |  
|Amounts due from reinsurers                                                |  |      | 1,029,629  |   |      |   | 882,499    |  
|Accrued investment income                                                  |  |      | (34,634    | ) |      |   | 27,351     |  
|Deferred policy acquisition costs                                          |  |      | 266,998    |   |      |   | 317,261    |  
|Other assets                                                               |  |      | (987       | ) |      |   | 1,016      |  
|Losses and loss adjustment expenses                                        |  |      | 100,174    |   |      |   | 379,799    |  
|Unearned premiums                                                          |  |      | (2,017,177 | ) |      |   | (1,964,782 | )
|Reinsurance funds withheld and premiums ceded payable                      |  |      | (1,010,642 | ) |      |   | (457,544   | )
|Accrued expenses and other liabilities                                     |  |      | (1,110,487 | ) |      |   | (975,600   | )
|                                                                           |  |      |            |   |      |   |            |  
|Net cash used in operating activities                                      |  |      | (557,668   | ) |      |   | (657,595   | )
|                                                                           |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                      |  |      |            |   |      |   |            |  
|Proceeds from sales and maturities of fixed maturity investments           |  |      | 6,025,840  |   |      |   | 3,433,168  |  
|Proceeds from sales of equity investments                                  |  |      | 2,521,295  |   |      |   | 838,970    |  
|Purchases of fixed maturity investments                                    |  |      | (6,407,839 | ) |      |   | (4,011,987 | )
|Purchases of equity investments                                            |  |      | (1,499,504 | ) |      |   | (2,769,664 | )
|Decrease in receivable from investments                                    |  |      | (12        | ) |      |   | 739,150    |  
|Repayment of mortgage loan on real estate from related party               |  |      |           |   |      |   | 970        |  
|Issuance of mortgage loan on real estate from related party                |  |      | (3,571     | ) |      |   |           |  
|Purchase of property and equipment, net                                    |  |      | (232,130   | ) |      |   | (19,885    | )
|                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) investing activities                        |  |      | 404,079    |   |      |   | (1,789,278 | )
|                                                                           |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                      |  |      |           |   |      |   |           |  
|                                                                           |  |      |            |   |      |   |            |  
|Net decrease in cash and cash equivalents                                  |  |      | (153,589   | ) |      |   | (2,446,873 | )
|                                                                           |  |     
|Cash and cash equivalents, beginning of period                             |  |      | 1,542,581  |   |      |   | 3,672,254  |  
|                                                                           |  |      |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                   |  | $    | 1,388,992  |   |      | $ | 1,225,381  |  
|                                                                           |  |      |            |   |      |   |            |  

The accompanying notes are an integral part of the consolidated financial statements.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|1. | Basis of Presentation
|-- | ---------------------

Fremont Michigan InsuraCorp,
Inc. and subsidiary (collectively, the Company) includes Fremont Michigan InsuraCorp, Inc. (FMIC) and its wholly owned subsidiary Fremont Insurance Company (FIC). FIC is a Michigan licensed property and casualty
insurance carrier operating exclusively in the State of Michigan and writing principally personal lines, commercial lines, farm and marine insurance policies through independent agents.

The accompanying unaudited consolidated financial statements which include the accounts of FMIC and its wholly-owned subsidiary, FIC, have been prepared
in accordance with accounting principles generally accepted in the United States of America (GAAP). All significant intercompany transactions have been eliminated.

The accompanying unaudited consolidated financial statements for the interim periods included herein are unaudited; however, such information reflects all
adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to a fair presentation of the financial position, results of operations, and cash flows for the interim periods. The results of operations
for interim periods are not necessarily indicative of results to be expected for the full year. The accompanying unaudited consolidated financial statements should be read with the annual consolidated financial statements and notes contained in the
Companys Annual Report on Form 10-K for the year ended December 31, 2005.

The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain reclassifications have been
made to the prior year balances to conform to the current year presentation.



|2. | New Accounting Pronouncement
|-- | ----------------------------

In December 2004, the
Financial Accounting Standards Board issued SFAS No. 123 (Revised 2004), Share-Based Payment (SFAS 123R). This standard requires expensing of stock options and other share-based payments and supersedes SFAS No. 123.
This standard became effective for the Company as of January 1, 2006 and applies to all awards granted, modified, cancelled or repurchased after that date as well as the unvested portion of prior awards. The adoption did not have a material
effect on the consolidated financial statements as the Company already values stock options issued based upon a fair value method and recognizes the fair value as an expense over the period in which the options vest.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|3. | Comprehensive Income or Loss
|-- | ----------------------------

The Companys
comprehensive income (loss) for the three months ended March 31, are as follows:



|                                                                                                                      |  |      |           |   |      |   |          |  
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | -------- | -
|                                                                                                                      |  | 2006 |           |   | 2005 |  
|Net income                                                                                                            |  | $    | 1,661,249 |   |      | $ | 472,397  |  
|Other comprehensive income:                                                                                           |  |      |           |   |      |   |          |  
|Unrealized (loss) gain on investments arising during the period                                                       |  |      | 203,817   |   |      |   | (845,314 | )
|Deferred income tax benefit (expense) of unrealized (loss) gain on investments arising during the period              |  |      | (69,298   | ) |      |   | 287,407  |  
|Change in deferred tax valuation allowance                                                                            |  |      |          |   |      |   | (287,407 | )
|                                                                                                                      |  |      |           |   |      |   |          |  
|Unrealized (loss) gain on investments arising during the period, net of deferred income taxes and valuation allowance |  |      | 134,519   |   |      |   | (845,314 | )
|Adjustment for pretax realized gains on investments included in net income                                            |  |      | (318,503  | ) |      |   | (20,309  | )
|Deferred income tax expense of realized gains included in net income                                                  |  |      | 108,291   |   |      |   | 6,905    |  
|Change in deferred tax valuation allowance                                                                            |  |      |          |   |      |   | (6,905   | )
|                                                                                                                      |  |      |           |   |      |   |          |  
|                                                                                                                      |  |      | (75,693   | ) |      |   | (865,623 | )
|                                                                                                                      |  |      |           |   |      |   |          |  
|Comprehensive income (loss)                                                                                           |  | $    | 1,585,556 |   |      | $ | (393,226 | )
|                                                                                                                      |  |      |           |   |      |   |          |  



|4. | Income Per Share
|-- | ----------------

Basic net income per share has
been calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share has been calculated by dividing net income by the weighted-average common shares outstanding and the weighted-average share
equivalents outstanding. The computation of basic and diluted net income per share for the three months ended March 31 is as follows:



|                                                                                            |  |      |           |      |   |        
|------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | -------
|                                                                                            |  | 2006 |           | 2005
|Numerator for basic and diluted net income per share:                                       |  |      |           |      |   |        
|Net income                                                                                  |  | $    | 1,661,249 |      |   | 472,397
|                                                                                            |  |      |           |      |   |        
|Denominator:                                                                                |  |      |           |      |   |        
|Denominator for basic net income per share  weighted average shares outstanding            |  |      | 862,128   |      |   | 862,128
|Effect of dilutive stock options                                                            |  |      | 11,600    |      |   |       
|                                                                                            |  |      |           |      |   |        
|Denominator for diluted net income per share  adjusted weighted average shares outstanding |  |      | 873,728   |      |   | 862,128
|                                                                                            |  |      |           |      |   |        
|Basic net income per share                                                                  |  | $    | 1.93      |      | $ | 0.55   
|Diluted net income per share                                                                |  | $    | 1.90      |      | $ | 0.55   



|5. | Segment Information
|-- | -------------------

The Company defines its
operations as property and casualty insurance operations. The Company writes four major insurance lines exclusively in the State of Michigan: Personal Lines, Commercial Lines, Farm and Marine. The separate financial information of these four major
insurance lines is consistent with the way results are regularly evaluated by management in deciding how to allocate resources and in assessing performance. All revenues are generated from external customers and the Company does not have a
significant reliance on any single major customer.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

The Company evaluates product line profitability based on underwriting gain (loss). Certain expenses are allocated based on net premiums earned and net losses incurred. Underwriting gain (loss) by product line would
change if different methods were applied.

The Company does not allocate assets, net investment income, net realized gains on investments,
other income (expense) or interest expense to its product lines. In addition, the Company does not separately identify depreciation expense related to the building by product line as such disclosure would be impracticable.

