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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q







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

For the quarterly period ended March 31, 2009

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)





FREMONT MICHIGAN INSURACORP,
INC.

(Exact name of Registrant as specified in its charter)







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

(231) 924-0300

(Registrants telephone number, including area code)





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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer
and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                                                                       |  |                             
|---------------------------------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈                                             |  | Accelerated filer   ̈        
|Non-accelerated filer   ̈ (Do not check if a smaller reporting company) |  | Smaller reporting company  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.



|                            |  |                                               
|--------------------------- |  | ----------------------------------------------
|                            |  | Number of Shares Outstanding as of May 8, 2009
|COMMON STOCK (No Par Value) |  | 1,755,509                                     
|(Title of Class)            |  | (Outstanding Shares)                          









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##### Table of Contents

TABLE OF CONTENTS



|                              |  |                                                                                       |  |   
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Financial Statements                                                                  |  | 3 
|                              |  | Consolidated Balance Sheets                                                           |  | 3 
|                              |  | Consolidated Statements of Operations                                                 |  | 4 
|                              |  | Consolidated Statement of Stockholders Equity                                        |  | 5 
|                              |  | Consolidated Statements of Cash Flows                                                 |  | 6 
|                              |  | Notes to Consolidated Financial Statements                                            |  | 7 
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 24
|Item 4.                       |  | Controls and Procedures                                                               |  | 24
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 25
|Item 1A.                      |  | Risk Factors                                                                          |  | 25
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 25
|Item 3.                       |  | Defaults Upon Senior Securities                                                       |  | 26
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 26
|Item 5.                       |  | Other Information                                                                     |  | 26
|Item 6.                       |  | Exhibits                                                                              |  | 26
|                              | 
|SIGNATURES                    |  | 27                                                                                   



2



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##### Table of Contents

PART IFINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS.
|------- | ---------------------

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Balance Sheets (Unaudited)

March 31, 2009 and December 31, 2008



|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                                                                             |  | March 31,2009 |            |   | December 31,2008 |  
|Assets                                                                                                                                                                       |  |               |            |   |                  |   |            |  
|Investments:                                                                                                                                                                 |  |               |            |   |                  |   |            |  
|Fixed maturities available for sale, at fair value                                                                                                                           |  | $             | 49,049,685 |   |                  | $ | 53,958,783 |  
|Equity securities available for sale, at fair value                                                                                                                          |  |               | 4,154,359  |   |                  |   | 4,560,368  |  
|Mortgage loans on real estate from related parties                                                                                                                           |  |               | 244,240    |   |                  |   | 247,000    |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|Total investments                                                                                                                                                            |  |               | 53,448,284 |   |                  |   | 58,766,151 |  
|Cash and cash equivalents                                                                                                                                                    |  |               | 10,706,028 |   |                  |   | 6,576,564  |  
|Premiums due from policyholders, net                                                                                                                                         |  |               | 9,080,923  |   |                  |   | 8,888,334  |  
|Amounts due from reinsurers                                                                                                                                                  |  |               | 8,028,405  |   |                  |   | 6,844,407  |  
|Prepaid reinsurance premiums                                                                                                                                                 |  |               | 504,027    |   |                  |   | 465,006    |  
|Accrued investment income                                                                                                                                                    |  |               | 523,684    |   |                  |   | 594,776    |  
|Deferred policy acquisition costs                                                                                                                                            |  |               | 3,499,282  |   |                  |   | 3,596,147  |  
|Deferred federal income taxes                                                                                                                                                |  |               | 4,859,618  |   |                  |   | 4,741,726  |  
|Property and equipment, net of accumulated depreciation                                                                                                                      |  |               | 2,487,461  |   |                  |   | 2,455,766  |  
|Other assets                                                                                                                                                                 |  |               | 6,969      |   |                  |   | 30,670     |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|                                                                                                                                                                             |  | $             | 93,144,681 |   |                  | $ | 92,959,547 |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|Liabilities and Stockholders Equity                                                                                                                                         |  |               |            |   |                  |   |            |  
|Liabilities:                                                                                                                                                                 |  |               |            |   |                  |   |            |  
|Losses and loss adjustment expenses                                                                                                                                          |  | $             | 22,229,849 |   |                  | $ | 21,369,524 |  
|Unearned premiums                                                                                                                                                            |  |               | 24,395,856 |   |                  |   | 25,455,624 |  
|Reinsurance balances payable                                                                                                                                                 |  |               | 11,142     |   |                  |   | 161,845    |  
|Accrued expenses and other liabilities                                                                                                                                       |  |               | 6,899,554  |   |                  |   | 6,657,625  |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|Total liabilities                                                                                                                                                            |  |               | 53,536,401 |   |                  |   | 53,644,618 |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|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, 1,754,485 and 1,740,154 shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively |  |               |           |   |                  |   |           |  
|Class B common stock, no par value, authorized 500,000 shares, no shares issued and outstanding                                                                              |  |               |           |   |                  |   |           |  
|Additional paid-in capital                                                                                                                                                   |  |               | 8,864,129  |   |                  |   | 8,653,443  |  
|Retained earnings                                                                                                                                                            |  |               | 32,731,007 |   |                  |   | 32,507,143 |  
|Accumulated other comprehensive loss                                                                                                                                         |  |               | (1,986,856 | ) |                  |   | (1,845,657 | )
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|Total stockholders equity                                                                                                                                                   |  |               | 39,608,280 |   |                  |   | 39,314,929 |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  
|Total liabilities and stockholders equity                                                                                                                                   |  | $             | 93,144,681 |   |                  | $ | 92,959,547 |  
|                                                                                                                                                                             |  |               |            |   |                  |   |            |  

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, 2009 and 2008



|                                                   |  |      |            |      |   |           
|-------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                   |  | 2009 |            | 2008
|Revenues:                                          |  |      |            |      |   |           
|Net premiums earned                                |  | $    | 12,820,881 |      | $ | 11,216,905
|Net investment income                              |  |      | 501,185    |      |   | 516,236   
|Net realized gains on investments                  |  |      | 196,661    |      |   | 158,602   
|Other income, net                                  |  |      | 144,166    |      |   | 138,141   
|                                                   |  |      |            |      |   |           
|Total revenues                                     |  |      | 13,662,893 |      |   | 12,029,884
|                                                   |  |      |            |      |   |           
|Expenses:                                          |  |      |            |      |   |           
|Losses and loss adjustment expenses, net           |  |      | 9,221,193  |      |   | 6,336,499 
|Policy acquisition and other underwriting expenses |  |      | 4,111,674  |      |   | 4,063,034 
|                                                   |  |      |            |      |   |           
|Total expenses                                     |  |      | 13,332,867 |      |   | 10,399,533
|                                                   |  |      |            |      |   |           
|Income before federal income tax expense           |  |      | 330,026    |      |   | 1,630,351 
|Federal income tax expense                         |  |      | 51,918     |      |   | 525,897   
|                                                   |  |      |            |      |   |           
|Net income                                         |  | $    | 278,108    |      | $ | 1,104,454 
|                                                   |  |      |            |      |   |           
|Earnings per share                                 |  |      |            |      |   |           
|Basic                                              |  | $    | .16        |      | $ | .62       
|Diluted                                            |  | $    | .16        |      | $ | .61       

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



4



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Statement of Stockholders Equity (Unaudited)

For the Three Months Ended March 31, 2009



|                                                 |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   |            |   |  |   |            |  
|------------------------------------------------ |  | ------------------------------------- | - |  | ------------------------ | --------- | - | ---------------- | - | ---------- | ------------------------------------------ |  | - | ---------- | - |  | - | ---------- | -
|                                                 |  | Common StockClass A(Number of Shares) |   |  | AdditionalPaid-inCapital |           |   | RetainedEarnings |   |            | AccumulatedOtherComprehensiveIncome (Loss) |  |   | Total      |  
|Balance, December 31, 2008                       |  | 1,740,154                             |   |  | $                        | 8,653,443 |   |                  | $ | 32,507,143 |                                            |  | $ | (1,845,657 | ) |  | $ | 39,314,929 |  
|Comprehensive income:                            |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   |            |   |  |   |            |  
|Net income                                       |  |                                       |   |  |                          |           |   |                  |   | 278,108    |                                            |  |   |            |   |  |   | 278,108    |  
|Net unrealized losses on investments, net of tax |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   | (127,231   | ) |  |   | (127,231   | )
|Amortization of prior service credit, net of tax |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   | (14,137    | ) |  |   | (14,137    | )
|Amortization of net actuarial loss, net of tax   |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   | 169        |   |  |   | 169        |  
|                                                 |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   |            |   |  |   |            |  
|Total comprehensive income                       |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   |            |   |  |   | 136,909    |  
|Common stock issued                              |  | 14,521                                |   |  |                          | 179,842   |   |                  |   |            |                                            |  |   |            |   |  |   | 179,842    |  
|Common stock repurchased                         |  | (190                                  | ) |  |                          | (910      | ) |                  |   | (1,608     | )                                          |  |   |            |   |  |   | (2,518     | )
|Cash dividend                                    |  |                                       |   |  |                          |           |   |                  |   | (52,636    | )                                          |  |   |            |   |  |   | (52,636    | )
|Stock-based compensation                         |  |                                       |   |  |                          | 31,754    |   |                  |   |            |                                            |  |   |            |   |  |   | 31,754     |  
|                                                 |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   |            |   |  |   |            |  
|Balance, March 31, 2009                          |  | 1,754,485                             |   |  | $                        | 8,864,129 |   |                  | $ | 32,731,007 |                                            |  | $ | (1,986,856 | ) |  | $ | 39,608,280 |  
|                                                 |  |                                       |   |  |                          |           |   |                  |   |            |                                            |  |   |            |   |  |   |            |  

