##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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

For the quarterly period ended March 31, 2007

OR



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

For the transition period from             
to

No. 000-50926

(Commission File Number)



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FREMONT MICHIGAN INSURACORP, INC.

(Exact name of Registrant as specified in its charter)



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

(231) 924-0300

(Registrants telephone number, including area code)



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

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

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

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

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



|                            |  |                                               
|--------------------------- |  | ----------------------------------------------
|                            |  | Number of Shares Outstanding as of May 3, 2007
|COMMON STOCK (No Par Value) |  | 1,727,456                                     
|(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 |  | 13
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 23
|Item 4.                       |  | Controls and Procedures                                                               |  | 24
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                      
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 24
|Item 1A.                      |  | Risk Factors                                                                          |  | 24
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 24
|Item 3.                       |  | Defaults Upon Senior Securities                                                       |  | 25
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                   |  | 25
|Item 5.                       |  | Other Information                                                                     |  | 25
|Item 6.                       |  | Exhibits                                                                              |  | 25
|                              | 
|SIGNATURES                    |  | 26                                                                                   



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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, 2007 and December 31, 2006



|                                                                                                |  |               |            |                  |   |           
|----------------------------------------------------------------------------------------------- |  | ------------- | ---------- | ---------------- | - | ----------
|                                                                                                |  | March 31,2007 |            | December 31,2006
|Assets                                                                                          |  |               |            |                  |   |           
|Investments:                                                                                    |  |               |            |                  |   |           
|Fixed maturities available for sale, at fair value                                              |  | $             | 45,466,335 |                  | $ | 44,959,266
|Equity securities available for sale, at fair value                                             |  |               | 12,079,095 |                  |   | 11,689,756
|Mortgage loans on real estate from related parties                                              |  |               | 259,065    |                  |   | 260,808   
|                                                                                                |  |               |            |                  |   |           
|Total investments                                                                               |  |               | 57,804,495 |                  |   | 56,909,830
|Cash and cash equivalents                                                                       |  |               | 3,256,846  |                  |   | 4,598,843 
|Premiums due from policyholders, net                                                            |  |               | 7,142,002  |                  |   | 7,528,683 
|Amounts due from reinsurers                                                                     |  |               | 7,418,637  |                  |   | 7,883,153 
|Prepaid reinsurance premiums                                                                    |  |               | 388,078    |                  |   | 404,016   
|Accrued investment income                                                                       |  |               | 504,614    |                  |   | 447,411   
|Deferred policy acquisition costs                                                               |  |               | 2,957,853  |                  |   | 3,235,383 
|Deferred federal income taxes                                                                   |  |               | 2,798,832  |                  |   | 3,070,713 
|Property and equipment, net of accumulated depreciation                                         |  |               | 1,835,048  |                  |   | 1,771,323 
|Other assets                                                                                    |  |               | 127,166    |                  |   | 28,078    
|                                                                                                |  |               |            |                  |   |           
|                                                                                                |  | $             | 84,233,571 |                  | $ | 85,877,433
|                                                                                                |  |               |            |                  |   |           
|Liabilities and Stockholders Equity                                                            |  |               |            |                  |   |           
|Liabilities:                                                                                    |  |               |            |                  |   |           
|Losses and loss adjustment expenses                                                             |  | $             | 20,514,928 |                  | $ | 20,176,555
|Unearned premiums                                                                               |  |               | 19,833,960 |                  |   | 21,463,019
|Reinsurance balances payable                                                                    |  |               | 31,957     |                  |   | 50,313    
|Accrued expenses and other liabilities                                                          |  |               | 5,391,100  |                  |   | 6,867,081 
|Surplus notes                                                                                   |  |               | 2,890,288  |                  |   | 2,890,288 
|                                                                                                |  |               |            |                  |   |           
|Total liabilities                                                                               |  |               | 48,662,233 |                  |   | 51,447,256
|                                                                                                |  |               |            |                  |   |           
|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,                                |  |               |            |                  |   |           
|1,727,456 and 1,725,456 shares issued and outstanding at                                        |  |               |           |                  |   |          
|March 31, 2007 and December 31, 2006, respectively                                              |  |               |            |                  |   |           
|Class B common stock, no par value, authorized 500,000 shares, no shares issued and outstanding |  |               |           |                  |   |          
|Additional paid-in capital                                                                      |  |               | 7,660,890  |                  |   | 7,605,096 
|Retained earnings                                                                               |  |               | 26,314,888 |                  |   | 25,511,413
|Accumulated other comprehensive income                                                          |  |               | 1,595,560  |                  |   | 1,313,668 
|                                                                                                |  |               |            |                  |   |           
|Total stockholders equity                                                                      |  |               | 35,571,338 |                  |   | 34,430,177
|                                                                                                |  |               |            |                  |   |           
|Total liabilities and stockholders equity                                                      |  | $             | 84,233,571 |                  | $ | 85,877,433
|                                                                                                |  |               |            |                  |   |           

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



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##### Table of Contents

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Statements of Operations (Unaudited)