Segment data for the three months ended March 31 are as follows:



|                                                         |  |      |           |   |      |   |           |  
|-------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                         |  | 2006 |           |   | 2005 |  
|Revenues:                                                |  |      |           |   |      |   |           |  
|Net premiums earned:                                     |  |      |           |   |      |   |           |  
|Personal lines                                           |  | $    | 6,198,978 |   |      | $ | 5,821,994 |  
|Commercial lines                                         |  |      | 1,937,864 |   |      |   | 1,929,594 |  
|Farm                                                     |  |      | 1,024,541 |   |      |   | 1,007,827 |  
|Marine                                                   |  |      | 392,212   |   |      |   | 351,263   |  
|                                                         |  |      |           |   |      |   |           |  
|Total net premiums earned                                |  |      | 9,553,595 |   |      |   | 9,110,678 |  
|                                                         |  |      |           |   |      |   |           |  
|Expenses:                                                |  |      |           |   |      |   |           |  
|Loss and loss adjustment expenses:                       |  |      |           |   |      |   |           |  
|Personal lines                                           |  |      | 2,938,461 |   |      |   | 3,802,084 |  
|Commercial lines                                         |  |      | 1,366,839 |   |      |   | 1,375,180 |  
|Farm                                                     |  |      | 222,396   |   |      |   | 420,445   |  
|Marine                                                   |  |      | 6,497     |   |      |   | 225,548   |  
|                                                         |  |      |           |   |      |   |           |  
|Total loss and loss adjustment expenses                  |  |      | 4,534,193 |   |      |   | 5,823,257 |  
|                                                         |  |      |           |   |      |   |           |  
|Policy acquisition and other underwriting expenses:      |  |      |           |   |      |   |           |  
|Personal lines                                           |  |      | 2,146,535 |   |      |   | 1,941,919 |  
|Commercial lines                                         |  |      | 671,029   |   |      |   | 643,614   |  
|Farm                                                     |  |      | 354,770   |   |      |   | 336,159   |  
|Marine                                                   |  |      | 135,812   |   |      |   | 117,163   |  
|                                                         |  |      |           |   |      |   |           |  
|Total policy acquisition and other underwriting expenses |  |      | 3,308,146 |   |      |   | 3,038,855 |  
|                                                         |  |      |           |   |      |   |           |  
|Underwriting gain (loss):                                |  |      |           |   |      |   |           |  
|Personal lines                                           |  |      | 1,113,982 |   |      |   | 77,991    |  
|Commercial lines                                         |  |      | (100,004  | ) |      |   | (89,200   | )
|Farm                                                     |  |      | 447,375   |   |      |   | 251,223   |  
|Marine                                                   |  |      | 249,903   |   |      |   | 8,552     |  
|                                                         |  |      |           |   |      |   |           |  
|Total underwriting gain                                  |  |      | 1,711,256 |   |      |   | 248,566   |  
|                                                         |  |     
|Net investment income                                    |  |      | 419,768   |   |      |   | 422,423   |  
|Net realized gains on investments                        |  |      | 318,503   |   |      |   | 20,309    |  
|Other income, net                                        |  |      | 96,213    |   |      |   | 95,255    |  
|Interest expense                                         |  |      | (76,663   | ) |      |   | (77,606   | )
|                                                         |  |      |           |   |      |   |           |  
|Income before federal income taxes                       |  | $    | 2,469,077 |   |      | $ | 708,947   |  
|                                                         |  |      |           |   |      |   |           |  



---

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|6. | Other Postretirement Plan
|-- | -------------------------

The Company provides
certain postretirement health care benefits for retired employees. The components of the net periodic benefit cost for the three months ended March 31 are as follows:



|                                                |  |      |         |   |      |   |         |  
|----------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                |  | 2006 |         |   | 2005 |  
|Components of net periodic benefit cost:        |  |      |         |   |      |   |         |  
|Service cost                                    |  | $    | 2,540   |   |      | $ | 5,212   |  
|Interest cost                                   |  |      | 25,096  |   |      |   | 29,410  |  
|Amortization of unrecognized prior service cost |  |      | (21,420 | ) |      |   | (21,421 | )
|Amortization of unrecognized net actuarial loss |  |      | 5,290   |   |      |   | 9,374   |  
|                                                |  |      |         |   |      |   |         |  
|Net periodic benefit cost                       |  | $    | 11,506  |   |      | $ | 22,575  |  
|                                                |  |      |         |   |      |   |         |  

As this plan is not pre-funded, no contributions other than those necessary to cover benefit
payments are anticipated. For the three months ended March 31, 2006 the Company has made contributions to the plan of approximately $7,000. During 2006, the Company expects to contribute a total of $54,000 to the plan to cover anticipated
benefit payments.

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act)
was signed into law. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to qualifying sponsors of retiree healthcare benefit plans. Based on the current structure of the Companys plan for retirees as
well as the retiree population the Company has determined that the Act will not have a material impact on the postretirement benefit obligation. Therefore, the valuation of the unfunded postretirement benefit obligation and the determination of the
net postretirement benefit cost included in these financial statements do not reflect the effects of the Act on the plan.



|7. | Reinsurance
|-- | -----------

Premiums earned are net of amounts
ceded of $2,032,155 and $1,688,524 for the three months ended March 31, 2006 and 2005, respectively. Loss and loss adjustment expenses are net of amounts ceded of $478,162 and $717,311 for the three months ended March 31, 2006 and 2005,
respectively.

Effective March 31, 2006, the Company entered into a commutation agreement with respect to the 2003 multi-line net
account quota share reinsurance agreement. As a result of this commutation, the funds withheld account liability was reduced by approximately $1,053,000 offset by an increase to the loss and loss adjustment expense liability of the same amount. No
gain or loss was realized as a result of this commutation.



---

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|8. | Federal Income Taxes
|-- | --------------------

The provision for income
taxes for the three months ended March 31 consists of the following:



|                 |  |                             |         |      |   |        
|---------------- |  | --------------------------- | ------- | ---- | - | -------
|                 |  | Three Months EndedMarch 31,
|                 |  | 2006                        |         | 2005
|Current expense  |  | $                           | 776,407 |      | $ | 236,550
|Deferred expense |  |                             | 31,421  |      |   |       
|                 |  |                             |         |      |   |        
|Total            |  | $                           | 807,828 |      | $ | 236,550
|                 |  |                             |         |      |   |        

Actual federal income taxes vary from amounts computed by applying the current federal income tax
rate of 34 percent to income before federal income taxes due to the following:



|                                   |  |                              |           |   |      |      |    |  |   |         |   |  |      |   
|---------------------------------- |  | ---------------------------- | --------- | - | ---- | ---- | -- |  | - | ------- | - |  | ---- | --
|                                   |  | Three Months Ended March 31, |          
|                                   |  | 2006                         |           |   | 2005 |     
|Income before federal income taxes |  | $                            | 2,469,077 |   |      |      |    |  | $ | 708,947 |   |  |      |   
|                                   |  |                              |           |   |      |      |    |  |   |         |   |  |      |   
|Tax at statutory rate              |  |                              | 839,486   |   |      | 34.0 | %  |  |   | 241,042 |   |  | 34.0 | % 
|Tax effect of :                    |  |                              |           |   |      |      |    |  |   |         |   |  |      |   
|Nontaxable investment income       |  |                              | (24,890   | ) |      | (1.0 | %) |  |   | (3,545  | ) |  | (0.5 | %)
|Nondeductible expenses, net        |  |                              | 3,666     |   |      | 0.1  | %  |  |   | 947     |   |  | 0.1  | % 
|Other, net                         |  |                              | (10,434   | ) |      | (0.4 | %) |  |   | (1,894  | ) |  | (0.3 | %)
|                                   |  |                              |           |   |      |      |    |  |   |         |   |  |      |   
|                                   |  | $                            | 807,828   |   |      | 32.7 | %  |  | $ | 236,550 |   |  | 33.4 | % 
|                                   |  |                              |           |   |      |      |    |  |   |         |   |  |      |   

Deferred federal income tax assets and liabilities are recognized for the estimated future tax
consequences attributable to the difference between financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. A valuation allowance is established when necessary to reduce deferred tax assets to the
amount expected to be realized. In determining the need for a valuation allowance, the Companys management reviews both positive and negative evidence, including current and historical results of operations, the annual limitation on
utilization of net operating loss carryforwards pursuant to Internal Revenue Code Section 382 (Section 382), future income projections and the overall prospects of our business. Based upon managements assessment of all
available evidence, including the Companys cumulative net income for recent fiscal years, estimates of current and future profitability and the overall prospects of our business, it has been determined that as of March 31, 2006 it is more
likely than not that sufficient taxable income will exist in the periods of reversal in order to realize the net deferred tax asset. Based on the annual Section 382 limitation of the utilization of net operating loss carryforwards management
has determined that approximately $3,098,000 of net operating loss carryforwards will not be realized and therefore a full valuation allowance will be maintained for the deferred tax asset associated with these amounts.