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, 2009 and 2008



|                                                                           |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                           |  | 2009 |            |   | 2008 |  
|Cash flows from operating activities:                                      |  |      |            |   |      |   |            |  
|Net income                                                                 |  | $    | 278,108    |   |      | $ | 1,104,454  |  
|Adjustments to reconcile net income to net cash from operating activities: |  |      |            |   |      |   |            |  
|Depreciation                                                               |  |      | 216,312    |   |      |   | 272,720    |  
|Deferred federal income taxes                                              |  |      | (45,148    | ) |      |   | 41,452     |  
|Stock based compensation expense                                           |  |      | 31,754     |   |      |   | 26,533     |  
|Net realized gains on investments                                          |  |      | (196,661   | ) |      |   | (158,602   | )
|Net amortization of premiums on investments                                |  |      | 77,175     |   |      |   | 59,641     |  
|Excess tax benefit from stock options exercised                            |  |      |           |   |      |   | (6,681     | )
|Changes in assets and liabilities:                                         |  |      |            |   |      |   |            |  
|Premiums due from policyholders                                            |  |      | (192,589   | ) |      |   | 426,541    |  
|Amounts due from reinsurers                                                |  |      | (1,183,998 | ) |      |   | 386,706    |  
|Prepaid reinsurance premiums                                               |  |      | (39,021    | ) |      |   | (61,067    | )
|Accrued investment income                                                  |  |      | 71,092     |   |      |   | (27,239    | )
|Deferred policy acquisition costs                                          |  |      | 96,865     |   |      |   | 258,180    |  
|Other assets                                                               |  |      | 23,701     |   |      |   | 40,578     |  
|Losses and loss adjustment expenses                                        |  |      | 860,325    |   |      |   | (130,688   | )
|Unearned premiums                                                          |  |      | (1,059,768 | ) |      |   | (1,659,058 | )
|Reinsurance balances payable                                               |  |      | (150,703   | ) |      |   | (163,672   | )
|Accrued expenses and other liabilities                                     |  |      | 220,763    |   |      |   | (142,300   | )
|                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) operating activities                        |  |      | (991,793   | ) |      |   | 267,498    |  
|                                                                           |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                      |  |      |            |   |      |   |            |  
|Proceeds from sales and maturities of fixed maturity investments           |  |      | 8,172,246  |   |      |   | 5,554,239  |  
|Proceeds from sales of equity investments                                  |  |      | 85,000     |   |      |   | 535,853    |  
|Purchases of fixed maturity investments                                    |  |      | (2,923,791 | ) |      |   | (5,060,923 | )
|Purchases of equity investments                                            |  |      | (91,639    | ) |      |   | (529,051   | )
|Repayment of mortgage loans on real estate from related parties            |  |      | 2,760      |   |      |   | 1,864      |  
|Purchase of property and equipment, net                                    |  |      | (248,007   | ) |      |   | (256,928   | )
|                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) investing activities                        |  |      | 4,996,569  |   |      |   | 245,054    |  
|                                                                           |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                      |  |      |            |   |      |   |            |  
|Proceeds from issuance of common stock                                     |  |      | 179,842    |   |      |   | 9,383      |  
|Shares repurchases of common stock                                         |  |      | (2,518     | ) |      |   |           |  
|Dividends paid to stockholders                                             |  |      | (52,636    | ) |      |   |           |  
|Tax benefit from exercised stock options                                   |  |      |           |   |      |   | 6,681      |  
|                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by financing activities                                  |  |      | 124,688    |   |      |   | 16,064     |  
|                                                                           |  |      |            |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                       |  |      | 4,129,464  |   |      |   | 528,616    |  
|Cash and cash equivalents, beginning of period                             |  |      | 6,576,564  |   |      |   | 4,033,158  |  
|                                                                           |  |      |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                   |  | $    | 10,706,028 |   |      | $ | 4,561,774  |  
|                                                                           |  |      |            |   |      |   |            |  

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, 2008.

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.



|2. | New Accounting Pronouncements
|-- | -----------------------------

In 2006, the FASB
issued Statement No. 157, Fair Value Measurements (SFAS No. 157) which provides guidance for using fair value to measure assets and liabilities as well as enhances disclosures about fair value measurements. SFAS
No. 157, which became effective for us on January 1, 2008 for financial assets and financial liabilities, applies whenever other standards require, or permit, assets or liabilities to be measured at fair value. The standard did not expand
the use of fair value in any new circumstances and therefore, did not have an impact on our financial position, results of operations or cash flows. The statement established a fair value hierarchy that prioritizes the observable and unobservable
inputs to valuation techniques used to measure fair value into three levels. Quantitative and qualitative disclosures focus on the inputs used to measure fair value for these measurements and the effect of these measurements in the financial
statements. The required disclosures concerning inputs used to measure fair value are disclosed in Note 3. Effective January 1, 2009, the Company adopted the provisions of SFAS No. 157 related to all non-financial assets and non-financial
liabilities. This adoption did not have any impact on our consolidated financial statements.

In 2007, the FASB issued Statement
No. 159, The Fair Value Option of Financial Assets and Financial Liabilities (SFAS No. 159). Under this standard, we are permitted to elect to measure financial instruments and certain other items at fair
value, with the change in fair value recorded in earnings. We implemented SFAS No. 159 effective January 1, 2008 and elected not to measure any eligible items using the fair value option in accordance with SFAS No. 159. We
believe the current accounting is appropriate for our investments as we have the intent and ability to hold our investments for the long-term, therefore, SFAS No. 159 did not have any impact on our consolidated financial condition or results of
operations.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), Business
Combinations (SFAS No. 141(R)). The Standard will significantly change the financial accounting and reporting of business combination transactions. SFAS No. 141(R) establishes principles for how an acquirer recognizes and measures
the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines what information to
disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective for acquisition dates on or after the beginning of an entitys first year that
begins after December 15, 2008. The implementation of SFAS No. 141(R) did not have an impact on our consolidated financial statements.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statementsan amendment of Accounting Research Bulletin No. 51 (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries
held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest and the valuation of retained noncontrolling equity investments
when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling
owners. SFAS No. 160, which became effective for us on January 1, 2009, did not have a material impact on our consolidated financial statements.

In February 2007, the FASB issued FSP No. FAS 158-1, Conforming Amendments to the Illustrations in FASB Statements No. 87, No. 88 and No. 106 and to the Related Staff Implementation Guides.
This FSP provides conforming amendments to the illustrations in SFAS 87, 88, and 106 and to related staff implementation guides as a result of the issuance of SFAS 158. The conforming amendments made by this FSP are effective as of the effective
dates of SFAS 158. The unaffected guidance that this FSP codifies into SFAS 87, 88, and 106 does not contain new requirements and therefore does not require a separate effective date or transition method. The implementation of FSP No. FAS 158-1 did
not have a material impact on the Companys consolidated financial statements.

In December 2007, the SEC issued Staff Accounting
Bulletin No. 110, Use of a Simplified Method in Developing Expected Term of Share Options (SAB 110). SAB 110 expresses the current view of the staff that it will accept a companys election to use the simplified method
discussed in SAB 107 for estimating the expected term of plain vanilla share options regardless of whether the company has sufficient information to make more refined estimates. The staff noted that it understands that detailed
information about employee exercise patterns may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The
implementation of SAB 110 did not have a material impact on the Companys consolidated financial statements.

In March 2008, the
FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, (SFAS No. 161). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on
derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. This statement, which became effective for us on January 1, 2009, did not affect our consolidated financial condition or results
of operations, but may require additional disclosures if we enter into derivative and hedging activities.

Note 3. Fair Value
Measurements

Our available-for-sale investment portfolio consists of fixed maturity and equity securities (mutual funds), and is
recorded at fair value in the accompanying Consolidated Balance Sheets in accordance with Financial Accounting Standards Board (FASB) Statement No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The change in the fair value of these investments is recorded as a component of other comprehensive income.

Under
SFAS No. 159, we are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option in
accordance with SFAS 159.

SFAS No. 157 defines fair value as the price that would be received to sell an asset or would be paid to
transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date, and establishes a framework to make the measurement of fair value more consistent and comparable. In
determining fair value, we primarily use prices and other relevant information generated by market transactions involving identical or comparable assets (market approach).



8



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



SFAS No. 157 established a three-level hierarchy for fair value measurements that distinguishes
between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and the reporting entitys own assumptions about market participant assumptions
developed based on the best information available in the circumstances (unobservable inputs). The hierarchy level assigned to each security in our available-for-sale portfolio is based on our assessment of the transparency and
reliability of the inputs used in the valuation of such instrument at the measurement date. The three hierarchy levels are defined as follows:

Level 1

Valuations based on unadjusted quoted market prices in active markets for identical securities. The fair value of
fixed maturity and equity securities (mutual funds) included in the Level 1 category were based on quoted prices that are readily and regularly available in an active market. The Level 1 category includes publicly traded equity securities
(mutual funds) and U.S. Government Treasury and Agency securities.