For the Three Months Ended March 31, 2007 and 2006



|                                                   |  |      |            |      |   |           
|-------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                   |  | 2007 |            | 2006
|Revenues:                                          |  |      |            |      |   |           
|Net premiums earned                                |  | $    | 10,265,293 |      | $ | 9,553,595 
|Net investment income                              |  |      | 491,407    |      |   | 419,768   
|Net realized gains on investments                  |  |      | 27,979     |      |   | 318,503   
|Other income, net                                  |  |      | 104,406    |      |   | 96,213    
|                                                   |  |      |            |      |   |           
|Total revenues                                     |  |      | 10,889,085 |      |   | 10,388,079
|                                                   |  |      |            |      |   |           
|Expenses:                                          |  |      |            |      |   |           
|Losses and loss adjustment expenses, net           |  |      | 5,830,670  |      |   | 4,534,193 
|Policy acquisition and other underwriting expenses |  |      | 3,848,134  |      |   | 3,308,146 
|Interest expense                                   |  |      | 50,580     |      |   | 76,663    
|                                                   |  |      |            |      |   |           
|Total expenses                                     |  |      | 9,729,384  |      |   | 7,919,002 
|                                                   |  |      |            |      |   |           
|Income before federal income tax expense           |  |      | 1,159,701  |      |   | 2,469,077 
|Federal income tax expense                         |  |      | 356,226    |      |   | 807,828   
|                                                   |  |      |            |      |   |           
|Net income                                         |  | $    | 803,475    |      | $ | 1,661,249 
|                                                   |  |      |            |      |   |           
|Earnings per share                                 |  |      |            |      |   |           
|Basic                                              |  | $    | .47        |      | $ | .96       
|Diluted                                            |  | $    | .46        |      | $ | .95       

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



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##### Table of Contents

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Consolidated Statement of Stockholders Equity
(Unaudited)

For the Three Months Ended March 31, 2007



|                                                 |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   |            |  
|------------------------------------------------ |  | -------------- | ------- | ------------ | ------- | ------------------------ |  | ---------------- | - | ------------------------------------------ | - | --------- | ----- | - | ---------- |  | - | --------- | - |  | - | ---------- | -
|                                                 |  | PreferredStock |         | Common Stock |         | AdditionalPaid-inCapital |  | RetainedEarnings |   | AccumulatedOtherComprehensiveIncome (Loss) |   |           | Total |  
|                                                 |  |                | Class A |              | Class B |                          |  |                  |  
|Balance, December 31, 2006                       |  | $              |        |              | $       |                         |  | $                |  |                                            | $ | 7,605,096 |       | $ | 25,511,413 |  | $ | 1,313,668 |   |  | $ | 34,430,177 |  
|Comprehensive income:                            |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   |            |  
|Net income                                       |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   | 803,475    |  |   |           |   |  |   | 803,475    |  
|Net unrealized gains on investments, net of tax  |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   | 292,681   |   |  |   | 292,681    |  
|Amortization of prior service credit, net of tax |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   | (14,137   | ) |  |   | (14,137    | )
|Amortization of net actuarial loss, net of tax   |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   | 3,348     |   |  |   | 3,348      |  
|                                                 |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   |            |  
|Total comprehensive income                       |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   | 1,085,367  |  
|Stock-based compensation                         |  |                |         |              |         |                          |  |                  |   |                                            |   | 34,238    |       |   |            |  |   |           |   |  |   | 34,238     |  
|Stock options exercised                          |  |                |         |              |         |                          |  |                  |   |                                            |   | 10,000    |       |   |            |  |   |           |   |  |   | 10,000     |  
|Tax benefit from stock                           |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   |           |  
|options exercised                                |  |                |         |              |         |                          |  |                  |   |                                            |   | 11,556    |       |   |            |  |   |           |   |  |   | 11,556     |  
|                                                 |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   |            |  
|Balance, March 31, 2007                          |  | $              |        |              | $       |                         |  | $                |  |                                            | $ | 7,660,890 |       | $ | 26,314,888 |  | $ | 1,595,560 |   |  | $ | 35,571,338 |  
|                                                 |  |                |         |              |         |                          |  |                  |   |                                            |   |           |       |   |            |  |   |           |   |  |   |            |  