---

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

At March 31, 2006 and December 31, 2005 the tax effects of temporary differences that give rise to deferred federal income tax assets and liabilities are as follows:



|                                                      |  |               |            |   |                  |   |            |  
|----------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                      |  | March 31,2006 |            |   | December 31,2005 |  
|Deferred federal income tax assets arising from:      |  |               |            |   |                  |   |            |  
|Loss and loss adjustment expense reserves             |  | $             | 483,930    |   |                  | $ | 436,552    |  
|Unearned premium reserves                             |  |               | 1,281,490  |   |                  |   | 1,397,087  |  
|Realized losses on investments                        |  |               |           |   |                  |   | 37,323     |  
|Unrealized losses on investments                      |  |               | 44,312     |   |                  |   | 5,319      |  
|Postretirement benefits accrued                       |  |               | 939,764    |   |                  |   | 933,782    |  
|Net operating loss carryforward                       |  |               | 2,742,271  |   |                  |   | 2,742,271  |  
|Capital loss carryfoward                              |  |               |           |   |                  |   | 28,184     |  
|Alternative minimum tax credit carryforward           |  |               | 357,697    |   |                  |   | 357,697    |  
|Other deferred tax assets                             |  |               | 182,229    |   |                  |   | 175,195    |  
|                                                      |  |               |            |   |                  |   |            |  
|Total deferred federal income tax assets              |  |               | 6,031,693  |   |                  |   | 6,113,410  |  
|                                                      |  |               |            |   |                  |   |            |  
|Deferred federal income tax liabilities arising from: |  |               |            |   |                  |   |            |  
|Deferred policy acquisition costs                     |  |               | (993,997   | ) |                  |   | (1,067,663 | )
|Property and equipment                                |  |               | (193,425   | ) |                  |   | (202,860   | )
|Other deferred tax liabilities                        |  |               | (9,018     | ) |                  |   | (15,206    | )
|                                                      |  |               |            |   |                  |   |            |  
|Total deferred federal income tax liabilities         |  |               | (1,196,440 | ) |                  |   | (1,285,729 | )
|                                                      |  |               |            |   |                  |   |            |  
|Net deferred federal income tax asset                 |  |               | 4,835,253  |   |                  |   | 4,827,681  |  
|                                                      |  |              
|Valuation allowance                                   |  |               | (1,053,236 | ) |                  |   | (1,053,236 | )
|                                                      |  |               |            |   |                  |   |            |  
|Net deferred tax asset                                |  | $             | 3,782,017  |   |                  | $ | 3,774,445  |  
|                                                      |  |               |            |   |                  |   |            |  



---

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

The following discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements and the Notes
thereto included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2005, particularly Item 7  Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Annual Report.

Fremont Michigan InsuraCorp, Inc. (the Company or the Holding Company) and
Fremont Insurance Company (the Insurance Company) may from time to time make written or oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission (including
this Quarterly Report on Form 10-Q and the exhibits hereto and thereto), in its reports to shareholders and in other communications by the Company, which are made in good faith by the Company pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. You can find many of these statements by looking for words such as believes, intends, expects, plans, anticipates, seeks,
estimates, projects, or similar expressions in this report. Determination of loss and loss adjustment expense reserves and amounts due from reinsurers are based substantially on estimates and the amounts so determined are
inherently forward-looking.

The forward-looking statements are subject to numerous assumptions, risks and uncertainties. We have
identified several important factors that could cause actual results to differ materially from any results discussed, contemplated, projected, forecast, estimated or budgeted in the forward-looking information. These factors, which are listed below,
are difficult to predict and many are beyond our control:



| |  |  | future economic conditions and the legal and regulatory environment in Michigan;
| | - |  | --------------------------------------------------------------------------------



| |  |  | the effects of weather-related and other catastrophic events;
| | - |  | -------------------------------------------------------------



| |  |  | financial market conditions, including, but not limited to, changes in interest rates and values of investments;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | the impact of acts of terrorism and acts of war on investment and reinsurance markets;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | inflation;
| | - |  | ----------



| |  |  | the cost, availability and collectibility of reinsurance;
| | - |  | ---------------------------------------------------------



| |  |  | estimates and adequacy of loss reserves and trends in losses and loss adjustment expenses;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | heightened competition, including specifically the intensification of price competition, the entry of new competitors and the development of new products by new and existing
competitors;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our inability to obtain regulatory approval of, or to implement, premium rate increases;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | inability to carry out marketing and sales plans, including, among others, development of new products or changes to existing products and acceptance of the new or revised products
in the market;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | unanticipated changes in industry trends and ratings assigned by nationally recognized rating organizations;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | adverse litigation or arbitration results;
| | - |  | ------------------------------------------



| |  |  | the ability to carry out our business plans; and
| | - |  | ------------------------------------------------



| |  |  | adverse changes in applicable laws, regulations or rules governing insurance holding companies and insurance companies, and changes that affect the cost of, or demand for, our
products.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because forward-looking information is subject to various risks and uncertainties, actual results may differ
materially from those expressed or implied by the forward-looking information. Therefore, we caution you not to place undue reliance on this forward-looking information, which speaks only as of the date of this filing.

All subsequent written and oral forward-looking information attributable to the Holding Company or the Insurance Company or any person acting on our
behalf is expressly qualified in its entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to publicly release any revisions that may be made to any forward-looking statements to reflect
events or circumstances occurring after the date of this filing.



---

Overview of Fremont Michigan InsuraCorp

Fremont Michigan InsuraCorp, Inc. is a holding company owning all of the outstanding shares of Fremont Insurance Company. Fremont Insurance Company is a
Michigan licensed property and casualty insurer operating exclusively in the State of Michigan and writing principally personal lines, commercial lines, farm and marine insurance policies through independent agents. We were founded in 1876 and have
served Michigan policyholders for over 130 years. We market policies through approximately 170 independent insurance agencies. The Holding Company is subject to regulation by the Michigan Office of Financial and Insurance Services (OFIS)
as its primary regulator because it is the holding company for Fremont Insurance Company. As of March 31, 2006, we had approximately 51,400 policies in force and assets of $73.5 million.

The Companys executive offices are located at 933 E. Main Street, Fremont, Michigan 49412-9753, and the telephone number is (231) 924-0300.
Our website address is www.fmic.com. Information on the Companys website is not a part of this Form 10-Q. The Company makes available free of charge on its website, or provides a link to, the Companys Forms 3, 4, 5, 10-K, 10-Q and
8-K and any amendments to these Forms, that have been filed with the SEC as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to the SEC. To access these filings, go to the Companys
website and click on Investor Information, then click on SEC Filings.

General

We use accounting principles that are in compliance with those generally accepted in the United States of America (GAAP). Managements discussion and
analysis covers the Companys financial condition and results of operations for the three months ended March 31, 2006 and 2005. The Companys fiscal year ends on December 31.

Critical Accounting Policies

General. We are required to make estimates and assumptions in certain circumstances that affect the amounts reported in our financial statements and related footnotes. We evaluate these estimates and assumptions on an
on-going basis based on historical developments, market trends, industry trends and other data we believe to be reasonable under the circumstances. There can be no assurance that actual results will conform to our estimates and assumptions, and that
reported results of operation will not be adversely affected by the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time.

The policies relating to liabilities for loss and loss adjustment expenses, investments, policy acquisition costs, reinsurance and income taxes are those
we believe to be most sensitive to estimates and judgments. These policies are more fully described below as well as in our 2005 Annual Report on Form 10-K. There have been no material changes to these policies during the most recent quarter.

Liabilities for Loss and Loss Adjustment Expenses (LAE). These liabilities are estimates of the ultimate unpaid cost of all
losses incurred, including losses for claims that have not yet been reported to the Company. The amount of the reserve for reported claims is based primarily on a case-by-case evaluation of the type of risk involved, knowledge of the circumstances
surrounding each occurrence, and the insurance policy provisions relating to the type of loss. The amounts of loss reserves for incurred but unreported (IBNR) claims and loss adjustment expense are calculated by using historical and
actuarial information by line of business as adjusted to current conditions. Inflation is implicitly provided for in the reserving function through analysis of costs, trends and comparisons of historical reserving results to the ultimate results.
Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical techniques. Reserves are estimates. We expect that these estimates will be more or less than the amounts
ultimately paid when the claim is settled. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the current financial statements.

Loss reserving techniques, which rely on historical information as adjusted to reflect current conditions, have been consistently applied during the
periods presented. Changes in the estimate of the liability for losses and LAE reflect actual payments and evaluations of new information and data since the last report. Because of the nature of insurance claims, there are uncertainties inherent in
the estimates of the ultimate loss payment. Court decisions, regulatory changes and economic conditions can affect the ultimate cost of claims that occurred in the past as well as uncertainties regarding future loss cost trends. The ultimate
liability for unpaid losses and LAE will differ from the amount recorded at the last reported date.

The property and casualty insurance
industry generally has incurred substantial aggregate losses from claims related to asbestos-related illnesses, environmental remediation, product and construction defect liability, mold and other uncertain exposures. However, the Company has not
experienced significant losses from these types of claims.



---

We have four business segments: personal, commercial, farm and marine. The following table shows the
breakdown of our loss and LAE reserves between reported losses and IBNR losses by segment as of March 31, 2006 and December 31, 2005 (in thousands):



|                |  |               |        |                  |   |       
|--------------- |  | ------------- | ------ | ---------------- | - | ------
|                |  | March 31,2006 |        | December 31,2005
|Reported losses |  |               |        |                  |   |       
|Personal        |  | $             | 5,256  |                  | $ | 5,497 
|Commercial      |  |               | 3,335  |                  |   | 2,642 
|Farm            |  |               | 1,040  |                  |   | 1,444 
|Marine          |  |               | 592    |                  |   | 770   
|                |  |               |        |                  |   |       
|                |  |               | 10,223 |                  |   | 10,353
|                |  |               |        |                  |   |       
|IBNR losses     |  |               |        |                  |   |       
|Personal        |  |               | 4,055  |                  |   | 3,870 
|Commercial      |  |               | 3,820  |                  |   | 3,775 
|Farm            |  |               | 646    |                  |   | 646   
|Marine          |  |               | 223    |                  |   | 223   
|                |  |               |        |                  |   |       
|                |  |               | 8,744  |                  |   | 8,514 
|                |  |               |        |                  |   |       
|Total           |  |               |        |                  |   |       
|Personal        |  |               | 9,311  |                  |   | 9,367 
|Commercial      |  |               | 7,155  |                  |   | 6,417 
|Farm            |  |               | 1,686  |                  |   | 2,090 
|Marine          |  |               | 815    |                  |   | 993   
|                |  |               |        |                  |   |       
|                |  | $             | 18,967 |                  | $ | 18,867
|                |  |               |        |                  |   |       

The reserves are reported gross of any amounts recoverable from reinsurers and are reduced for
anticipated salvage and subrogation. Anticipated salvage and subrogation as of March 31, 2006 and December 31, 2005, was approximately $295,000 and $223,000, respectively.