Level 2

Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in
markets that are not active; or other inputs that are observable, either directly or indirectly. The fair value of fixed maturity securities in the Level 2 category were based on the market values obtained from an independent pricing service
that were evaluated using pricing models that vary by asset class and incorporate available trade, bid and other market information. The independent pricing service also monitors market indicators, industry and economic events. For broker-quoted
only securities, quotes are obtained from market makers or broker-dealers that it recognizes to be market participants. The Level 2 category includes corporate bonds, municipal bonds, and mortgage-backed securities.

Level 3

Valuations based on inputs
that are unobservable and significant to the overall fair value measurement, and involve management judgment. The Company did not hold any available-for-sale investments on the measurement date that are classified in the Level 3 category.

If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial securitys hierarchy level
is based upon the lowest level of input that is significant to the fair value measurement.

The following table presents our
available-for-sale investments measured at fair value on a recurring basis as of March 31, 2009 classified by the SFAS No. 157 valuation hierarchy (as discussed above):



|                                |  |       |            |                               |   |           |  |         |            |  |   |  
|------------------------------- |  | ----- | ---------- | ----------------------------- | - | --------- |  | ------- | ---------- |  | - | -
|                                |  |       |            | Fair Value Measurements Using
|                                |  | Total |            | Level 1                       |   | Level 2   |  | Level 3
|Available-for-Sale Investments: |  |       |            |                               |   |           |  |         |            |  |   |  
|Fixed Maturity Securities       |  | $     | 49,049,685 |                               | $ | 1,658,954 |  | $       | 47,390,731 |  | $ | 
|Equity Securities-Mutual Funds  |  |       | 4,154,359  |                               |   | 4,154,359 |  |         |           |  |   | 
|                                |  |       |            |                               |   |           |  |         |            |  |   |  
|Total                           |  | $     | 53,204,044 |                               | $ | 5,813,313 |  | $       | 47,390,731 |  | $ | 
|                                |  |       |            |                               |   |           |  |         |            |  |   |  



|4. | Comprehensive Income
|-- | --------------------

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



|                                                                                     |  |      |          |   |      |   |           |  
|------------------------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | --------- | -
|                                                                                     |  | 2009 |          |   | 2008 |  
|Net income                                                                           |  | $    | 278,108  |   |      | $ | 1,104,454 |  
|Other comprehensive income, net of tax:                                              |  |      |          |   |      |   |           |  
|Unrealized (losses) gains on investments                                             |  |      | 2,565    |   |      |   | (721,907  | )
|Reclassification adjustment for realized gains on investments included in net income |  |      | (129,796 | ) |      |   | (104,677  | )
|Amortization of prior service credit                                                 |  |      | (14,137  | ) |      |   | (14,137   | )
|Amortization of net actuarial loss                                                   |  |      | 169      |   |      |   | 2,022     |  
|                                                                                     |  |      |          |   |      |   |           |  
|Other comprehensive loss, net of tax                                                 |  |      | (141,199 | ) |      |   | (838,699  | )
|                                                                                     |  |      |          |   |      |   |           |  
|Comprehensive income                                                                 |  | $    | 136,909  |   |      | $ | 265,755   |  
|                                                                                     |  |      |          |   |      |   |           |  



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|5. | Earnings Per Share
|-- | ------------------

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



|                                                                                          |  |      |           |      |   |          
|----------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                                                          |  | 2009 |           | 2008
|Numerator for basic and diluted earnings per share:                                       |  |      |           |      |   |          
|Net income                                                                                |  | $    | 278,108   |      | $ | 1,104,454
|                                                                                          |  |      |           |      |   |          
|Denominator:                                                                              |  |      |           |      |   |          
|Denominator for basic earnings per share  weighted average shares outstanding            |  |      | 1,744,533 |      |   | 1,779,985
|Effect of dilutive stock options                                                          |  |      | 34,020    |      |   | 36,806   
|                                                                                          |  |      |           |      |   |          
|Denominator for diluted earnings per share  adjusted weighted average shares outstanding |  |      | 1,778,553 |      |   | 1,816,791
|                                                                                          |  |      |           |      |   |          
|Basic earnings per share                                                                  |  | $    | 0.16      |      | $ | 0.62     
|Diluted earnings per share                                                                |  | $    | 0.16      |      | $ | 0.61     



|6. | 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.

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.



10



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##### Table of Contents

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



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



|                                                         |  |      |            |   |      |   |            |  
|-------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                         |  | 2009 |            |   | 2008 |  
|Net premiums earned:                                     |  |      |            |   |      |   |            |  
|Personal lines                                           |  | $    | 9,351,382  |   |      | $ | 7,864,128  |  
|Commercial lines                                         |  |      | 1,775,586  |   |      |   | 1,803,700  |  
|Farm                                                     |  |      | 1,223,103  |   |      |   | 1,110,786  |  
|Marine                                                   |  |      | 470,810    |   |      |   | 438,291    |  
|                                                         |  |      |            |   |      |   |            |  
|Total net premiums earned                                |  |      | 12,820,881 |   |      |   | 11,216,905 |  
|                                                         |  |      |            |   |      |   |            |  
|Loss and loss adjustment expenses:                       |  |      |            |   |      |   |            |  
|Personal lines                                           |  |      | 6,911,988  |   |      |   | 4,735,268  |  
|Commercial lines                                         |  |      | 1,113,710  |   |      |   | 1,185,601  |  
|Farm                                                     |  |      | 1,028,381  |   |      |   | 429,640    |  
|Marine                                                   |  |      | 167,114    |   |      |   | (14,010    | )
|                                                         |  |      |            |   |      |   |            |  
|Total loss and loss adjustment expenses                  |  |      | 9,221,193  |   |      |   | 6,336,499  |  
|                                                         |  |      |            |   |      |   |            |  
|Policy acquisition and other underwriting expenses:      |  |      |            |   |      |   |            |  
|Personal lines                                           |  |      | 2,881,652  |   |      |   | 2,848,576  |  
|Commercial lines                                         |  |      | 651,601    |   |      |   | 653,344    |  
|Farm                                                     |  |      | 439,755    |   |      |   | 402,354    |  
|Marine                                                   |  |      | 138,666    |   |      |   | 158,760    |  
|                                                         |  |      |            |   |      |   |            |  
|Total policy acquisition and other underwriting expenses |  |      | 4,111,674  |   |      |   | 4,063,034  |  
|                                                         |  |      |            |   |      |   |            |  
|Underwriting gain (loss):                                |  |      |            |   |      |   |            |  
|Personal lines                                           |  |      | (442,258   | ) |      |   | 280,284    |  
|Commercial lines                                         |  |      | 10,275     |   |      |   | (35,245    | )
|Farm                                                     |  |      | (245,033   | ) |      |   | 278,792    |  
|Marine                                                   |  |      | 165,030    |   |      |   | 293,541    |  
|                                                         |  |      |            |   |      |   |            |  
|Total underwriting gain (loss)                           |  |      | (511,986   | ) |      |   | 817,372    |  
|Net investment income                                    |  |      | 501,185    |   |      |   | 516,236    |  
|Net realized gains on investments                        |  |      | 196,661    |   |      |   | 158,602    |  
|Other income, net                                        |  |      | 144,166    |   |      |   | 138,141    |  
|                                                         |  |      |            |   |      |   |            |  
|Income before federal income taxes                       |  | $    | 330,026    |   |      | $ | 1,630,351  |  
|                                                         |  |      |            |   |      |   |            |  



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|7. | 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:



|                                                  |  |      |         |   |      |   |         |  
|------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                  |  | 2009 |         |   | 2008 |  
|Components of net periodic benefit cost:          |  |      |         |   |      |   |         |  
|Service cost                                      |  | $    | 1,946   |   |      | $ | 2,844   |  
|Interest cost                                     |  |      | 26,285  |   |      |   | 25,276  |  
|Amortization of unrecognized prior service credit |  |      | (21,421 | ) |      |   | (21,421 | )
|Amortization of unrecognized net actuarial loss   |  |      | 254     |   |      |   | 3,063   |  
|                                                  |  |      |         |   |      |   |         |  
|Net periodic benefit cost                         |  | $    | 7,064   |   |      | $ | 9,762   |  
|                                                  |  |      |         |   |      |   |         |  

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, 2009 the Company has made contributions to the plan of approximately $7,000. During 2009, the Company expects to contribute a total of $70,000 to the plan to cover anticipated
benefit payments.



|8. | Reinsurance
|-- | -----------

The effect of reinsurance on premiums
written and earned and losses and LAE incurred for the three months ended March 31, was as follows:



|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|------------------------- |  | ------- | ---------- | - | ------ | - | ---------- | ------- |  | - | ---------- | - |  | - | ---------- | -
|                          |  | 2009    |            |   | 2008   |  
|                          |  | Written |            |   | Earned |   |            | Written |  |   | Earned     |  
|Direct                    |  | $       | 14,415,684 |   |        | $ | 15,472,917 |         |  | $ | 12,063,702 |   |  | $ | 13,720,683 |  
|Assumed                   |  |         | 14,538     |   |        |   | 17,073     |         |  |   | 17,650     |   |  |   | 19,728     |  
|Ceded                     |  |         | (2,687,408 | ) |        |   | (2,669,109 | )       |  |   | (2,504,486 | ) |  |   | (2,523,506 | )
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|Net premiums              |  | $       | 11,742,814 |   |        | $ | 12,820,881 |         |  | $ | 9,576,866  |   |  | $ | 11,216,905 |  
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|                          |  |         |            |  
|                          |  |         |            |   |        |   |            | 2009    |  |   | 2008       |  
|Loss and LAE incurred     |  |         |            |   |        |   |            |         |  | $ | 11,040,357 |   |  | $ | 6,654,615  |  
|Reinsurance recoveries    |  |         |            |   |        |   |            |         |  |   | (1,819,164 | ) |  |   | (318,116   | )
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|Net loss and LAE incurred |  |         |            |   |        |   |            |         |  | $ | 9,221,193  |   |  | $ | 6,336,499  |  
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  



|9. | Federal Income Taxes
|-- | --------------------

The provision for income
taxes consists of the following:



|                           |  |                             |         |   |      |   |        
|-------------------------- |  | --------------------------- | ------- | - | ---- | - | -------
|                           |  | Three Months EndedMarch 31,
|                           |  | 2009                        |         |   | 2008
|Current expense            |  | $                           | 97,068  |   |      | $ | 484,445
|Deferred expense (benefit) |  |                             | (45,150 | ) |      |   | 41,452 
|                           |  |                             |         |   |      |   |        
|Total                      |  | $                           | 51,918  |   |      | $ | 525,897
|                           |  |                             |         |   |      |   |        