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, 2007 and 2006



|                                                                           |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                           |  | 2007 |            |   | 2006 |  
|Cash flows from operating activities:                                      |  |      |            |   |      |   |            |  
|Net income                                                                 |  | $    | 803,475    |   |      | $ | 1,661,249  |  
|Adjustments to reconcile net income to net cash from operating activities: |  |      |            |   |      |   |            |  
|Depreciation                                                               |  |      | 246,250    |   |      |   | 89,250     |  
|Deferred federal income taxes                                              |  |      | 126,664    |   |      |   | 31,421     |  
|Stock based compensation expense                                           |  |      | 34,238     |   |      |   | 11,763     |  
|Net realized gains on investments                                          |  |      | (27,979    | ) |      |   | (318,503   | )
|Net amortization of premiums on investments                                |  |      | 54,604     |   |      |   | 55,419     |  
|Excess tax benefit from stock options exercised                            |  |      | (11,556    | ) |      |   |           |  
|Changes in assets and liabilities:                                         |  |      |            |   |      |   |            |  
|Premiums due from policyholders                                            |  |      | 386,681    |   |      |   | 688,859    |  
|Amounts due from reinsurers                                                |  |      | 464,516    |   |      |   | 1,021,292  |  
|Prepaid reinsurance premiums                                               |  |      | 15,938     |   |      |   | 8,337      |  
|Accrued investment income                                                  |  |      | (57,203    | ) |      |   | (34,634    | )
|Deferred policy acquisition costs                                          |  |      | 277,530    |   |      |   | 266,998    |  
|Other assets                                                               |  |      | (99,088    | ) |      |   | (987       | )
|Losses and loss adjustment expenses                                        |  |      | 338,373    |   |      |   | 100,174    |  
|Unearned premiums                                                          |  |      | (1,629,059 | ) |      |   | (2,017,177 | )
|Reinsurance balances payable                                               |  |      | (18,356    | ) |      |   | (1,010,642 | )
|Accrued expenses and other liabilities                                     |  |      | (1,480,772 | ) |      |   | (1,110,487 | )
|                                                                           |  |      |            |   |      |   |            |  
|Net cash used in operating activities                                      |  |      | (575,744   | ) |      |   | (557,668   | )
|                                                                           |  |      |            |   |      |   |            |  
|Cash flows from investing activities:                                      |  |      |            |   |      |   |            |  
|Proceeds from sales and maturities of fixed maturity investments           |  |      | 1,197,809  |   |      |   | 6,025,840  |  
|Proceeds from sales of equity investments                                  |  |      | 74,256     |   |      |   | 2,521,295  |  
|Purchases of fixed maturity investments                                    |  |      | (1,666,066 | ) |      |   | (6,407,839 | )
|Purchases of equity investments                                            |  |      | (85,576    | ) |      |   | (1,499,504 | )
|Decrease in receivable from investments                                    |  |      |           |   |      |   | (12        | )
|Repayment of mortgage loan on real estate from related party               |  |      | 1,743      |   |      |   |           |  
|Issuance of mortgage loan on real estate from related party                |  |      |           |   |      |   | (3,571     | )
|Purchase of property and equipment, net                                    |  |      | (309,975   | ) |      |   | (232,130   | )
|                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by (used in) investing activities                        |  |      | (787,809   | ) |      |   | 404,079    |  
|                                                                           |  |      |            |   |      |   |            |  
|Cash flows from financing activities:                                      |  |      |            |   |      |   |            |  
|Proceeds from exercised stock options                                      |  |      | 10,000     |   |      |   |           |  
|Tax benefit from exercised stock options                                   |  |      | 11,556     |   |      |   |           |  
|                                                                           |  |      |            |   |      |   |            |  
|Net cash provided by financing activities                                  |  |      | 21,556     |   |      |   |           |  
|                                                                           |  |      |            |   |      |   |            |  
|Net decrease in cash and cash equivalents                                  |  |      | (1,341,997 | ) |      |   | (153,589   | )
|Cash and cash equivalents, beginning of period                             |  |      | 4,598,843  |   |      |   | 1,542,581  |  
|                                                                           |  |      |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                   |  | $    | 3,256,846  |   |      | $ | 1,388,992  |  
|                                                                           |  |      |            |   |      |   |            |  

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



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##### Table of Contents

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, 2006.

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

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



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

The Company adopted
the Financial Accounting Standards Boards (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48), effective January 1, 2007. FIN 48
clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the
taxing authority. The adoption of FIN 48 did not have a material effect on our consolidated financial position or results of operations. See Note 8 for further discussion of the Companys adoption of FIN 48.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (Statement 157). Statement 157 defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Statement 157 applies under other accounting pronouncements that require fair value
measurement in which the FASB concluded that fair value was the relevant measurement, but does not require any new fair value measurements. Statement 157 will be effective for the quarter ended March 31, 2008. The Company is currently
evaluating the impact Statement 157 will have on the consolidated financial statements.

In February 2007, the FASB issued SFAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (Statement 159). This statement, which is expected to expand fair value measurement, permits entities to choose to measure many financial
instruments and certain other items at fair value. Statement 159 will be effective for the quarter ended March 31, 2008. The Company is currently assessing the impact Statement 159 may have on the consolidated financial statements.



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Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



|3. | Comprehensive Income
|-- | --------------------

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



|                                                                                     |  |      |           |   |      |   |           |  
|------------------------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                                     |  | 2007 |           |   | 2006 |  
|Net income                                                                           |  | $    | 803,475   |   |      | $ | 1,661,249 |  
|Other comprehensive income, net of tax:                                              |  |      |           |   |      |   |           |  
|Unrealized gains on investments                                                      |  |      | 311,147   |   |      |   | 134,519   |  
|Reclassification adjustment for realized gains on investments included in net income |  |      | (18,466   | ) |      |   | (210,212  | )
|Amortization of prior service credit                                                 |  |      | (14,137   | ) |      |   |          |  
|Amortization of net actuarial loss                                                   |  |      | 3,348     |   |      |   |          |  
|                                                                                     |  |      |           |   |      |   |           |  
|Other comprehensive income (loss), net of tax                                        |  |      | 281,892   |   |      |   | (75,693   | )
|                                                                                     |  |      |           |   |      |   |           |  
|Comprehensive income                                                                 |  | $    | 1,085,367 |   |      | $ | 1,585,556 |  
|                                                                                     |  |      |           |   |      |   |           |  