Investments.Our investments are classified as available for sale. Investments classified as available for sale are available to be sold in
the future in response to the Companys liquidity needs, changes in market interest rates, tax strategies and asset-liability management strategies, among other reasons. Available for sale investments are reported at fair value, with unrealized
gains and losses reported in the accumulated other comprehensive income component of stockholders equity, net of deferred taxes and any corresponding deferred tax asset valuation allowance.

Other Than Temporary Impairments of Securities and Unrealized Losses on Investments. We review the status and market value changes of our
investments on at least a quarterly basis during the year, and any provisions for other than temporary impairments in the portfolios value are evaluated and established at each quarterly balance sheet date. In reviewing investments for other
than temporary impairment, we consider, in addition to a securitys market price history, the issuers operating results, financial condition and liquidity, its ability to access capital markets, credit rating trends, most current audit
opinion, industry and securities markets conditions, analyst expectations, and our intent and ability to retain fixed maturity securities for a period of time sufficient to allow for anticipated recovery in market value, in their totality to reach
our conclusions.

Additionally, our impairment evaluation and recognition for interests in mortgage-backed/asset-backed securities is
conducted in accordance with the guidance provided by the Emerging Issues Task Force of the Financial Accounting Standards Board. Under this guidance, impairment losses on investments must be recognized if the fair value of the investment is less
than both its book value and the net present value of expected future cash flows at the most recent (prior) estimation date. If these criteria are met, an impairment charge, calculated as the difference between the current book value of the
investment and its fair value, is included in earnings as a realized loss in the period the impairment arose. As a result of this evaluation process, there were no impairment losses recorded in mortgage-backed/asset-backed securities during the
three month period ended March 31, 2006 and 2005.

During the three months ended March 31, 2006 there were no investments that
the Company determined to be other than temporarily impaired. During the three months ended March 31, 2005 the Company recognized approximately $99,000 in realized losses due to two equity investments that the Company deemed to be other than
temporarily impaired. At March 31, 2006 and December 31, 2005 gross unrealized losses on available for sale investments were approximately $1,240,000 and $818,000, respectively. Management views the unrealized losses as being temporary.

Policy Acquisition Costs. We defer certain policy acquisition costs, which vary with, and are directly related to,
the production of business. In our case, these deferred costs consist primarily of agent commissions net of ceding commissions and premium taxes. These costs are amortized over the effective period of the related insurance policies. The method
followed in computing deferred



---

policy acquisition costs limits the amount of deferred costs to their estimated realizable value, which gives effect to
the premiums earned, related investment income, loss and loss adjustment expense and certain other costs expected to be incurred as the premium is earned. Future changes in estimates, the most significant of which is expected to be loss and loss
adjustment expense, may require accelerated amortization of deferred policy acquisition costs. Deferred policy acquisition costs at March 31, 2006 and December 31, 2005 were approximately $2,826,000 and $3,093,000, respectively.

Reinsurance. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated
with the reinsured policy. These balances are the amounts we expect to collect from our reinsurers for settled claims and for claims that are in the process of adjustment but have not been completely settled. Premiums paid for reinsurance contracts
are recognized over the contract period during which the reinsurance coverage attaches to the underlying policy. Ceded unearned premiums and reinsurance balances recoverable on paid and unpaid losses and LAE are reported separately as assets,
instead of being netted with the associated liabilities, because reinsurance does not relieve us of our legal liability to the claimants. Additionally, the same uncertainties associated with estimating unpaid loss and LAE affect the estimates for
the ceded portion of these liabilities. We continually monitor the financial condition of our reinsurers.

At March 31, 2006 and
December 31, 2005, the Companys recoverable from reinsurers was comprised of the following:



|                            |  |               |           |                  |   |          
|--------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                            |  | March 31,2006 |           | December 31,2005
|Paid losses and LAE         |  | $             | 1,558,371 |                  | $ | 1,353,467
|Unpaid losses and LAE       |  |               | 4,707,273 |                  |   | 5,933,469
|Unearned premium            |  |               | 203,954   |                  |   | 212,291  
|                            |  |               |           |                  |   |          
|Amounts due from reinsurers |  | $             | 6,469,598 |                  | $ | 7,499,227
|                            |  |               |           |                  |   |          

The effect of reinsurance on premiums written and earned for the three months ended March 31,
2006 and 2005 are as follows:



|             |  |                              |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|------------ |  | ---------------------------- | ---------- | - | ------ | - | ---------- | ------- |  | - | ---------- | - |  | - | ---------- | -
|             |  | Three Months Ended March 31, |           
|             |  | 2006                         |            |   | 2005   |  
|             |  | Written                      |            |   | Earned |   |            | Written |  |   | Earned     |  
|Direct       |  | $                            | 9,552,875  |   |        | $ | 11,563,921 |         |  | $ | 8,809,158  |   |  | $ | 10,765,913 |  
|Assumed      |  |                              | 15,698     |   |        |   | 21,829     |         |  |   | 25,262     |   |  |   | 33,289     |  
|Ceded        |  |                              | (2,023,818 | ) |        |   | (2,032,155 | )       |  |   | (1,680,086 | ) |  |   | (1,688,524 | )
|             |  |                              |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|Net premiums |  | $                            | 7,544,755  |   |        | $ | 9,553,595  |         |  | $ | 7,154,334  |   |  | $ | 9,110,678  |  
|             |  |                              |            |   |        |   |            |         |  |   |            |   |  |   |            |  

Income Taxes.Deferred federal income tax assets and liabilities are recognized for
the estimated future tax consequences attributable to the difference between financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, the Companys management reviews both positive and negative evidence, including current and historical results of operations, the
annual limitation on utilization of net operating loss carryforwards pursuant to Internal Revenue Code Section 382 (Section 382), future income projections and the overall prospects of our business. Based upon managements
assessment of all available evidence, including the Companys cumulative net income for recent fiscal years, estimates of current and future profitability and the overall prospects of our business, it has been determined that as of
March 31, 2006 it is more likely than not that sufficient taxable income will exist in the periods of reversal in order to realize the net deferred tax asset. Based on the annual Section 382 limitation of the utilization of net operating
loss carryforwards management has determined that approximately $1,053,000 of net operating loss carryforwards will not be realized and therefore a full valuation allowance will be maintained for these amounts.

Description of Ratios Analyzed.In the analysis of our operating results that follows, we refer to various financial ratios and other
measures that management uses to analyze and compare the underwriting results of our insurance operations. We calculate the loss and LAE ratio, policy acquisition and other underwriting expense ratio and combined ratio on a GAAP basis. As such, we
calculate these ratios by using net premiums earned as the denominator. There have been no material changes to the calculation and use of these ratios during the most recent quarter. The Company also calculates underwriting gain (loss) on a GAAP
basis. This measure equals the net premiums earned less loss and loss adjustment expenses as well as policy acquisition and other underwriting expenses. It is another measure used by management and insurance regulators to evaluate the underwriting
performance of our insurance operations.



---

Results of Operations  Three Months Ended March 31, 2006 and 2005

Consolidated Results of Operations. The following table shows the underwriting gain or loss as well as other revenue and expense items
included in our unaudited consolidated statements of income for the three months ended March 31, 2006 and 2005. The Companys underwriting gain or loss consists of net premiums earned less loss and LAE and policy acquisition and other
underwriting expenses. The Companys underwriting performance is the most important factor in evaluating the overall results of operations given the fluctuations which can occur in loss and LAE due to weather related events as well as the
uncertainties involved in the process of estimating reserves for losses and LAE. The underwriting results and the fluctuations in other revenue and expense items are discussed in greater detail below.