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



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, |        
|                                   |  | 2009                         |         |   | 2008 |      
|Income before federal income taxes |  | $                            | 330,026 |   |      |       |    |  | $ | 1,630,351 |   |  |      |   
|                                   |  |                              |         |   |      |       |    |  |   |           |   |  |      |   
|Tax at statutory rate              |  |                              | 112,209 |   |      | 34.0  | %  |  |   | 554,319   |   |  | 34.0 | % 
|Tax effect of:                     |  |                              |         |   |      |       |    |  |   |           |   |  |      |   
|Nontaxable investment income       |  |                              | (61,617 | ) |      | (18.7 | %) |  |   | (76,814   | ) |  | (4.7 | %)
|Nondeductible expenses             |  |                              | 1,326   |   |      | 0.4   | %  |  |   | 1,695     |   |  | 0.1  | % 
|Other                              |  |                              |        |   |      |      |    |  |   | 46,697    |   |  | 2.9  | % 
|                                   |  |                              |         |   |      |       |    |  |   |           |   |  |      |   
|                                   |  | $                            | 51,918  |   |      | 15.7  | %  |  | $ | 525,897   |   |  | 32.3 | % 
|                                   |  |                              |         |   |      |       |    |  |   |           |   |  |      |   

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, 2009 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 $2,971,000 of net operating loss carryforwards will not be realized and therefore a valuation allowance of approximately $1,010,000 will be maintained for the deferred tax asset associated with these amounts.

The tax effects of temporary differences that give rise to deferred federal income tax assets and liabilities are as follows:



|                                                      |  |               |            |   |                  |   |            |  
|----------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                      |  | March 31,2009 |            |   | December 31,2008 |  
|Deferred federal income tax assets arising from:      |  |               |            |   |                  |   |            |  
|Loss and loss adjustment expense reserves             |  | $             | 440,218    |   |                  | $ | 439,895    |  
|Unearned premium reserves                             |  |               | 1,693,203  |   |                  |   | 1,741,373  |  
|Unrealized losses on investments                      |  |               | 1,350,656  |   |                  |   | 1,285,111  |  
|Realized losses on investments                        |  |               | 123,080    |   |                  |   | 123,080    |  
|Postretirement benefits accrued                       |  |               | 600,281    |   |                  |   | 591,157    |  
|Net operating loss carryforward                       |  |               | 2,328,429  |   |                  |   | 2,362,431  |  
|Alternative minimum tax credit carryforward           |  |               | 453,894    |   |                  |   | 357,697    |  
|Other deferred tax assets                             |  |               | 235,825    |   |                  |   | 207,193    |  
|                                                      |  |               |            |   |                  |   |            |  
|Total deferred federal income tax assets              |  |               | 7,225,586  |   |                  |   | 7,107,937  |  
|                                                      |  |               |            |   |                  |   |            |  
|Deferred federal income tax liabilities arising from: |  |               |            |   |                  |   |            |  
|Deferred policy acquisition costs                     |  |               | (1,238,262 | ) |                  |   | (1,253,820 | )
|Property and equipment                                |  |               | (108,285   | ) |                  |   | (88,698    | )
|Other deferred tax liabilities                        |  |               | (9,384     | ) |                  |   | (13,656    | )
|                                                      |  |               |            |   |                  |   |            |  
|Total deferred federal income tax liabilities         |  |               | (1,355,931 | ) |                  |   | (1,356,174 | )
|                                                      |  |               |            |   |                  |   |            |  
|Net deferred federal income tax asset                 |  |               | 5,869,655  |   |                  |   | 5,751,763  |  
|Valuation allowance                                   |  |               | (1,010,037 | ) |                  |   | (1,010,037 | )
|                                                      |  |               |            |   |                  |   |            |  
|Net deferred tax asset                                |  | $             | 4,859,618  |   |                  | $ | 4,741,726  |  
|                                                      |  |               |            |   |                  |   |            |  



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##### Table of Contents

|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, 2008, 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 fiscal, monetary and tax policies, 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;
| | - |  | ------------------------------------------



| |  |  | technological change;
| | - |  | ---------------------



| |  |  | 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 131 years. We market policies through approximately 175
independent insurance agencies. Fremont Insurance Company has a financial strength rating of B++ (Good) by A.M. Best. The Holding Company is subject to regulation by the Michigan Office of Financial and Insurance Regulation
(OFIR) as its primary regulator because it is the holding company for Fremont Insurance Company. As of March 31, 2009, we had approximately 67,400 policies in force and assets of $93.1 million.



14



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##### Table of Contents

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, 2009 and 2008. The Companys fiscal year ends on December 31.

Critical Accounting Policies and
Estimates

General. Our discussion and analysis of financial condition, results of operations and liquidity and capital
resources is based upon the consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, expenses and related disclosures. We generally base our estimates on historical experience or other appropriate assumptions that we believe are reasonable and relevant under the circumstances and evaluate them on an ongoing
basis. The results of these estimation processes form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.

We believe the critical accounting policies and estimates discussed below reflect our more significant
judgments and estimates used in the preparation of the consolidated financial statements. These may be further commented upon in applicable sections on Results of Operations and Liquidity and Capital Resources that follow. These policies are more
fully described below as well as in our 2008 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. The liability for losses and loss adjustment expenses represents estimates of the ultimate unpaid cost of all losses
incurred, including losses for claims that have not yet been reported. The amount of loss reserves for reported claims is based primarily upon a case-by-case evaluation of the type of risk involved, knowledge of the circumstances surrounding each
claim and the insurance policy provisions relating to the type of loss. The amounts of loss reserves for unreported claims and loss adjustment expenses are determined using historical information by line of insurance as adjusted to current
conditions. Inflation is ordinarily implicitly provided for in the reserving function through analysis of costs, trends and reviews of historical reserving results over multiple years.

When a claim is reported to us, our claims representatives establish a case reserve for the estimated amount of the ultimate payment. This
estimate reflects an informed judgment based upon general insurance reserving practices and on the experience and knowledge of the estimator. The individual estimating the reserve considers the nature and value of the specific claim, the severity of
injury or damage, and the policy provisions relating to the type of loss. Case reserves are adjusted by our claims staff as more information becomes available. It is our policy to settle each claim as expeditiously as possible.

We maintain incurred but not reported (IBNR) reserves to provide for already incurred claims that have not yet been reported and developments
on reported claims. The IBNR reserve is determined by estimating our ultimate net liability for both reported and unreported claims and then subtracting the case reserves and payments made to date for reported claims.

Reserves are closely monitored and are recomputed periodically using the most recent information on reported claims and a variety of statistical
techniques. Each quarter we review existing reserves, new claims, changes to existing case reserves and paid losses with respect to the current and prior accident years. In connection with the determination of the reserves we also consider other
specific factors such as recent weather-related losses, trends in historical paid losses, and legal and judicial trends with respect to theories of liability. We review our loss reserves to ascertain whether new developments have occurred which
would require adjustment to our ultimate loss estimates. The quarterly review also involves roundtable discussion involving the claims, underwriting and accounting departments. Discussion is generally focused on claims involving liability and those
claims that involve significant judgment. Because the establishment of loss reserves is an inherently uncertain process, we cannot be certain that ultimate losses will not exceed the established loss reserves and have a material adverse effect on
the Companys results of operations and financial condition. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made.

Reserves are estimates because there are uncertainties inherent in the determination of ultimate losses. Court decisions, regulatory
changes and economic conditions can affect the ultimate cost of claims that occurred in the past as well as create uncertainties regarding future loss cost trends. Accordingly, the ultimate liability for unpaid losses and loss adjustment expenses
will likely differ from the amount recorded at March 31, 2009.