|4. | 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 net income per share for the three months ended March 31 is as follows:



|                                                                                          |  |      |           |      |   |          
|----------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                                                                          |  | 2007 |           | 2006
|Numerator for basic and diluted earnings per share:                                       |  |      |           |      |   |          
|Net income                                                                                |  | $    | 803,475   |      | $ | 1,661,249
|                                                                                          |  |      |           |      |   |          
|Denominator:                                                                              |  |      |           |      |   |          
|Denominator for basic earnings per share  weighted average shares outstanding            |  |      | 1,726,612 |      |   | 1,724,256
|Effect of dilutive stock options                                                          |  |      | 36,127    |      |   | 23,200   
|                                                                                          |  |      |           |      |   |          
|Denominator for diluted earnings per share  adjusted weighted average shares outstanding |  |      | 1,762,739 |      |   | 1,747,456
|                                                                                          |  |      |           |      |   |          
|Basic earnings per share                                                                  |  | $    | 0.47      |      | $ | 0.96     
|Diluted earnings per share                                                                |  | $    | 0.46      |      | $ | 0.95     



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

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

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.



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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:



|                                                         |  |      |            |   |      |   |           |  
|-------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                         |  | 2007 |            |   | 2006 |  
|Revenues:                                                |  |      |            |   |      |   |           |  
|Net premiums earned:                                     |  |      |            |   |      |   |           |  
|Personal lines                                           |  | $    | 6,955,775  |   |      | $ | 6,198,978 |  
|Commercial lines                                         |  |      | 1,805,555  |   |      |   | 1,937,864 |  
|Farm                                                     |  |      | 1,079,520  |   |      |   | 1,024,541 |  
|Marine                                                   |  |      | 424,443    |   |      |   | 392,212   |  
|                                                         |  |      |            |   |      |   |           |  
|Total net premiums earned                                |  |      | 10,265,293 |   |      |   | 9,553,595 |  
|                                                         |  |      |            |   |      |   |           |  
|Expenses:                                                |  |      |            |   |      |   |           |  
|Loss and loss adjustment expenses:                       |  |      |            |   |      |   |           |  
|Personal lines                                           |  |      | 4,165,283  |   |      |   | 2,938,461 |  
|Commercial lines                                         |  |      | 1,098,391  |   |      |   | 1,366,839 |  
|Farm                                                     |  |      | 512,646    |   |      |   | 222,396   |  
|Marine                                                   |  |      | 54,350     |   |      |   | 6,497     |  
|                                                         |  |      |            |   |      |   |           |  
|Total loss and loss adjustment expenses                  |  |      | 5,830,670  |   |      |   | 4,534,193 |  
|                                                         |  |      |            |   |      |   |           |  
|Policy acquisition and other underwriting expenses:      |  |      |            |   |      |   |           |  
|Personal lines                                           |  |      | 2,607,501  |   |      |   | 2,146,535 |  
|Commercial lines                                         |  |      | 676,845    |   |      |   | 671,029   |  
|Farm                                                     |  |      | 404,678    |   |      |   | 354,770   |  
|Marine                                                   |  |      | 159,110    |   |      |   | 135,812   |  
|                                                         |  |      |            |   |      |   |           |  
|Total policy acquisition and other underwriting expenses |  |      | 3,848,134  |   |      |   | 3,308,146 |  
|                                                         |  |      |            |   |      |   |           |  
|Underwriting gain (loss):                                |  |      |            |   |      |   |           |  
|Personal lines                                           |  |      | 182,991    |   |      |   | 1,113,982 |  
|Commercial lines                                         |  |      | 30,319     |   |      |   | (100,004  | )
|Farm                                                     |  |      | 162,196    |   |      |   | 447,375   |  
|Marine                                                   |  |      | 210,983    |   |      |   | 249,903   |  
|                                                         |  |      |            |   |      |   |           |  
|Total underwriting gain                                  |  |      | 586,489    |   |      |   | 1,711,256 |  
|Net investment income                                    |  |      | 491,407    |   |      |   | 419,768   |  
|Net realized gains on investments                        |  |      | 27,979     |   |      |   | 318,503   |  
|Other income, net                                        |  |      | 104,406    |   |      |   | 96,213    |  
|Interest expense                                         |  |      | (50,580    | ) |      |   | (76,663   | )
|                                                         |  |      |            |   |      |   |           |  
|Income before federal income taxes                       |  | $    | 1,159,701  |   |      | $ | 2,469,077 |  
|                                                         |  |      |            |   |      |   |           |  



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##### Table of Contents

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



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

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



|                                                |  |      |         |   |      |   |         |  
|----------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                |  | 2007 |         |   | 2006 |  
|Components of net periodic benefit cost:        |  |      |         |   |      |   |         |  
|Service cost                                    |  | $    | 2,895   |   |      | $ | 2,540   |  
|Interest cost                                   |  |      | 26,231  |   |      |   | 25,096  |  
|Amortization of unrecognized prior service cost |  |      | (21,421 | ) |      |   | (21,420 | )
|Amortization of unrecognized net actuarial loss |  |      | 5,073   |   |      |   | 5,290   |  
|                                                |  |      |         |   |      |   |         |  
|Net periodic benefit cost                       |  | $    | 12,778  |   |      | $ | 11,506  |  
|                                                |  |      |         |   |      |   |         |  

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, 2007 the Company has made contributions to the plan of approximately $4,000. During 2007, the Company expects to contribute a total of $54,000 to the plan to cover anticipated
benefit payments.