|                                           |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|------------------------------------------ |  | ---- | --------- | ------ | ---- | - | ---------- | ------ |  | - | --------- | - |  | ------ | --
|                                           |  | 2006 |           |        | 2005 |   |            | Change | 
|                                           |  |      |           | Dollar |      |   | Percentage |       
|Underwriting gain (loss)                   |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|Personal                                   |  | $    | 1,113,982 |        |      | $ | 77,991     |        |  | $ | 1,035,991 |   |  | 1328.3 | % 
|Commercial                                 |  |      | (100,004  | )      |      |   | (89,200    | )      |  |   | (10,804   | ) |  | 12.1   | % 
|Farm                                       |  |      | 447,375   |        |      |   | 251,223    |        |  |   | 196,152   |   |  | 78.1   | % 
|Marine                                     |  |      | 249,903   |        |      |   | 8,552      |        |  |   | 241,351   |   |  | 2822.2 | % 
|                                           |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|Total underwriting gain                    |  |      | 1,711,256 |        |      |   | 248,566    |        |  |   | 1,462,690 |   |  | 588.5  | % 
|Other revenue (expense) items              |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|Net investment income                      |  |      | 419,768   |        |      |   | 422,423    |        |  |   | (2,655    | ) |  | (0.6   | %)
|Net realized gains (losses) on investments |  |      | 318,503   |        |      |   | 20,309     |        |  |   | 298,194   |   |  | 1468.3 | % 
|Other income                               |  |      | 96,213    |        |      |   | 95,255     |        |  |   | 958       |   |  | 1.0    | % 
|Interest expense                           |  |      | (76,663   | )      |      |   | (77,606    | )      |  |   | 943       |   |  | (1.2   | %)
|                                           |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|Total other revenue (expense) items        |  |      | 757,821   |        |      |   | 460,381    |        |  |   | 297,440   |   |  | 64.6   | % 
|                                           |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|Income before federal income taxes         |  |      | 2,469,077 |        |      |   | 708,947    |        |  |   | 1,760,130 |   |  | 248.3  | % 
|Federal income tax expense                 |  |      | (807,828  | )      |      |   | (236,550   | )      |  |   | (571,278  | ) |  | 241.5  | % 
|                                           |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   
|Net income                                 |  | $    | 1,661,249 |        |      | $ | 472,397    |        |  | $ | 1,188,852 |   |  | 251.7  | % 
|                                           |  |      |           |        |      |   |            |        |  |   |           |   |  |        |   

Underwriting Results. The following table shows the components of the Companys
underwriting gain or loss for the three months ended March 31, 2006 and 2005.



|                                                        |  |      |           |   |      |   |           |        |  |   |            |    |  |       |   
|------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ------ |  | - | ---------- | -- |  | ----- | --
|                                                        |  | 2006 |           |   | 2005 |   |           | Change |  |   | % Change   |   
|Direct premiums written                                 |  | $    | 9,552,875 |   |      | $ | 8,809,158 |        |  | $ | 743,717    |    |  | 8.4   | % 
|                                                        |  |      |           |   |      |   |           |        |  |   |            |    |  |       |   
|Net premiums written                                    |  | $    | 7,544,755 |   |      | $ | 7,154,334 |        |  | $ | 390,421    |    |  | 5.5   | % 
|                                                        |  |      |           |   |      |   |           |        |  |   |            |    |  |       |   
|Net premiums earned                                     |  | $    | 9,553,595 |   |      | $ | 9,110,678 |        |  | $ | 442,917    |    |  | 4.9   | % 
|Loss and LAE                                            |  |      | 4,534,193 |   |      |   | 5,823,257 |        |  |   | (1,289,064 | )  |  | (22.1 | %)
|Policy acquisition and other underwriting expenses      |  |      | 3,308,146 |   |      |   | 3,038,855 |        |  |   | 269,291    |    |  | 8.9   | % 
|                                                        |  |      |           |   |      |   |           |        |  |   |            |    |  |       |   
|Underwriting gain (loss)                                |  | $    | 1,711,256 |   |      | $ | 248,566   |        |  | $ | 1,462,690  |    |  | 588.5 | % 
|                                                        |  |      |           |   |      |   |           |        |  |   |            |    |  |       |   
|Loss and LAE ratio                                      |  |      | 47.5      | % |      |   | 63.9      | %      |  |   | (16.5      | %) |  |       |   
|Policy acquisition and other underwriting expense ratio |  |      | 34.6      | % |      |   | 33.4      | %      |  |   | 1.3        | %  |  |       |   
|Combined ratio                                          |  |      | 82.1      | % |      |   | 97.3      | %      |  |   | (15.2      | %) |  |       |   

Premiums. The property and casualty industry is affected by soft and hard market
business cycles no different than most other industries. During a soft market price competition tends to increase as insurers are willing to reduce premium rates in order to maintain growth in premium volume. The soft market makes it more difficult
to attract new business as well as retain exposures which are adequately priced. Although we recognize the need to remain competitive in the Michigan market during the current soft market the Company remains committed to its disciplined underwriting
philosophy of only accepting risks which we feel are appropriately priced while declining risks which are under priced for the level of coverage provided.



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Direct premiums written by major business segment for the three months ended March 31 are presented
in the table below:



|                         |  |      |           |      |   |           |  |          |         |  |      |  
|------------------------ |  | ---- | --------- | ---- | - | --------- |  | -------- | ------- |  | ---- | -
|                         |  | 2006 |           | 2005 |   | $ Change  |  | % Change |        
|Direct Premiums Written: |  |      |           |      |   |           |  |          |         |  |      |  
|Personal                 |  | $    | 6,097,335 |      | $ | 5,560,750 |  | $        | 536,585 |  | 9.6  | %
|Commercial               |  |      | 2,115,247 |      |   | 1,998,279 |  |          | 116,968 |  | 5.9  | %
|Farm                     |  |      | 1,047,755 |      |   | 997,261   |  |          | 50,494  |  | 5.1  | %
|Marine                   |  |      | 292,538   |      |   | 252,868   |  |          | 39,670  |  | 15.7 | %
|                         |  |      |           |      |   |           |  |          |         |  |      |  
|                         |  | $    | 9,552,875 |      | $ | 8,809,158 |  | $        | 743,717 |  | 8.4  | %
|                         |  |      |           |      |   |           |  |          |         |  |      |  

The Michigan market continues to remain soft in both personal and commercial lines. Even with the
softness of the market, we were able to continue to increase direct premiums written in all segments. Direct premiums written for the personal segment increased 9.6%, primarily driven by an increase of 18.1% in premiums written for the automobile
line of business in addition to a 3.4% increase in the homeowners line of business. While new business premium for the personal segment was flat, renewal premiums were up 11.5%. The commercial segments direct premiums written increased 5.9% as
underwriting actions taken in the prior two years are no longer impacting the results. New business premium for the commercial segment was down 22.2%, primarily driven by the soft market, however this was offset by an increase of 12.4% in renewal
premiums. Farm direct premiums written increased 5.1% with new business premium down 6.8% while renewal premiums increased 6.0%. Direct written premium for the marine segment increased 15.7%, with new business premiums down 15.2%, but renewal
premiums increasing 23.7%.

Net premiums written by major business segment for the three months ended March 31 are presented in the
table below:



|                      |  |      |           |      |   |           |  |          |         |  |      |  
|--------------------- |  | ---- | --------- | ---- | - | --------- |  | -------- | ------- |  | ---- | -
|                      |  | 2006 |           | 2005 |   | $ Change  |  | % Change |        
|Net Premiums Written: |  |      |           |      |   |           |  |          |         |  |      |  
|Personal              |  | $    | 4,716,637 |      | $ | 4,419,274 |  | $        | 297,363 |  | 6.7  | %
|Commercial            |  |      | 1,716,146 |      |   | 1,662,092 |  |          | 54,054  |  | 3.3  | %
|Farm                  |  |      | 865,590   |      |   | 853,265   |  |          | 12,325  |  | 1.4  | %
|Marine                |  |      | 246,382   |      |   | 219,703   |  |          | 26,679  |  | 12.1 | %
|                      |  |      |           |      |   |           |  |          |         |  |      |  
|                      |  | $    | 7,544,755 |      | $ | 7,154,334 |  | $        | 390,421 |  | 5.5  | %
|                      |  |      |           |      |   |           |  |          |         |  |      |  

Net premiums written increased approximately $390,000 due to the overall increase in direct
premiums written of $744,000 offset by an increase of $354,000 in ceded premiums written under the Companys reinsurance agreements.

Net premiums earned by major business segment for the three months ended March 31 are presented in the table below:



|                     |  |      |           |      |   |           |  |          |         |  |      |  
|-------------------- |  | ---- | --------- | ---- | - | --------- |  | -------- | ------- |  | ---- | -
|                     |  | 2006 |           | 2005 |   | $ Change  |  | % Change |        
|Net Premiums Earned: |  |      |           |      |   |           |  |          |         |  |      |  
|Personal             |  | $    | 6,198,978 |      | $ | 5,821,994 |  | $        | 376,984 |  | 6.5  | %
|Commercial           |  |      | 1,937,864 |      |   | 1,929,594 |  |          | 8,270   |  | 0.4  | %
|Farm                 |  |      | 1,024,541 |      |   | 1,007,827 |  |          | 16,714  |  | 1.7  | %
|Marine               |  |      | 392,212   |      |   | 351,263   |  |          | 40,949  |  | 11.7 | %
|                     |  |      |           |      |   |           |  |          |         |  |      |  
|                     |  | $    | 9,553,595 |      | $ | 9,110,678 |  | $        | 442,917 |  | 4.9  | %
|                     |  |      |           |      |   |           |  |          |         |  |      |  

Net premiums earned increased $798,000 as a result of overall volume growth offset by an increase
of $355,000 in ceded premiums written under the Companys reinsurance agreements.