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##### Table of Contents

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, 2009 and December 31, 2008 (in thousands):



|                |  |               |        |                  |   |       
|--------------- |  | ------------- | ------ | ---------------- | - | ------
|                |  | March 31,2009 |        | December 31,2008
|Reported losses |  |               |        |                  |   |       
|Personal        |  | $             | 9,390  |                  | $ | 9,043 
|Commercial      |  |               | 2,777  |                  |   | 2,538 
|Farm            |  |               | 1,476  |                  |   | 1,228 
|Marine          |  |               | 629    |                  |   | 603   
|                |  |               |        |                  |   |       
|                |  |               | 14,272 |                  |   | 13,412
|                |  |               |        |                  |   |       
|IBNR losses     |  |               |        |                  |   |       
|Personal        |  |               | 4,538  |                  |   | 4,538 
|Commercial      |  |               | 2,644  |                  |   | 2,644 
|Farm            |  |               | 447    |                  |   | 447   
|Marine          |  |               | 329    |                  |   | 329   
|                |  |               |        |                  |   |       
|                |  |               | 7,958  |                  |   | 7,958 
|                |  |               |        |                  |   |       
|Total           |  |               |        |                  |   |       
|Personal        |  |               | 13,928 |                  |   | 13,581
|Commercial      |  |               | 5,421  |                  |   | 5,182 
|Farm            |  |               | 1,923  |                  |   | 1,675 
|Marine          |  |               | 958    |                  |   | 932   
|                |  |               |        |                  |   |       
|                |  | $             | 22,230 |                  | $ | 21,370
|                |  |               |        |                  |   |       

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, 2009 and December 31, 2008, was approximately $99,000 and $131,000, respectively.

Investments.All of the Companys investments are classified as available-for-sale and are those investments that would be available
to be sold in response to the Companys liquidity needs, changes in market interest rates and asset-liability management strategies, among others. Available-for-sale investments are recorded at fair value, with the corresponding unrealized
appreciation or depreciation, net of deferred income taxes and any corresponding deferred tax asset valuation allowance, reported as a component of accumulated other comprehensive income or loss until realized.

The Company reviews the status and market value changes of its investment portfolio 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 its fixed maturity securities for other than temporary impairment, the Company takes into consideration
the securitys market price history, the length of time that the securitys fair value has been below cost, 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 market conditions, and analyst expectations, to reach its conclusions. In reviewing equity securities, which currently consists of mutual funds, the Company takes into consideration the
mutual funds market price history, the length of time that the funds fair value has been below cost, the individual investments held within the mutual fund, most current audit opinion, industry and securities market conditions, and
analyst expectations to reach its conclusions.

In addition to analyzing each individual security that has a fair value below cost, the
Company also considers its intent and ability to hold a security until its maturity, in the case of a fixed maturity security, or until its fair value is equal to or greater than its cost. The Company does not have the intent to sell securities at a
realized loss. The investment strategy of the Company is not one of actively trading securities to generate short-term gains or losses. Instead, the Company focuses on acquiring and holding high quality, high yield fixed maturity securities and
equity securities which are expected to appreciate over time. The Company also has the ability to hold investment securities until their fair value has increased to above cost. Factors which support the Companys ability to hold impaired
securities until their recovery include current cash and cash equivalents, sufficient historical and projected cash flow from operations and cash from maturities of fixed maturity securities.

When a security in the Companys investment portfolio has an unrealized loss in value that is deemed to be other than temporary, the Company reduces
the book value of such security to its current market value, recognizing the decline as a realized loss in the statement of operations. Any future increases in the market value of investments written down are reflected as changes in unrealized gains
as part of accumulated other comprehensive income within stockholders equity.



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##### Table of Contents

Reinsurance.The Company accounts for reinsurance contracts under the
provisions of Statement of Financial Accounting Standards (SFAS), No. 113, Accounting and Reporting for Reinsurance on Short-Duration and Long-Duration Contracts. Net premiums earned, losses and LAE and policy
acquisition and other underwriting expenses are reported net of the amounts related to reinsurance ceded to other companies. Amounts recoverable from reinsurers related to the portions of the liability for losses and LAE and unearned premiums ceded
to them are reported as assets. Reinsurance assumed from other companies, including assumed premiums written and earned and losses and LAE, is accounted for in the same manner as direct insurance written.

Reinsurance recoverables include balances due from reinsurance companies for paid and unpaid losses and LAE that will be recovered from reinsurers, based
on contracts in force. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. Reinsurance contracts do not relieve the Company from its primary obligations to
policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk with respect to the individual
reinsurer that participates in its ceded programs to minimize its exposure to significant losses from reinsurer insolvencies. When necessary the Company holds collateral in the form of letters of credit or trust accounts for amounts recoverable from
reinsurers that are not considered authorized insurers by the State of Michigan Office of Financial and Insurance Regulation.

At
March 31, 2009 and December 31, 2008, the Companys recoverable from reinsurers was comprised of the following:



|                            |  |               |           |                  |   |          
|--------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                            |  | March 31,2009 |           | December 31,2008
|Paid losses and LAE         |  | $             | 1,093,902 |                  | $ | 726,618  
|Unpaid losses and LAE       |  |               | 6,934,503 |                  |   | 6,117,789
|                            |  |               |           |                  |   |          
|Amounts due from reinsurers |  | $             | 8,028,405 |                  | $ | 6,844,407
|                            |  |               |           |                  |   |          

Federal Income Taxes.Deferred federal income tax assets and
liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amount of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized.

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.



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##### Table of Contents

Results of Operations  Three Months Ended March 31, 2009 and 2008

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, 2009 and 2008. 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.



|                                           |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|------------------------------------------ |  | ---- | -------- | - | ---- | - | --------- | ------ |  | - | ---------- | - |  | ------ | --
|                                           |  |      |          |   |      |   |           | Change | 
|                                           |  | 2009 |          |   | 2008 |   |           | Dollar |  |   | Percentage |  
|Underwriting gain (loss)                   |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|Personal                                   |  |      | (442,258 | ) |      | $ | 280,284   |        |  | $ | (722,542   | ) |  | (257.8 | %)
|Commercial                                 |  |      | 10,275   |   |      |   | (35,245   | )      |  |   | 45,520     |   |  | 129.2  | % 
|Farm                                       |  |      | (245,033 | ) |      |   | 278,792   |        |  |   | (523,825   | ) |  | (187.9 | %)
|Marine                                     |  |      | 165,030  |   |      |   | 293,541   |        |  |   | (128,511   | ) |  | (43.8  | %)
|                                           |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|Total underwriting gain (loss)             |  |      | (511,986 | ) |      |   | 817,372   |        |  |   | (1,329,358 | ) |  | (162.6 | %)
|Other revenue (expense) items              |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|Net investment income                      |  |      | 501,185  |   |      |   | 516,236   |        |  |   | (15,051    | ) |  | (2.9   | %)
|Net realized gains (losses) on investments |  |      | 196,661  |   |      |   | 158,602   |        |  |   | 38,059     |   |  | 24.0   | % 
|Other income                               |  |      | 144,166  |   |      |   | 138,141   |        |  |   | 6,025      |   |  | 4.4    | % 
|                                           |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|Total other revenue (expense) items        |  |      | 842,012  |   |      |   | 812,979   |        |  |   | 29,033     |   |  | 3.6    | % 
|                                           |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|Income before federal income taxes         |  |      | 330,026  |   |      |   | 1,630,351 |        |  |   | (1,300,325 | ) |  | (79.8  | %)
|Federal income tax expense                 |  |      | (51,918  | ) |      |   | (525,897  | )      |  |   | 473,979    |   |  | (90.1  | %)
|                                           |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   
|Net income                                 |  | $    | 278,108  |   |      | $ | 1,104,454 |        |  | $ | (826,346   | ) |  | (74.8  | %)
|                                           |  |      |          |   |      |   |           |        |  |   |            |   |  |        |   

Underwriting Results. The following table shows the components of the Companys
underwriting gain or loss for the three months ended March 31, 2009 and 2008.



|                                                        |  |      |            |   |      |   |            |        |  |   |            |    |  |        |   
|------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ------ |  | - | ---------- | -- |  | ------ | --
|                                                        |  | 2009 |            |   | 2008 |   |            | Change |  |   | %Change    |   
|Direct premiums written                                 |  | $    | 14,415,684 |   |      | $ | 12,063,702 |        |  | $ | 2,351,982  |    |  | 19.5   | % 
|                                                        |  |      |            |   |      |   |            |        |  |   |            |    |  |        |   
|Net premiums written                                    |  | $    | 11,742,814 |   |      | $ | 9,576,866  |        |  | $ | 2,165,948  |    |  | 22.6   | % 
|                                                        |  |      |            |   |      |   |            |        |  |   |            |    |  |        |   
|Net premiums earned                                     |  | $    | 12,820,881 |   |      | $ | 11,216,905 |        |  | $ | 1,603,976  |    |  | 14.3   | % 
|Loss and LAE                                            |  |      | 9,221,193  |   |      |   | 6,336,499  |        |  |   | 2,884,694  |    |  | 45.5   | % 
|Policy acquisition and other underwriting expenses      |  |      | 4,111,674  |   |      |   | 4,063,034  |        |  |   | 48,640     |    |  | 1.2    | % 
|                                                        |  |      |            |   |      |   |            |        |  |   |            |    |  |        |   
|Underwriting gain (loss)                                |  | $    | (511,986   | ) |      | $ | 817,372    |        |  | $ | (1,329,358 | )  |  | (162.6 | %)
|                                                        |  |      |            |   |      |   |            |        |  |   |            |    |  |        |   
|Loss and LAE ratio                                      |  |      | 71.9       | % |      |   | 56.5       | %      |  |   | 15.4       | %  |  |        |   
|Policy acquisition and other underwriting expense ratio |  |      | 32.1       | % |      |   | 36.2       | %      |  |   | (4.1       | %) |  |        |   
|Combined ratio                                          |  |      | 104.0      | % |      |   | 92.7       | %      |  |   | 11.3       | %  |  |        |   

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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##### Table of Contents