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

The effect of reinsurance on premiums
written and earned and losses and LAE incurred for the three months ended March 31, 2007 and 2006, was as follows:



|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|------------------------- |  | ------- | ---------- | - | ------ | - | ---------- | ------- |  | - | ---------- | - |  | - | ---------- | -
|                          |  | 2007    |            |   | 2006   |  
|                          |  | Written |            |   | Earned |   |            | Written |  |   | Earned     |  
|Direct                    |  | $       | 10,962,905 |   |        | $ | 12,588,519 |         |  | $ | 9,552,875  |   |  | $ | 11,563,921 |  
|Assumed                   |  |         | 14,381     |   |        |   | 17,826     |         |  |   | 15,698     |   |  |   | 21,829     |  
|Ceded                     |  |         | (2,345,477 | ) |        |   | (2,341,052 | )       |  |   | (2,023,818 | ) |  |   | (2,032,155 | )
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|Net premiums              |  | $       | 8,631,809  |   |        | $ | 10,265,293 |         |  | $ | 7,544,755  |   |  | $ | 9,553,595  |  
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|                          |  |         |            |  
|                          |  |         |            |   |        |   |            | 2007    |  |   | 2006       |  
|Loss and LAE incurred     |  |         |            |   |        |   |            |         |  | $ | 6,010,837  |   |  | $ | 5,014,360  |  
|Reinsurance recoveries    |  |         |            |   |        |   |            |         |  |   | (180,167   | ) |  |   | (480,167   | )
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  
|Net loss and LAE incurred |  |         |            |   |        |   |            |         |  | $ | 5,830,670  |   |  | $ | 4,534,193  |  
|                          |  |         |            |   |        |   |            |         |  |   |            |   |  |   |            |  

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



10



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##### Table of Contents

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



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

The Company adopted the
provisions of FIN 48 on January 1, 2007. The adoption of FIN 48 did not have a material effect on our consolidated financial position or results of operations. The Company evaluated all tax positions taken on its U.S. federal income tax return.
No material uncertainties exist for any tax positions taken by the Company.

The Company files income tax returns in the U.S. federal
jurisdiction. The Company is subject to U.S federal income tax examinations for all tax years from 1994 to the current year (with the exception of the 2002 tax year) due to the utilization of its net operating losses in current open tax years. The
Company has not recently been examined by the Internal Revenue Service for any open tax year.

It is the Companys policy to recognize
interest and penalties related to uncertain tax positions in income tax expense.

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



|                 |  |                             |         |      |   |        
|---------------- |  | --------------------------- | ------- | ---- | - | -------
|                 |  | Three Months EndedMarch 31,
|                 |  | 2007                        |         | 2006
|Current expense  |  | $                           | 229,562 |      | $ | 776,407
|Deferred expense |  |                             | 126,664 |      |   | 31,421 
|                 |  |                             |         |      |   |        
|Total            |  | $                           | 356,226 |      | $ | 807,828
|                 |  |                             |         |      |   |        

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, |          
|                                   |  | 2007                         |           |   | 2006 |     
|Income before federal income taxes |  | $                            | 1,159,701 |   |      |      |    |  | $ | 2,469,077 |   |  |      |   
|                                   |  |                              |           |   |      |      |    |  |   |           |   |  |      |   
|Tax at statutory rate              |  |                              | 394,298   |   |      | 34.0 | %  |  |   | 839,486   |   |  | 34.0 | % 
|Tax effect of :                    |  |                              |           |   |      |      |    |  |   |           |   |  |      |   
|Nontaxable investment income       |  |                              | (40,342   | ) |      | (3.5 | %) |  |   | (24,890   | ) |  | (1.0 | %)
|Nondeductible expenses, net        |  |                              | 2,270     |   |      | 0.2  | %  |  |   | 3,666     |   |  | 0.1  | % 
|Other, net                         |  |                              |          |   |      |     |    |  |   | (10,434   | ) |  | (0.4 | %)
|                                   |  |                              |           |   |      |      |    |  |   |           |   |  |      |   
|                                   |  | $                            | 356,226   |   |      | 30.7 | %  |  | $ | 807,828   |   |  | 32.7 | % 
|                                   |  |                              |           |   |      |      |    |  |   |           |   |  |      |   

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, 2007 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.



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##### Table of Contents

Fremont Michigan InsuraCorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)



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 full valuation allowance will be maintained for the deferred tax asset associated with these amounts.