---

Loss and Loss Adjustment Expenses (LAE). The Companys net loss and LAE, incurred
claim count, average loss and LAE per claim and the loss and LAE ratios for the three months ended March 31 are shown in the tables below:



|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -------- |  | - | ---------- | - |  | ----- | --
|                                |  | 2006 |           |   | 2005 |   |           | $ Change |  |   | % Change   |  
|Loss and LAE:                   |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Personal                        |  | $    | 2,938,461 |   |      | $ | 3,802,084 |          |  | $ | (863,623   | ) |  | (22.7 | %)
|Commercial                      |  |      | 1,366,839 |   |      |   | 1,375,180 |          |  |   | (8,341     | ) |  | (0.6  | %)
|Farm                            |  |      | 222,396   |   |      |   | 420,445   |          |  |   | (198,049   | ) |  | (47.1 | %)
|Marine                          |  |      | 6,497     |   |      |   | 225,548   |          |  |   | (219,051   | ) |  | (97.1 | %)
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|                                |  | $    | 4,534,193 |   |      | $ | 5,823,257 |          |  | $ | (1,289,064 | ) |  | (22.1 | %)
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Incurred Claim Count:           |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Personal                        |  |      | 1,371     |   |      |   | 1,177     |          |  |   | 194        |   |  | 16.5  | % 
|Commercial                      |  |      | 163       |   |      |   | 176       |          |  |   | (13        | ) |  | (7.4  | %)
|Farm                            |  |      | 91        |   |      |   | 74        |          |  |   | 17         |   |  | 23.0  | % 
|Marine                          |  |      | 29        |   |      |   | 19        |          |  |   | 10         |   |  | 52.6  | % 
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|                                |  |      | 1,654     |   |      |   | 1,446     |          |  |   | 208        |   |  | 14.4  | % 
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Average Loss and LAE per Claim: |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Personal                        |  | $    | 2,143     |   |      | $ | 3,230     |          |  | $ | (1,087     | ) |  | (33.7 | %)
|Commercial                      |  |      | 8,386     |   |      |   | 7,814     |          |  |   | 572        |   |  | 7.3   | % 
|Farm                            |  |      | 2,444     |   |      |   | 5,682     |          |  |   | (3,238     | ) |  | (57.0 | %)
|Marine                          |  |      | 224       |   |      |   | 11,871    |          |  |   | (11,647    | ) |  | (98.1 | %)
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|                                |  | $    | 2,741     |   |      | $ | 4,027     |          |  | $ | (1,286     | ) |  | (31.9 | %)
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Loss and LAE Ratio:             |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|Personal                        |  |      | 47.4      | % |      |   | 65.1      | %        |  |   |            |   |  |       |   
|Commercial                      |  |      | 70.5      | % |      |   | 71.1      | %        |  |   |            |   |  |       |   
|Farm                            |  |      | 21.7      | % |      |   | 41.6      | %        |  |   |            |   |  |       |   
|Marine                          |  |      | 1.7       | % |      |   | 64.1      | %        |  |   |            |   |  |       |   
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   
|                                |  |      | 47.5      | % |      |   | 63.9      | %        |  |   |            |   |  |       |   
|                                |  |      |           |   |      |   |           |          |  |   |            |   |  |       |   

The decline in loss and LAE of approximately $864,000 for the personal segment is due to a decline
in claim severity experienced primarily in the homeowners and personal auto product lines. Despite an increase in the claim counts for both product lines a decline in severity was experienced for the three months ended March 31, 2006. The
personal segments loss ratio declined as a result of both a decline in claim severity coupled with growth in net premium earned during the period. The loss and LAE for the commercial segment was consistent with the loss experience during the
three months ended March 31, 2005. The small decline in claim frequency during the period was offset by an increase in severity which caused the loss and LAE ratio to remain relatively consistent with the ratio for prior year period. Both the
farm and marine segments experienced a decline in claim severity during the three months ended March 31, 2006. Although frequency increased for both segments the losses experienced during this period were not as significant as those experienced
in the prior year period. The decline in the marine segments loss and LAE was also due to redundant development on several individual claims which were either closed with no payment or settled for less than the initial loss estimate.

Policy Acquisition and Other Underwriting Expenses.Policy acquisition and other underwriting expenses for the three months
ended March 31 were as follows:



|                                                         |  |      |           |   |      |   |           |        |  |   |          |   |  |      |  
|-------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ------ |  | - | -------- | - |  | ---- | -
|                                                         |  | 2006 |           |   | 2005 |   |           | Change |  |   | % Change |  
|Amortization of deferred policy acquisition costs        |  | $    | 1,674,555 |   |      | $ | 1,497,797 |        |  | $ | 176,758  |   |  | 11.8 | %
|Other underwriting expenses                              |  |      | 1,633,591 |   |      |   | 1,541,058 |        |  |   | 92,533   |   |  | 6.0  | %
|                                                         |  |      |           |   |      |   |           |        |  |   |          |   |  |      |  
|Total policy acquisition and other underwriting expenses |  | $    | 3,308,146 |   |      | $ | 3,038,855 |        |  | $ | 269,291  |   |  | 8.9  | %
|                                                         |  |      |           |   |      |   |           |        |  |   |          |   |  |      |  
|Net premiums earned                                      |  | $    | 9,553,595 |   |      | $ | 9,110,678 |        |  | $ | 442,917  |   |  | 4.9  | %
|                                                         |  |      |           |   |      |   |           |        |  |   |          |   |  |      |  
|Expense ratio                                            |  |      | 34.6      | % |      |   | 33.4      | %      |  |   | 1.3      | % |  |      |  
|                                                         |  |      |           |   |      |   |           |        |  |   |          |   |  |      |  



---

Amortization of deferred policy acquisition costs increased during the period in 2006 as compared to the
same period in 2005 as a result of increased earned premium volume coupled with an increase in the premium tax component of deferred policy acquisition costs. The expense ratio, defined as the ratio of policy acquisition and other underwriting
expenses to net earned premium, increased from 33.4% in 2005 to 34.6% in the 2006 quarter. The increase is due to growth in salaries and wages, expenses associated with surveys and inspections as well as an increase in depreciation on equipment.

Investment Income.The Companys net investment income excluding realized gains and losses, average invested assets
including cash and cash equivalents and the rate of return for the three months ended March 31 are as follows:



|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ------ |  | - | --------- | -- |  | ---- | --
|                                               |  | 2006 |            |   | 2005 |   |            | Change |  |   | % Change  |   
|Gross investment income                        |  | $    | 499,860    |   |      | $ | 479,863    |        |  | $ | 19,997    |    |  | 4.2  | % 
|Less: Investment expenses                      |  |      | (80,092    | ) |      |   | (57,440    | )      |  |   | (22,652   | )  |  | 39.4 | % 
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|Net investment income                          |  | $    | 419,768    |   |      | $ | 422,423    |        |  | $ | (2,655    | )  |  | (0.6 | %)
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|Average invested assets (amortized cost basis) |  | $    | 52,644,105 |   |      | $ | 45,732,166 |        |  | $ | 6,911,939 |    |  | 15.1 | % 
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|Rate of return on average invested assets      |  |      | 3.2        | % |      |   | 3.7        | %      |  |   | (0.5      | %) |  |      |   
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   

Gross investment income increased $36,000 from fixed maturities and $11,000 from cash and cash
equivalents while investment income from equities decreased $27,000 resulting in a total increase in gross investment income of $20,000. The increase in income from the fixed maturity portfolio is due to three factors. The tax-equivalent book yield
on fixed maturities has been maintained constant at 4.54% during the three months ended March 31, 2006 and 2005. This was accomplished despite shortening the portfolios effective duration by over 1.5 years during that time. The effective
duration of the fixed maturity portfolio was: 3.72 years as of March 31, 2006, 3.92 years as of December 31, 2005, 5.33 years as of March 31, 2005 and 4.96 years as of December 31, 2004. The fixed maturity portfolio duration was
reduced in an effort to remove some of the interest rate risk present and minimize unrealized losses to the portfolio brought on by an increase in market-wide interest rates. The Company took advantage of the attractive tax-equivalent yields
available in the intermediate and long-term portion of the tax exempt municipal (states and political subdivision) sector, offsetting the otherwise adverse book yield impact of reducing duration. Furthermore, reinvested cash flows from
payments, maturities and corporate actions were redeployed into a higher yield environment, as short and intermediate yields rose substantially over the course of 2005 and the beginning of 2006. And finally, the fixed maturity portfolio book value
increased approximately $4.42 million between March 31, 2005 and 2006. This was the result of direct cash contributions to the portfolio as well as reinvestment of investment income. This increase in the fixed maturity portfolios asset base
increased the income generating capacity of the portfolio. The increase in investment income from cash and cash equivalents is due to higher interest rates coupled with the fact that the Company held a higher balance of cash and cash equivalents
during the three months ended March 31, 2006 compared to the same period in 2005. The decrease in investment income from the equity portfolio is largely driven by the shift within the portfolio from holding common and preferred stocks to
holding mutual funds. Whereas common and preferred stocks typically provided quarterly dividend payments mutual funds do not provide dividend payments as frequently.

Investment expenses increased $23,000 during the three months ended March 31, 2006 as compared to the same period in 2005. The increase is a result of increased advisory fees due to the growth in invested assets
coupled with an increase in operating expenses allocable to investment activities. The average invested asset balance (amortized cost basis), including cash and cash equivalents, increased $6.9 million primarily as a result of cash provided by
operations from April 2005 through March 2006 which was placed into the investment portfolio. As a result of the aforementioned items the annualized rate of return on average invested assets decreased to 3.2% for the three months ended
March 31, 2006 from 3.7% for the same period in 2005.