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



|                         |  |      |            |      |   |            |  |         |           |  |      |  
|------------------------ |  | ---- | ---------- | ---- | - | ---------- |  | ------- | --------- |  | ---- | -
|                         |  | 2009 |            | 2008 |   | $ Change   |  | %Change |          
|Direct Premiums Written: |  |      |            |      |   |            |  |         |           |  |      |  
|Personal                 |  | $    | 10,284,215 |      | $ | 8,695,828  |  | $       | 1,588,387 |  | 18.3 | %
|Commercial               |  |      | 2,581,072  |      |   | 1,980,702  |  |         | 600,370   |  | 30.3 | %
|Farm                     |  |      | 1,212,887  |      |   | 1,056,693  |  |         | 156,194   |  | 14.8 | %
|Marine                   |  |      | 337,510    |      |   | 330,479    |  |         | 7,031     |  | 2.1  | %
|                         |  |      |            |      |   |            |  |         |           |  |      |  
|                         |  | $    | 14,415,684 |      | $ | 12,063,702 |  | $       | 2,351,982 |  | 19.5 | %
|                         |  |      |            |      |   |            |  |         |           |  |      |  

We continue to generate growth in direct premiums written which were up 19.5% in the first quarter
2009 compared to the same quarter in 2008. We continue to capitalize on the relationships we have built with our independent agents. During the current soft market, independent agents are placing more emphasis on placing business with carriers that
can provide an efficient process for quoting and issuing policies. Our investment in Fremont Complete has paid significant dividends which is evident by the growth weve experienced in direct premiums written. The Companys goal is to be
the carrier of choice in every one of our independent agencies. The Company is achieving its goal by providing our agents with the path of least resistance in terms of quoting and placing target market business with Fremont.

Direct premiums written for the personal segment increased 18.3%, driven by personal auto, up 21.7%, and homeowners, up 13.9%. The personal
segments new business increased 39.4% while renewal business was up 14.6%. Personal auto and homeowners new business premium increased 48.8% and 31.0%, respectively, while renewal premium grew 17.3% and 10.7%, respectively. Since
December 31, 2008, the in-force policy count for personal auto and homeowners increased 4.8% and 1.6%, respectively. The growth in both homeowners and personal auto is driven by our emphasis on agency relationships, providing competitive
products and the ease of doing business afforded to agents who utilize our web based platform  Fremont Complete.

The commercial
segment experienced an increase of 30.3% in direct premiums written driven by growth in commercial auto, businessowners (BOP), commercial package (CPP) and workers compensation. New business was up 69.9% while renewal business was up 15.7%. Since
December 31, 2008, the commercial segments in-force policy count increased 1.8%. The premium growth is a continuation of the momentum achieved during 2008 during which the Company was able to roll out commercial auto and workers
compensation onto Fremont Complete. Our focus in commercial lines is to expand our account business. Account business means selling not only the BOP or CPP coverage but also the commercial auto and workers compensation coverages. We do not target
monoline commercial auto or workers compensation coverages. In commercial lines we rely heavily on financial underwriting and tend to focus on lower hazard risk business. In addition, the majority of the growth in commercial lines has been generated
by the Companys preferred independent agents which are those agents who have a track record of submitting profitable commercial business.

Farm direct premiums written were up 14.8% during the current quarter driven by new business growth of 212.6% and an increase in renewal business of 2.6%. New business growth was positively affected by a large farm policy which accounted
for $90,000 of the increase in farm written premium. Direct premiums written for the marine segment increased 2.1%, driven by new premium growth of 11.4% and renewal premium growth of 1.7%.

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



|                      |  |      |            |      |   |           |  |         |           |  |      |  
|--------------------- |  | ---- | ---------- | ---- | - | --------- |  | ------- | --------- |  | ---- | -
|                      |  | 2009 |            | 2008 |   | $ Change  |  | %Change |          
|Net Premiums Written: |  |      |            |      |   |           |  |         |           |  |      |  
|Personal              |  | $    | 8,618,199  |      | $ | 6,824,458 |  | $       | 1,793,741 |  | 26.3 | %
|Commercial            |  |      | 1,731,224  |      |   | 1,590,058 |  |         | 141,166   |  | 8.9  | %
|Farm                  |  |      | 1,103,049  |      |   | 894,210   |  |         | 208,839   |  | 23.4 | %
|Marine                |  |      | 290,342    |      |   | 268,140   |  |         | 22,202    |  | 8.3  | %
|                      |  |      |            |      |   |           |  |         |           |  |      |  
|                      |  | $    | 11,742,814 |      | $ | 9,576,866 |  | $       | 2,165,948 |  | 22.6 | %
|                      |  |      |            |      |   |           |  |         |           |  |      |  

The increase in net premiums written is due to growth in direct premiums written of $2,352,000
offset by an increase of $186,000 in ceded premiums written under the Companys reinsurance agreements.



19



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##### Table of Contents

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



|                     |  |      |            |      |   |            |  |   |           |   |  |      |   
|-------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | --------- | - |  | ---- | --
|                     |  | 2009 |            | 2008 |   | $ Change   |  |   | %Change   |  
|Net Premiums Earned: |  |      |            |      |   |            |  |   |           |   |  |      |   
|Personal             |  | $    | 9,351,382  |      | $ | 7,864,128  |  | $ | 1,487,254 |   |  | 18.9 | % 
|Commercial           |  |      | 1,775,586  |      |   | 1,803,700  |  |   | (28,114   | ) |  | (1.6 | %)
|Farm                 |  |      | 1,223,103  |      |   | 1,110,786  |  |   | 112,317   |   |  | 10.1 | % 
|Marine               |  |      | 470,810    |      |   | 438,291    |  |   | 32,519    |   |  | 7.4  | % 
|                     |  |      |            |      |   |            |  |   |           |   |  |      |   
|                     |  | $    | 12,820,881 |      | $ | 11,216,905 |  | $ | 1,603,976 |   |  | 14.3 | % 
|                     |  |      |            |      |   |            |  |   |           |   |  |      |   

The increase in net premiums earned is due to the overall increase in direct premiums earned of
$1,752,000 offset by an increase of $148,000 in ceded premiums earned 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:



|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -------- |  | - | --------- | - |  | ------ | --
|                                |  | 2009 |           |   | 2008 |   |           | $ Change |  |   | %Change   |  
|Loss and LAE:                   |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Personal                        |  | $    | 6,911,988 |   |      | $ | 4,735,268 |          |  | $ | 2,176,720 |   |  | 46.0   | % 
|Commercial                      |  |      | 1,113,710 |   |      |   | 1,185,601 |          |  |   | (71,891   | ) |  | (6.1   | %)
|Farm                            |  |      | 1,028,381 |   |      |   | 429,640   |          |  |   | 598,741   |   |  | 139.4  | % 
|Marine                          |  |      | 167,114   |   |      |   | (14,010   | )        |  |   | 181,124   |   |  | 1292.8 | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|                                |  | $    | 9,221,193 |   |      | $ | 6,336,499 |          |  | $ | 2,884,694 |   |  | 45.5   | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Incurred Claim Count:           |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Personal                        |  |      | 2,433     |   |      |   | 2,169     |          |  |   | 264       |   |  | 12.2   | % 
|Commercial                      |  |      | 227       |   |      |   | 205       |          |  |   | 22        |   |  | 10.7   | % 
|Farm                            |  |      | 150       |   |      |   | 114       |          |  |   | 36        |   |  | 31.6   | % 
|Marine                          |  |      | 38        |   |      |   | 30        |          |  |   | 8         |   |  | 26.7   | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|                                |  |      | 2,848     |   |      |   | 2,518     |          |  |   | 330       |   |  | 13.1   | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Average Loss and LAE per Claim: |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Personal                        |  | $    | 2,841     |   |      | $ | 2,183     |          |  | $ | 658       |   |  | 30.1   | % 
|Commercial                      |  |      | 4,906     |   |      |   | 5,783     |          |  |   | (877      | ) |  | (15.2  | %)
|Farm                            |  |      | 6,856     |   |      |   | 3,769     |          |  |   | 3,087     |   |  | 81.9   | % 
|Marine                          |  |      | 4,398     |   |      |   | (467      | )        |  |   | 4,865     |   |  | 1041.7 | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|                                |  | $    | 3,238     |   |      | $ | 2,516     |          |  | $ | 722       |   |  | 28.7   | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Loss and LAE Ratio:             |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|Personal                        |  |      | 73.9      | % |      |   | 60.2      | %        |  |   |           |   |  |        |   
|Commercial                      |  |      | 62.7      | % |      |   | 65.7      | %        |  |   |           |   |  |        |   
|Farm                            |  |      | 84.1      | % |      |   | 38.7      | %        |  |   |           |   |  |        |   
|Marine                          |  |      | 35.5      | % |      |   | (3.2      | %)       |  |   |           |   |  |        |   
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   
|                                |  |      | 71.9      | % |      |   | 56.5      | %        |  |   |           |   |  |        |   
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |        |   

Overall, the first quarter of 2009 was negatively impacted by an increase in fire related losses
and to a lesser extent an increase in losses related to winter weather experienced during January and February of 2009. In the personal segment, our homeowners line generated a loss and LAE ratio of 86.6% for the first quarter of 2009 compared
to 54.7% in the first quarter of 2008. The significant increase in the loss and LAE ratio was due primarily to higher severity from fire losses coupled with increased loss frequency associated with weather related losses. Colder temperatures and
snow accumulation during the early part of the quarter caused an increase in freezing losses as well as collapse losses associated with snow accumulation. The increase in claim count for the personal segment was driven by the homeowners line.