At March 31, 2007 and December 31, 2006 the tax effects of temporary differences that give rise to deferred federal income tax assets and
liabilities are as follows:



|                                                      |  |               |            |   |                  |   |            |  
|----------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                      |  | March 31,2007 |            |   | December 31,2006 |  
|Deferred federal income tax assets arising from:      |  |               |            |   |                  |   |            |  
|Loss and loss adjustment expense reserves             |  | $             | 442,997    |   |                  | $ | 421,360    |  
|Unearned premium reserves                             |  |               | 1,377,499  |   |                  |   | 1,470,987  |  
|Postretirement benefits accrued                       |  |               | 677,186    |   |                  |   | 667,021    |  
|Net operating loss carryforward                       |  |               | 2,498,439  |   |                  |   | 2,634,446  |  
|Alternative minimum tax credit carryforward           |  |               | 357,697    |   |                  |   | 357,697    |  
|Other deferred tax assets                             |  |               | 140,609    |   |                  |   | 186,814    |  
|                                                      |  |               |            |   |                  |   |            |  
|Total deferred federal income tax assets              |  |               | 5,494,427  |   |                  |   | 5,738,325  |  
|                                                      |  |               |            |   |                  |   |            |  
|Deferred federal income tax liabilities arising from: |  |               |            |   |                  |   |            |  
|Deferred policy acquisition costs                     |  |               | (1,038,105 | ) |                  |   | (1,120,000 | )
|Unrealized gains on investments                       |  |               | (557,070   | ) |                  |   | (406,295   | )
|Property and equipment                                |  |               | (68,152    | ) |                  |   | (107,254   | )
|Other deferred tax liabilities                        |  |               | (22,231    | ) |                  |   | (24,026    | )
|                                                      |  |               |            |   |                  |   |            |  
|Total deferred federal income tax liabilities         |  |               | (1,685,558 | ) |                  |   | (1,657,575 | )
|                                                      |  |               |            |   |                  |   |            |  
|Net deferred federal income tax asset                 |  |               | 3,808,869  |   |                  |   | 4,080,750  |  
|Valuation allowance                                   |  |               | (1,010,037 | ) |                  |   | (1,010,037 | )
|                                                      |  |               |            |   |                  |   |            |  
|Net deferred tax asset                                |  | $             | 2,798,832  |   |                  | $ | 3,070,713  |  
|                                                      |  |               |            |   |                  |   |            |  



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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,
2006, 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 170
independent insurance agencies. In October 2006, Fremont Insurance Company received an upgrade from A.M. Best with respect to its financial strength rating. The Insurance Company was upgraded to a B++ rating (Good) by A.M. Best. The
Holding Company is subject to regulation by the Michigan Office of Financial and Insurance Services (OFIS) as its primary regulator because it is the holding company for Fremont Insurance Company. As of March 31, 2007, we had
approximately 56,300 policies in force and assets of $84.2 million.



13



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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, 2007 and 2006. 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 2006 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 IBNR 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 reviews 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 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, 2007.



14



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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, 2007 and December 31, 2006 (in thousands):



|                |  |               |        |                  |   |       
|--------------- |  | ------------- | ------ | ---------------- | - | ------
|                |  | March 31,2007 |        | December 31,2006
|Reported losses |  |               |        |                  |   |       
|Personal        |  | $             | 6,672  |                  | $ | 6,094 
|Commercial      |  |               | 3,134  |                  |   | 3,525 
|Farm            |  |               | 1,321  |                  |   | 1,123 
|Marine          |  |               | 790    |                  |   | 837   
|                |  |               |        |                  |   |       
|                |  |               | 11,917 |                  |   | 11,579
|                |  |               |        |                  |   |       
|IBNR losses     |  |               |        |                  |   |       
|Personal        |  |               | 4,338  |                  |   | 4,338 
|Commercial      |  |               | 3,520  |                  |   | 3,520 
|Farm            |  |               | 486    |                  |   | 486   
|Marine          |  |               | 254    |                  |   | 254   
|                |  |               |        |                  |   |       
|                |  |               | 8,598  |                  |   | 8,598 
|                |  |               |        |                  |   |       
|Total           |  |               |        |                  |   |       
|Personal        |  |               | 11,010 |                  |   | 10,432
|Commercial      |  |               | 6,654  |                  |   | 7,045 
|Farm            |  |               | 1,807  |                  |   | 1,609 
|Marine          |  |               | 1,044  |                  |   | 1,091 
|                |  |               |        |                  |   |       
|                |  | $             | 20,515 |                  | $ | 20,177
|                |  |               |        |                  |   |       

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, 2007 and December 31, 2006, was approximately $134,000 and $208,000, 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 investments for other than temporary impairment, the Company, in addition to an investments market
price history and its intent and ability to hold fixed maturity investments until maturity, considers the issuers operating results, financial condition and liquidity, its ability to access capital markets, credit rating trends, most current
audit opinion, industry and securities markets conditions, and analyst expectations, in their totality to reach its conclusions. 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.

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



15



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##### Table of Contents

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 Services.

At March 31, 2007 and December 31, 2006, the Companys recoverable from reinsurers was comprised of the following:



|                            |  |               |           |                  |   |          
|--------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                            |  | March 31,2007 |           | December 31,2006
|Paid losses and LAE         |  | $             | 809,857   |                  | $ | 853,132  
|Unpaid losses and LAE       |  |               | 6,608,780 |                  |   | 7,030,021
|                            |  |               |           |                  |   |          
|Amounts due from reinsurers |  | $             | 7,418,637 |                  | $ | 7,883,153
|                            |  |               |           |                  |   |          

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.