During the three months ended March 31, 2006 the Company realized a net
gain on the sale of fixed maturity and equity securities of approximately $13,000 and $305,000, respectively, for a total net realized gain of approximately $318,000. During the same period in 2005 the Company had a net realized gain of $20,000. The
increase in the net realized gains from equity sales is due to the continuation of the Companys strategy to shift the equity portfolio from common and preferred stocks to mutual funds. During 2005 the Company began to liquidate its holdings in
common and preferred stocks and move those funds into mutual funds. This is being done in order to reduce the volatility associated with holding individual stocks. At March 31, 2006 the Company holds one common stock security while the
remaining equity portfolio is invested in mutual funds.

Interest Expense. Interest expense decreased $1,000 during the three
months ended March 31, 2006 as compared to the same period in 2005. The small decrease is due to the decline in the quota share funds withheld account balance. The quota share reinsurance contract was structured on a funds withheld basis and
requires the Company to accrue interest at an annual rate of 2.5%.



---

Income Tax Expense. During the three months ended March 31, 2006 and 2005 the Company
recorded income tax expense of approximately $808,000 and $237,000, respectively. The increase is due to the growth in pre-tax income in the 2006 period compared to the prior year period. The effective tax rate for the three months ended
March 31, 2006 was 32.7% which is less than the statutory rate of 34% primarily due to nontaxable investment income generated during the period.

Liquidity and Capital Resources

The principal sources of funds for the Company are insurance premiums, investment income
and proceeds from the maturity and sale of invested assets. Funds are primarily used for the payment of claims, commissions, salaries and employee benefits, other operating expenses and surplus note service. Our short and long term liquidity
requirements vary because of the uncertainties regarding the settlement dates for liabilities for unpaid claims and because of the potential for large losses, either individually or in the aggregate.

We maintain an investment portfolio that is intended to provide sufficient funds to meet our obligations without forced sales of investments. A portion
of our investment portfolio is maintained in relatively short term and highly liquid assets, including mortgage-backed securities, which have shorter estimated durations, to ensure the availability of funds.

Cash flow used in operations was $558,000 and $658,000 for the three months ended March 31, 2006 and 2005, respectively, a decrease of $100,000.
During the three months ended March 31, 2006 as compared to the same period in 2005, net premiums collected increased $873,000, net loss and LAE payments decreased $129,000, policy acquisition and other underwriting expenses paid decreased
$189,000 and federal income taxes paid increased $1,190,000. During the three months ended March 31, 2006, net cash used under the quota share funds withheld account decreased $168,000 from the same period in 2005. Other cash used in operations
increased $69,000 during the three months ended March 31, 2006 compared to the same period in 2005.

During the three months ended
March 31, 2006 cash flow provided by investing activities was $404,000 while during the same period in 2005 cash flow used in investing activities was $1,789,000. The shift in cash flow from investing activities is due to the higher cash
balance on hand as of the beginning of the three month period ended March 31, 2005. At the beginning of 2005 the Company had cash on hand of approximately $3.6 million, a portion of which was invested into the portfolio during the three months
ended March 31, 2005.

Our debt structure consists of Series B Surplus Notes which carry a 7 percent interest rate and mature on
September 30, 2007. At March 31, 2006 and December 31, 2005, there were $2,890,000 Series B Surplus Notes outstanding.

We
believe that our existing cash and funds generated from operations will be sufficient to satisfy our financial requirements during the foreseeable future.

The cost or amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of investments at March 31, 2006 and December 31, 2005 are as follows:



|                                                 |  |                      |            |                      |   |                       |  |                     |           |  |   |           
|------------------------------------------------ |  | -------------------- | ---------- | -------------------- | - | --------------------- |  | ------------------- | --------- |  | - | ----------
|                                                 |  | March 31, 2006      
|                                                 |  | Cost orAmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFair Value
|Fixed maturities:                                |  |                      |            |                      |   |                       |  |                     |           |  |   |           
|U.S. Treasury securities and obligations of U.S. |  |                      |            |                      |   |                       |  |                     |           |  |   |           
|Government corporations and agencies             |  | $                    | 8,354,607  |                      | $ |                      |  | $                   | 165,872   |  | $ | 8,188,735 
|States and political subdivisions                |  |                      | 7,630,743  |                      |   |                      |  |                     | 183,832   |  |   | 7,446,911 
|Corporate securities                             |  |                      | 14,137,583 |                      |   |                      |  |                     | 510,990   |  |   | 13,626,593
|Mortgage-backed securities                       |  |                      | 12,578,471 |                      |   | 1,767                 |  |                     | 355,847   |  |   | 12,224,391
|                                                 |  |                      |            |                      |   |                       |  |                     |           |  |   |           
|                                                 |  |                      | 42,701,404 |                      |   | 1,767                 |  |                     | 1,216,541 |  |   | 41,486,630
|                                                 |  |                      |            |                      |   |                       |  |                     |           |  |   |           
|Common stocks and mutual funds                   |  |                      | 8,090,146  |                      |   | 1,107,945             |  |                     | 23,500    |  |   | 9,174,591 
|                                                 |  |                      |            |                      |   |                       |  |                     |           |  |   |           
|Total                                            |  | $                    | 50,791,550 |                      | $ | 1,109,712             |  | $                   | 1,240,041 |  | $ | 50,661,221
|                                                 |  |                      |            |                      |   |                       |  |                     |           |  |   |           



---

|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|------------------------------------------------------------------------------------- |  | -------------------- | ---------- | -------------------- | - | --------------------- |  | ------------------- | ------- |  | - | ----------
|                                                                                      |  | December 31, 2005   
|                                                                                      |  | Cost orAmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFair Value
|Fixed maturities:                                                                     |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 7,598,104  |                      | $ | 2,977                 |  | $                   | 97,817  |  | $ | 7,503,264 
|States and political subdivisions                                                     |  |                      | 7,645,905  |                      |   | 35                    |  |                     | 97,858  |  |   | 7,548,082 
|Corporate securities                                                                  |  |                      | 15,101,502 |                      |   | 34,317                |  |                     | 323,027 |  |   | 14,812,792
|Mortgage-backed securities                                                            |  |                      | 12,016,345 |                      |   | 3,358                 |  |                     | 239,412 |  |   | 11,780,291
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|                                                                                      |  |                      | 42,361,856 |                      |   | 40,687                |  |                     | 758,114 |  |   | 41,644,429
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|Preferred stocks                                                                      |  |                      | 426,200    |                      |   |                      |  |                     | 5,600   |  |   | 420,600   
|Common stocks and mutual funds                                                        |  |                      | 8,380,201  |                      |   | 761,894               |  |                     | 54,510  |  |   | 9,087,585 
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|                                                                                      |  |                      | 8,806,401  |                      |   | 761,894               |  |                     | 60,110  |  |   | 9,508,185 
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|Total                                                                                 |  | $                    | 51,168,257 |                      | $ | 802,581               |  | $                   | 818,224 |  | $ | 51,152,614
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           

At March 31, 2006, corporate securities accounted for 36% of our fixed maturity portfolio,
mortgage backed securities were 28%, states and political subdivisions were 18% and U. S. government and government agency bonds were 18%. At March 31, 2006, our equity portfolio had a 100% concentration in the U.S. industrial and miscellaneous
sector.

All securities are listed as available for sale. We evaluate securities for impairment on a regular basis and specifically
determine on an individual security basis whether or not the decline in value is other than temporary. Equity securities with unrealized losses at March 31, 2006 were generally determined to have temporary declines in value due to geopolitical
reasons or a reaction to their particular industry rather than fundamental reasons. Fixed maturity securities with unrealized losses at March 31, 2006 were also determined to have temporary declines in value as opposed to fundamental changes in
the credit quality of the issuers of the securities. We believe it is more likely than not that those securities will appreciate in value.

The following table summarizes the length of time securities with unrealized losses at March 31, 2006 have been in an unrealized loss position:



|                                                                                      |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          
|------------------------------------------------------------------------------------- |  | ------------------- | ---------- | --------------------- | - | ------------------- |  | --------------------- | ---------- | ------------------- | - | --------------------- |  | - | ---------- |  | - | ---------
|                                                                                      |  | Less than 12 Months |            | 12 Months or More     |   | Total              
|                                                                                      |  | EstimatedFair Value |            | GrossUnrealizedLosses |   | EstimatedFair Value |  | GrossUnrealizedLosses |            | EstimatedFair Value |   | GrossUnrealizedLosses
|Fixed maturities:                                                                     |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                   | 5,306,108  |                       | $ | 54,433              |  | $                     | 2,882,627  |                     | $ | 111,439               |  | $ | 8,188,735  |  | $ | 165,872  
|States and political subdivisions                                                     |  |                     | 7,446,911  |                       |   | 183,832             |  |                       |           |                     |   |                      |  |   | 7,446,911  |  |   | 183,832  
|Corporate securities                                                                  |  |                     | 7,093,798  |                       |   | 179,282             |  |                       | 6,532,796  |                     |   | 331,708               |  |   | 13,626,594 |  |   | 510,990  
|Mortgage-backed securities                                                            |  |                     | 3,650,290  |                       |   | 80,040              |  |                       | 7,109,730  |                     |   | 275,807               |  |   | 10,760,020 |  |   | 355,847  
|                                                                                      |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          
|                                                                                      |  |                     | 23,497,107 |                       |   | 497,587             |  |                       | 16,525,153 |                     |   | 718,954               |  |   | 40,022,260 |  |   | 1,216,541
|                                                                                      |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          
|Common stocks and mutual funds                                                        |  |                     | 503,123    |                       |   | 23,500              |  |                       |           |                     |   |                      |  |   | 503,123    |  |   | 23,500   
|                                                                                      |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          
|                                                                                      |  |                     | 503,123    |                       |   | 23,500              |  |                       |           |                     |   |                      |  |   | 503,123    |  |   | 23,500   
|                                                                                      |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          
|Total                                                                                 |  | $                   | 24,000,230 |                       | $ | 521,087             |  | $                     | 16,525,153 |                     | $ | 718,954               |  | $ | 40,525,383 |  | $ | 1,240,041
|                                                                                      |  |                     |            |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |          