The loss and LAE ratio for personal auto decreased to 65.6% in the first quarter of 2009 from 69.1% in the first quarter of 2008. The
decrease is due to growth in net premiums earned as well as a drop in claim frequency and severity during the first quarter of 2009. The claim count for personal auto in the first quarter of 2009 was consistent with the first quarter of 2008.



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The farm segment was also negatively impacted by fire losses which caused the increase in its loss and
LAE ratio as compared to the 2008 quarter.

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



|                                                         |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|-------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ------ |  | - | --------- | -- |  | ---- | --
|                                                         |  | 2009 |            |   | 2008 |   |            | Change |  |   | %Change   |   
|Amortization of deferred policy acquisition costs        |  | $    | 2,015,153  |   |      | $ | 1,879,677  |        |  | $ | 135,476   |    |  | 7.2  | % 
|Other underwriting expenses                              |  |      | 2,096,521  |   |      |   | 2,183,357  |        |  |   | (86,836   | )  |  | (4.0 | %)
|                                                         |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|Total policy acquisition and other underwriting expenses |  | $    | 4,111,674  |   |      | $ | 4,063,034  |        |  | $ | 48,640    |    |  | 1.2  | % 
|                                                         |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|Net premiums earned                                      |  | $    | 12,820,881 |   |      | $ | 11,216,905 |        |  | $ | 1,603,976 |    |  | 14.3 | % 
|                                                         |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   
|Expense ratio                                            |  |      | 32.1       | % |      |   | 36.2       | %      |  |   | (4.1      | %) |  |      |   
|                                                         |  |      |            |   |      |   |            |        |  |   |           |    |  |      |   

Amortization of deferred policy acquisition costs (DAC) increased during the first
quarter of 2009 as compared to the same period in 2008 as a result of increased earned premium volume. However, as a percentage of net premiums earned DAC amortization decreased from 16.8% to 15.7% as a result of the increased volume of personal
automobile premium which pays a lower commission than other products as well as increased ceding commission. The decrease in other underwriting expenses is due to lower assessments from state mandated pools and associations and a decline in
depreciation expense.

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



|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |       |   
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ------ |  | - | --------- | -- |  | ----- | --
|                                               |  | 2009 |            |   | 2008 |   |            | Change |  |   | %Change   |   
|Fixed maturities                               |  | $    | 567,440    |   |      | $ | 566,886    |        |  | $ | 554       |    |  | 0.1   | % 
|Equity securities                              |  |      | 157        |   |      |   | 69         |        |  |   | 88        |    |  | 127.5 | % 
|Cash and cash equivalents                      |  |      | 20,834     |   |      |   | 39,009     |        |  |   | (18,175   | )  |  | (46.6 | %)
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |       |   
|Gross investment income                        |  |      | 588,431    |   |      |   | 605,964    |        |  |   | (17,533   | )  |  | (2.9  | %)
|Less: Investment expenses                      |  |      | (87,246    | ) |      |   | (89,728    | )      |  |   | (2,482    | )  |  | (2.8  | %)
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |       |   
|Net investment income                          |  | $    | 501,185    |   |      | $ | 516,236    |        |  | $ | (15,051   | )  |  | (2.9  | %)
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |       |   
|Average invested assets (amortized cost basis) |  | $    | 68,587,357 |   |      | $ | 62,067,890 |        |  | $ | 6,519,467 |    |  | 10.5  | % 
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |       |   
|Rate of return on average invested assets      |  |      | 2.9        | % |      |   | 3.3        | %      |  |   | (0.4      | %) |  |       |   
|                                               |  |      |            |   |      |   |            |        |  |   |           |    |  |       |   

Gross investment income from the fixed portfolio during the first quarter of 2009 was consistent
with the same period in the prior year. However, over the last 12 months, the markets have seen extremely volatile conditions. The Federal Funds Rate dropped from an already low 1% to an unprecedented 0% to 0.25% range. Therefore, the
interest rate environment in the first quarter of 2009 was much lower than in the first quarter of 2008. Over the last four quarters, the portfolio has been positioned to reduce both credit risk and interest rate risk going forward. This
has led to investing in more risk averse securities. The portfolio duration has also been reduced from 5.3 years during the first quarter of 2008 to below 4 years in the first quarter of 2009. This substantial decrease has produced a portfolio
more defensive to a potential rise in interest rates. The combination of these investment decisions, combined with much lower yields, particularly on the short end of the yield curve, is expected to lead to a modest decline in investment income
through the remainder of 2009. The decline in income from cash and cash equivalents is a result of the lower interest rate environment experienced during the first quarter of 2009 compared to the same period in the prior year. Investment expenses
decreased slightly as a result of lower advisory fees.

The table below summarizes the net realized gains generated during the three month
period ended March 31:



|                                                |  |      |         |   |      |   |         |  |   |          |   |  |        |   
|----------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | - | -------- | - |  | ------ | --
|                                                |  | 2009 |         |   | 2008 |   | Change  |  |   | %Change  |  
|Net realized gains (losses) - fixed maturities  |  | $    | 253,825 |   |      | $ | 66,383  |  | $ | 187,442  |   |  | 282.4  | % 
|Net realized gains (losses) - equity securities |  |      | (57,164 | ) |      |   | 92,219  |  |   | (149,383 | ) |  | (162.0 | %)
|                                                |  |      |         |   |      |   |         |  |   |          |   |  |        |   
|Total net realized gains (losses)               |  | $    | 196,661 |   |      | $ | 158,602 |  | $ | 38,059   |   |  | 24.0   | % 
|                                                |  |      |         |   |      |   |         |  |   |          |   |  |        |   



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During the quarter ended March 31, 2009, the Company sold approximately $5.5 million in fixed
maturity securities which generated realized gains of $253,825. In addition, the Company rebalanced a portion of the equity portfolio in order to realign the sector allocation within the portfolio. The rebalancing resulted in net realized losses of
$57,164.

Income Tax Expense. During the quarters ended March 31, 2009 and 2008 the Company recorded income tax expense
of approximately $52,000 and $526,000, respectively. The decrease is due to lower pre-tax income in the 2009 quarter compared to the prior year period coupled with higher tax-exempt interest income during the 2009 quarter compared to 2008. The
effective tax rate for the quarter ended March 31, 2009 was 15.7% compared to 32.3% in the prior year quarter. The decrease in the effective tax rate is due to the fact that non-taxable investment income made up a larger component of total
pre-tax income in the 2009 quarter as compared to the 2008 quarter.

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 shareholder dividends. 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)
provided by operations was $(992,000) and $267,000 for the three months ended March 31, 2009 and 2008, respectively, a decrease of $1,259,000. During the three months ended March 31, 2009 as compared to the same period in 2008, net
premiums collected increased $1,745,000, net loss and LAE payments increased $3,464,000, policy acquisition and other underwriting expenses paid increased $230,000 and federal income taxes paid decreased $600,000. Other cash provided by operations
increased $90,000 during the three months ended March 31, 2009 compared to the same period in 2008.

During the three months ended
March 31, 2009 and 2008, cash flow provided by investing activities was $4,997,000 and $245,000, respectively. The increase in cash flow provided by investing activities is due to an increase in the sales of fixed maturity securities.

Cash provided by financing activities was $125,000 and $16,000 for the three months ended March 31, 2009 and 2008, respectively.
During the three months ended March 31, 2009, financing activities consisted of the issuance of common stock which generated $180,000 in proceeds, share repurchases of approximately $2,000 and a cash dividend of $53,000 paid to stockholders.
During the same period in 2008, financing activities consisted of cash received of approximately $16,000 from the exercise of stock options.

The Company paid a quarterly cash dividend of $.03 per common share on March 30, 2009 which totaled approximately $53,000. The Boards current intention is evaluate each quarter whether a cash dividend will be declared. The
payment of future dividends will depend upon the availability of cash resources at the Holding Company, the financial condition and results of operations of the Company and such other factors as are deemed relevant by the Board of Directors.

During the quarter ended March 31, 2009, the Company repurchased 190 shares of our common stock under a repurchase plan which was
previously announced on May 8, 2008. The shares were repurchased at a cost of approximately $2,518, or $13.25 per share. See Part II Item 2, Unregistered Sales of Equity Securities and Use of Proceeds for details of our share
repurchase program.