Results of Operations  Three Months Ended March 31, 2007 and 2006

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, 2007 and 2006. 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 | 
|                                    |  | 2007 |           |   | 2006 |   |           | Dollar |  |   | Percentage |  
|Underwriting gain (loss)            |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   
|Personal                            |  | $    | 182,991   |   |      | $ | 1,113,982 |        |  | $ | (930,991   | ) |  | (83.6 | %)
|Commercial                          |  |      | 30,319    |   |      |   | (100,004  | )      |  |   | 130,323    |   |  | 130.3 | % 
|Farm                                |  |      | 162,196   |   |      |   | 447,375   |        |  |   | (285,179   | ) |  | (63.7 | %)
|Marine                              |  |      | 210,983   |   |      |   | 249,903   |        |  |   | (38,920    | ) |  | (15.6 | %)
|                                    |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   
|Total underwriting gain             |  |      | 586,489   |   |      |   | 1,711,256 |        |  |   | (1,124,767 | ) |  | (65.7 | %)
|Other revenue (expense) items       |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   
|Net investment income               |  |      | 491,407   |   |      |   | 419,768   |        |  |   | 71,639     |   |  | 17.1  | % 
|Net realized gains on investments   |  |      | 27,979    |   |      |   | 318,503   |        |  |   | (290,524   | ) |  | (91.2 | %)
|Other income                        |  |      | 104,406   |   |      |   | 96,213    |        |  |   | 8,193      |   |  | 8.5   | % 
|Interest expense                    |  |      | (50,580   | ) |      |   | (76,663   | )      |  |   | 26,083     |   |  | (34.0 | %)
|                                    |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   
|Total other revenue (expense) items |  |      | 573,212   |   |      |   | 757,821   |        |  |   | (184,609   | ) |  | (24.4 | %)
|                                    |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   
|Income before federal income taxes  |  |      | 1,159,701 |   |      |   | 2,469,077 |        |  |   | (1,309,376 | ) |  | (53.0 | %)
|Federal income tax expense          |  |      | (356,226  | ) |      |   | (807,828  | )      |  |   | 451,602    |   |  | (55.9 | %)
|                                    |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   
|Net income                          |  | $    | 803,475   |   |      | $ | 1,661,249 |        |  | $ | (857,774   | ) |  | (51.6 | %)
|                                    |  |      |           |   |      |   |           |        |  |   |            |   |  |       |   



16



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##### Table of Contents

Underwriting Results. The following table shows the components of the Companys
underwriting gain or loss for the three months ended March 31, 2007 and 2006.



|                                                        |  |      |            |   |      |   |           |        |  |   |            |   |  |       |   
|------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | ------ |  | - | ---------- | - |  | ----- | --
|                                                        |  | 2007 |            |   | 2006 |   |           | Change |  |   | % Change   |  
|Direct premiums written                                 |  | $    | 10,962,905 |   |      | $ | 9,552,875 |        |  | $ | 1,410,030  |   |  | 14.8  | % 
|                                                        |  |      |            |   |      |   |           |        |  |   |            |   |  |       |   
|Net premiums written                                    |  | $    | 8,631,809  |   |      | $ | 7,544,755 |        |  | $ | 1,087,054  |   |  | 14.4  | % 
|                                                        |  |      |            |   |      |   |           |        |  |   |            |   |  |       |   
|Net premiums earned                                     |  | $    | 10,265,293 |   |      | $ | 9,553,595 |        |  | $ | 711,698    |   |  | 7.4   | % 
|Loss and LAE                                            |  |      | 5,830,670  |   |      |   | 4,534,193 |        |  |   | 1,296,477  |   |  | 28.6  | % 
|Policy acquisition and other underwriting expenses      |  |      | 3,848,134  |   |      |   | 3,308,146 |        |  |   | 539,988    |   |  | 16.3  | % 
|                                                        |  |      |            |   |      |   |           |        |  |   |            |   |  |       |   
|Underwriting gain (loss)                                |  | $    | 586,489    |   |      | $ | 1,711,256 |        |  | $ | (1,124,767 | ) |  | (65.7 | %)
|                                                        |  |      |            |   |      |   |           |        |  |   |            |   |  |       |   
|Loss and LAE ratio                                      |  |      | 56.8       | % |      |   | 47.5      | %      |  |   | 9.3        | % |  |       |   
|Policy acquisition and other underwriting expense ratio |  |      | 37.5       | % |      |   | 34.6      | %      |  |   | 2.9        | % |  |       |   
|Combined ratio                                          |  |      | 94.3       | % |      |   | 82.1      | %      |  |   | 12.2       | % |  |       |   