Changes in Interest Rates

Fluctuations in near-term interest rates could have an impact on our results of operations and cash flows due to some rate sensitive investments we hold. Certain fixed maturity securities have call features that allow
the issuer to pre-pay the obligation. In a



---

declining interest rate environment, these securities may be called by their issuer and can only be replaced with similar
securities bearing lower interest rates. In a rising interest rate environment, because of our strategy of holding these securities to maturity, our ability to invest in higher yielding securities would be limited.

Effects of Inflation

The effects of inflation are
implicitly considered in estimating our reserves for unpaid losses and loss adjustment expenses and in the premium rate-making process. The actual effects of inflation on our results of operations cannot be accurately known until the ultimate
settlement of claims. However, based upon the actual results reported to date, it is our opinion that our loss and LAE reserves, including reserves for losses that have been incurred but not yet reported, make adequate provision for the effects of
inflation.

Contractual Obligations and Commitments

There were no material changes outside the ordinary course of our business in our contractual obligations during the three months ended March 31, 2006.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

General. Market risk is the risk that we will incur losses due to adverse changes in market rates and prices. We have exposure to three principal types of market risk through our investment
activities: interest rate risk, credit risk and equity risk. Our primary market risk exposure is to changes in interest rates. We have not entered, and do not plan to enter, into any derivative financial instruments for hedging, trading or
speculative purposes.

Interest Rate Risk. Interest rate risk is the risk that we will incur economic losses due to
adverse changes in interest rates. Our exposure to interest rate changes primarily results from our significant holdings of fixed rate investments. Fluctuations in interest rates have a direct impact on the market valuation of these securities.
Therefore, an adverse change in market prices of these securities would result in unrealized losses reflected in the balance sheet. As a result of the rising interest rate environment the portfolio duration has been reduced over the last 12 months
in an effort to remove some of the interest rate risk present and minimize unrealized losses to the fixed maturity portfolio brought on by an increase in market-wide interest rates. Although the reduction in duration is expected to reduce the
overall interest rate risk associated with our fixed maturity portfolio, it will also likely decrease future investment income. If interest rates continue to rise, however, unrealized losses in the fixed maturity portfolio are expected to be smaller
because of the shortened duration position.

The change in the fixed maturity portfolios net unrealized loss from $717,000 at
December 31, 2005 to a net unrealized loss of $1,215,000 at March 31, 2006 is due to increasing interest rates during the period. During the three months ended March 31, 2006 the yields on the 2, 5 and 10 year treasuries increased
..42, .46 and .46 basis points, respectively.

The following table shows the effects of a change in interest rate on the fair value of our
fixed maturity investment portfolio. We have assumed an immediate increase or decrease of 1% or 2% in interest rates. You should not consider this assumption or the values shown in the table to be a prediction of actual future results.



|               |  |                |        |                |   |        |  
|-------------- |  | -------------- | ------ | -------------- | - | ------ | -
|Change in Rate |  | PortfolioValue |        | Change inValue |  
|               |  | (In thousands) |       
|2%             |  | $              | 38,319 |                | $ | (3,168 | )
|1%             |  |                | 39,915 |                |   | (1,572 | )
|0              |  |                | 41,487 |                |   |       |  
|-1%            |  |                | 43,034 |                |   | 1,547  |  
|-2%            |  |                | 44,557 |                |   | 3,070  |  

Credit Risk. At March 31, 2006, all of our fixed maturity securities were rated
by Moodys as investment grade with an average credit quality rating of AA+ and an average duration of 3.72 years.

Equity
Risk. Equity price risk is the risk that we will incur economic losses due to adverse changes in equity prices. Our exposure to changes in equity prices primarily results from our holdings of common stocks, mutual funds and other
equities. Our portfolio of equity securities is carried on the balance sheet at fair value. Therefore, an adverse change in market prices of these securities would result in losses.

ITEM 4. CONTROLS AND PROCEDURES.

The Company maintains disclosure controls and procedures
designed to ensure that information required to be disclosed in the Companys reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms, and that such information is



---

accumulated and communicated to the Companys management, including its Chief Executive Officer and Vice President
of Finance, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.

As required by Securities and Exchange Commission Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the
participation of the Companys management, including the Companys Chief Executive Officer and the Companys Vice President of Finance, of the effectiveness of the design and operation of the Companys disclosure controls and
procedures as of the end of the quarter covered by this report. Based on the foregoing, the Companys Chief Executive Officer and Vice President of Finance concluded that the Companys disclosure controls and procedures were effective at
the reasonable assurance level.

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is party to litigation in the normal course of business.
Based upon information presently available to us, we do not consider any litigation to be material.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors previously disclosed in the Companys Annual Report on Form 10-K for the year ended
December 31, 2005.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We do not intend to pay dividends in the foreseeable future and cannot assure our shareholders that dividends will be paid in the future. The Holding
Companys principal source of cash available for payment of dividends is dividends from the Insurance Company. The payment of dividends by the Insurance Company is subject to limitations imposed by the Michigan Insurance Code. The Insurance
Company may not pay an extraordinary dividend unless it notifies the Insurance Commissioner and she does not disapprove the payment. An extraordinary dividend includes any dividend which, when taken together with other dividends paid within the
preceding 12 months, exceeds the greater of 10% of the Insurance Companys statutory policyholders surplus as of December 31 of the immediately preceding year or its statutory net income, excluding realized capital gains, for the
12-month period ending December 31 of the immediately preceding year. During the year ended December 31, 2006, the Insurance Company can pay a non-extraordinary dividend of up to $2,599,000 without prior approval from the Insurance
Commissioner. In order to pay any dividends, the Insurance Company must be in a position to satisfy the requirement that the Company continues to be safe, reliable and entitled to public confidence. Also, in the absence of approval of the Insurance
Commissioner, dividends may only be paid from statutory earned surplus. Also, dividends may not exceed the amount of the Insurance Companys statutory capital stock account in any one-year unless it meets certain other requirements.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

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

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.



| | (a) | Exhibits. The following documents are included as exhibits to this report on Form 10-Q. Documents not accompanying this report are incorporated by reference as indicated.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|       |  |                                                                                                                                                                                                                                                                                          
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NUMBER |  | TITLE                                                                                                                                                                                                                                                                                    
|       | 
|3.1    |  | Articles of Incorporation of Fremont Michigan InsuraCorp, Inc. (Incorporated by reference to Exhibit 3.1 to Registration Statement No. 333-112414 on Form S-1).                                                                                                                          
|       | 
|3.2    |  | Bylaws of Fremont Michigan InsuraCorp, Inc. (Incorporated by reference to Exhibit 3.2 to Registration Statement No. 333-112414 on Form S-1).                                                                                                                                             
|       | 
|4.1    |  | See Articles of Incorporation, filed as Exhibit 3.1                                                                                                                                                                                                                                      
|       | 
|4.2    |  | Shareholder Rights Agreement dated November 1, 2004 by and between the Company and Registrar and Transfer Company, as Rights Agent (Incorporated by reference to Exhibit 4.2 to the
Companys Form 8-K filed with the Securities and Exchange Commission on November 3, 2004).           
|       | 
|4.3    |  | Certificate of Adoption of Resolution Designating and Prescribing Rights, Preferences and Limitations of Junior Participating Preferred Stock (Incorporated by reference to Exhibit 4.3 to the
Companys Form 8-K filed with the Securities and Exchange Commission on November 3, 2004).
|       | 
|31.1   |  | Certification of President and Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                              
|       | 
|31.2   |  | Certification of Vice President of Finance under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|       | 
|32.1   |  | Certification pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                        



---

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.



|                   |  |                                   |  |                                             
|------------------ |  | --------------------------------- |  | --------------------------------------------
|                   |  | FREMONT MICHIGAN INSURACORP, INC.
|                   |  |                                  
|Date: May 15, 2006 |  | By:                               |  | /s/ Richard E. Dunning                      
|                   |  |                                   |  | Richard E. Dunning                          
|                   |  |                                   |  | President and Chief Executive Officer       
|                   |  |                                  
|Date: May 15, 2006 |  | By:                               |  | /s/ Kevin G. Kaastra                        
|                   |  |                                   |  | Kevin G. Kaastra                            
|                   |  |                                   |  | Vice President of Finance                   
|                   |  |                                   |  | (principal financial and accounting officer)