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



22



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##### Table of Contents

The cost or amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of
investments at March 31, 2009 and December 31, 2008 are as follows:



|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|------------------------------------------------------------------------------------- |  | -------------------- | ---------- | -------------------- | - | --------------------- |  | ------------------ | --------- |  | - | ----------
|                                                                                      |  | March 31, 2009      
|                                                                                      |  | Cost orAmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFairValue
|Fixed maturities:                                                                     |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 6,844,590  |                      | $ | 174,967               |  | $                  |          |  | $ | 7,019,557 
|States and political subdivisions                                                     |  |                      | 22,972,995 |                      |   | 430,106               |  |                    | 369,227   |  |   | 23,033,874
|Corporate securities                                                                  |  |                      | 6,094,994  |                      |   | 68,434                |  |                    | 261,238   |  |   | 5,902,190 
|Mortgage-backed securities                                                            |  |                      | 13,609,674 |                      |   | 218,059               |  |                    | 733,669   |  |   | 13,094,064
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|                                                                                      |  |                      | 49,522,253 |                      |   | 891,566               |  |                    | 1,364,134 |  |   | 49,049,685
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|Equity securities - mutual funds                                                      |  |                      | 7,654,308  |                      |   |                      |  |                    | 3,499,949 |  |   | 4,154,359 
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|Total                                                                                 |  | $                    | 57,176,561 |                      | $ | 891,566               |  | $                  | 4,864,083 |  | $ | 53,204,044
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|                                                                                      | 
|                                                                                      |  | December 31, 2008   
|                                                                                      |  | Cost orAmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFairValue
|Fixed maturities:                                                                     |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 9,088,700  |                      | $ | 293,127               |  | $                  |          |  | $ | 9,381,827 
|States and political subdivisions                                                     |  |                      | 23,010,088 |                      |   | 224,481               |  |                    | 721,766   |  |   | 22,512,803
|Corporate securities                                                                  |  |                      | 5,116,362  |                      |   | 49,142                |  |                    | 71,830    |  |   | 5,093,674 
|Mortgage-backed securities                                                            |  |                      | 17,378,907 |                      |   | 304,940               |  |                    | 713,368   |  |   | 16,970,479
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|                                                                                      |  |                      | 54,594,057 |                      |   | 871,690               |  |                    | 1,506,964 |  |   | 53,958,783
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|Equity securities - mutual funds                                                      |  |                      | 7,704,834  |                      |   |                      |  |                    | 3,144,466 |  |   | 4,560,368 
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           
|Total                                                                                 |  | $                    | 62,298,891 |                      | $ | 871,690               |  | $                  | 4,651,430 |  | $ | 58,519,151
|                                                                                      |  |                      |            |                      |   |                       |  |                    |           |  |   |           

At March 31, 2009, corporate securities accounted for 12% of our fixed maturity portfolio,
mortgage backed securities were 27%, states and political subdivisions (including both taxable and tax-exempt municipal) were 47% and U. S. government and government agency bonds were 14%. At March 31, 2009, our equity portfolio, which consists
entirely of mutual funds, was spread among the following mutual fund types: large-cap  27%, mid-cap  23%, small-cap  27%, specialty  4%, and international  19%.

At December 31, 2008, corporate securities accounted for 9% of our fixed maturity portfolio, mortgage backed securities were 32%, states and
political subdivisions (including both taxable and tax-exempt municipal) were 42% and U. S. government and government agency bonds were 17%. At December 31, 2008, our equity portfolio, which consists entirely of mutual funds, was spread among
the following mutual fund types: large-cap  29%, mid-cap  24%, small-cap  26%, specialty  3%, and international  18%.

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, 2009 were determined to have temporary declines in value generally due to the current tightness in the credit markets and the related impact on the equity market, geopolitical reasons or a reaction
to their particular industry rather than fundamental reasons. Fixed maturity securities with unrealized losses at March 31, 2009 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.



23



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The following table summarizes the length of time securities with unrealized losses at March 31,
2009 have been in an unrealized loss position:



|                                                                                      |  |                     |           |                       |   |                    |  |                       |            |                    |   |                       |  |   |            |  |   |          
|------------------------------------------------------------------------------------- |  | ------------------- | --------- | --------------------- | - | ------------------ |  | --------------------- | ---------- | ------------------ | - | --------------------- |  | - | ---------- |  | - | ---------
|                                                                                      |  | Less than 12 Months |           | 12 Months or More     |   | Total             
|                                                                                      |  | EstimatedFairValue  |           | GrossUnrealizedLosses |   | EstimatedFairValue |  | GrossUnrealizedLosses |            | EstimatedFairValue |   | GrossUnrealizedLosses
|Fixed maturities:                                                                     |  |                     |           |                       |   |                    |  |                       |            |                    |   |                       |  |   |            |  |   |          
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                   |          |                       | $ |                   |  | $                     |           |                    | $ |                      |  | $ |           |  | $ |         
|States and political subdivisions                                                     |  |                     | 519,015   |                       |   | 2,784              |  |                       | 7,184,850  |                    |   | 366,443               |  |   | 7,703,865  |  |   | 369,227  
|Corporate securities                                                                  |  |                     | 378,322   |                       |   | 26,399             |  |                       | 1,398,018  |                    |   | 234,839               |  |   | 1,776,340  |  |   | 261,238  
|Mortgage-backed securities                                                            |  |                     | 1,612,145 |                       |   | 120,059            |  |                       | 3,250,927  |                    |   | 613,610               |  |   | 4,863,072  |  |   | 733,669  
|                                                                                      |  |                     |           |                       |   |                    |  |                       |            |                    |   |                       |  |   |            |  |   |          
|                                                                                      |  |                     | 2,509,482 |                       |   | 149,242            |  |                       | 11,833,795 |                    |   | 1,214,892             |  |   | 14,343,277 |  |   | 1,364,134
|                                                                                      |  |                     |           |                       |   |                    |  |                       |            |                    |   |                       |  |   |            |  |   |          
|Equity securities - mutual funds                                                      |  |                     | 2,490,156 |                       |   | 1,890,800          |  |                       | 1,664,203  |                    |   | 1,609,149             |  |   | 4,154,359  |  |   | 3,499,949
|                                                                                      |  |                     |           |                       |   |                    |  |                       |            |                    |   |                       |  |   |            |  |   |          
|Total                                                                                 |  | $                   | 4,999,638 |                       | $ | 2,040,042          |  | $                     | 13,497,998 |                    | $ | 2,824,041             |  | $ | 18,497,636 |  | $ | 4,864,083
|                                                                                      |  |                     |           |                       |   |                    |  |                       |            |                    |   |                       |  |   |            |  |   |          

As of March 31, 2009, the portfolio included four fixed maturity securities and ten equity
securities in an unrealized loss position for less than twelve months and twenty-seven fixed maturity securities and five equity securities in an unrealized loss position for more than twelve months. Of the fixed maturity securities, one was trading
below 75% of amortized cost; six were trading between 76% and 84% of amortized cost, nine were trading between 85% and 94% of amortized cost while the remaining fifteen were trading at or above 95% of amortized cost. All the fixed maturity
securities in an unrealized loss position and assigned a rating by commercial credit rating companies are rated investment grade securities.

Of the fifteen equity securities in an unrealized loss position, the range of market value to cost was from 41% up to 72%. While all of these securities are monitored for potential impairment, the Companys experience indicates that
they generally do not present as great a risk of impairment, as fair value often recovers over time. These securities have generally been adversely affected by the downturn in the financial markets and overall economic conditions. Management
believes that the analysis of each of these securities in addition to the fact that the Company has both the intent and ability to hold these securities until their recovery supports our view that these securities were not other-than-temporarily
impaired.

Changes in Interest Rates

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 losses reflected in the balance sheet. The following table shows the effects of a
change in interest rates 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%             |  | $              | 44,511 |                | $ | (4,539 | )
|1%             |  |                | 46,779 |                |   | (2,271 | )
|0              |  |                | 49,050 |                |   |       |  
|-1%            |  |                | 51,322 |                |   | 2,272  |  
|-2%            |  |                | 53,596 |                |   | 4,546  |  



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|------- | -----------------------------------------------------------

Not applicable.



|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



24



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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.



|ITEM 4T. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

There have not been any
changes in our internal control over financial reporting, as defined by the Securities and Exchange Commission Rule 13a-15(f), as of the end of the quarter covered by this report, that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

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. However, given the uncertainties attendant to litigation, we cannot be sure that our results of
operations and financial condition will not be materially adversely affected by any litigation.



|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, 2008.



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

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 he 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, 2009, the Insurance Company can pay a non-extraordinary dividend of up to $2,688,000 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.

The following table sets
forth the repurchases of common stock for the quarter ended March 31, 2009:

Issuer Purchases of Equity Securities



|                              |  |                                |  |                             |       |                                                                       |     |                                                                 |       
|----------------------------- |  | ------------------------------ |  | --------------------------- | ----- | --------------------------------------------------------------------- | --- | --------------------------------------------------------------- | ------
|                              |  | Total Numberof SharesPurchased |  | Average PricePaid per Share |       | Total Number of SharesPurchased as Part ofPublicly AnnouncedPlans (1) |     | Maximum Number ofShares that May Yet BePurchased Under thePlans
|Month ended January 31, 2009  |  | 190                            |  | $                           | 13.25 |                                                                       | 190 |                                                                 | 58,810
|Month ended February 28, 2009 |  |                               |  | $                           |      |                                                                       |    |                                                                 | 58,810
|Month ended March 31, 2009    |  |                               |  | $                           |      |                                                                       |    |                                                                 | 58,810
|Total                         |  | 190                            |  | $                           | 13.25 |                                                                       | 190 |                                                                 |       



|(1) | On May 8, 2008, the Company announced a share repurchase plan for up to 100,000 shares of common stock.
|--- | -------------------------------------------------------------------------------------------------------



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|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                                                                                                      
|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     |  | Certification pursuant to 18 U.S.C. Section 1350.                                                          



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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, 2009 |  | By:                               |  | /s/ Richard E. Dunning                      
|                   |  |                                   |  | Richard E. Dunning                          
|                   |  |                                   |  | President and Chief Executive Officer       
|                   |  |                                  
|Date: May 15, 2009 |  | By:                               |  | /s/ Kevin G. Kaastra                        
|                   |  |                                   |  | Kevin G. Kaastra                            
|                   |  |                                   |  | Vice President of Finance                   
|                   |  |                                   |  | (principal financial and accounting officer)



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