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

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



|                         |  |      |            |      |   |           |  |   |           |   |  |      |   
|------------------------ |  | ---- | ---------- | ---- | - | --------- |  | - | --------- | - |  | ---- | --
|                         |  | 2007 |            | 2006 |   | $ Change  |  |   | % Change  |  
|Direct Premiums Written: |  |      |            |      |   |           |  |   |           |   |  |      |   
|Personal                 |  | $    | 7,553,226  |      | $ | 6,097,335 |  | $ | 1,455,891 |   |  | 23.9 | % 
|Commercial               |  |      | 2,018,424  |      |   | 2,115,247 |  |   | (96,823   | ) |  | (4.6 | %)
|Farm                     |  |      | 1,057,575  |      |   | 1,047,755 |  |   | 9,820     |   |  | 0.9  | % 
|Marine                   |  |      | 333,680    |      |   | 292,538   |  |   | 41,142    |   |  | 14.1 | % 
|                         |  |      |            |      |   |           |  |   |           |   |  |      |   
|                         |  | $    | 10,962,905 |      | $ | 9,552,875 |  | $ | 1,410,030 |   |  | 14.8 | % 
|                         |  |      |            |      |   |           |  |   |           |   |  |      |   

The Michigan market continues to remain soft in both personal and commercial lines. Except for
commercial lines, all other segments were able to increase direct premium written during the first quarter of 2007. Direct premium written for the personal segment increased 23.9%, driven by the personal automobile segment, which was up 36.0% and
the homeowner segment which was up 14.1%. The personal segment experienced increases in both new business premiums which were up 66.6% and renewal premiums which were up 14.9%. During the first quarter of 2007, the homeowner product line was added
to our web-based rating platform, Fremont Complete, which contributed to the increase in homeowner new business of 61.1%. From a personal lines standpoint, the Companys independent agents are now able to quote and issue homeowner and personal
auto policies through Fremont Complete which is a significant driver behind the premium growth in the personal segment.

The commercial
segments direct premium written decreased 4.6%. Of the Companys four segments the commercial segment is most affected by the soft market. Although commercial new business premium was up 13.0% during the first quarter our renewal premiums
decreased 7.1%. The drop in renewal premiums is driven by the fact that commercial rates continue to erode in the marketplace which presents a significant challenge to the Company in terms of profitably growing the commercial segment. In addition to
the softening rate environment, the decline in commercial premium was also impacted by an audit premium reduction of over $60,000 due to decreased payroll on one of our larger commercial accounts. Farm direct premium written was up .9%, driven by an
increase in renewal premiums of 1.2% offset by a reduction in new business premiums of 5.6%. Direct premium written for the marine segment increased 14.1%, with new business premiums up 15.3% and renewal premiums up 14.2%.



17



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##### Table of Contents

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



|                      |  |      |           |      |   |           |  |   |           |   |  |      |   
|--------------------- |  | ---- | --------- | ---- | - | --------- |  | - | --------- | - |  | ---- | --
|                      |  | 2007 |           | 2006 |   | $ Change  |  |   | % Change  |  
|Net Premiums Written: |  |      |           |      |   |           |  |   |           |   |  |      |   
|Personal              |  | $    | 5,836,688 |      | $ | 4,716,637 |  | $ | 1,120,051 |   |  | 23.7 | % 
|Commercial            |  |      | 1,626,866 |      |   | 1,716,146 |  |   | (89,280   | ) |  | (5.2 | %)
|Farm                  |  |      | 884,294   |      |   | 865,590   |  |   | 18,704    |   |  | 2.2  | % 
|Marine                |  |      | 283,961   |      |   | 246,382   |  |   | 37,579    |   |  | 15.3 | % 
|                      |  |      |           |      |   |           |  |   |           |   |  |      |   
|                      |  | $    | 8,631,809 |      | $ | 7,544,755 |  | $ | 1,087,054 |   |  | 14.4 | % 
|                      |  |      |           |      |   |           |  |   |           |   |  |      |   

The increase in net premiums written was impacted by an increase of approximately $1,410,000 due
to the overall increase in direct premiums written offset by an increase of $323,000 in ceded premiums written under the Companys reinsurance agreements.

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



|                     |  |      |            |      |   |           |  |   |          |   |  |      |   
|-------------------- |  | ---- | ---------- | ---- | - | --------- |  | - | -------- | - |  | ---- | --
|                     |  | 2007 |            | 2006 |   | $ Change  |  |   | % Change |  
|Net Premiums Earned: |  |      |            |      |   |           |  |   |          |   |  |      |   
|Personal             |  | $    | 6,955,775  |      | $ | 6,198,978 |  | $ | 756,797  |   |  | 12.2 | % 
|Commercial           |  |      | 1,805,555  |      |   | 1,937,864 |  |   | (132,309 | ) |  | (6.8 | %)
|Farm                 |  |      | 1,079,520  |      |   | 1,024,541 |  |   | 54,979   |   |  | 5.4  | % 
|Marine               |  |      | 424,443    |      |   | 392,212   |  |   | 32,231   |   |  | 8.2  | % 
|                     |  |      |            |      |   |           |  |   |          |   |  |      |   
|                     |  | $    | 10,265,293 |      | $ | 9,553,595 |  | $ | 711,698  |   |  | 7.4  | % 
|                     |  |      |            |      |   |           |  |   |          |   |  |      |   

The increase in net premiums earned was impacted by an increase of approximately $1,025,000 due to
the overall increase in direct premiums earned offset by an increase of $313,000 in ceded premiums earned under the Companys reinsurance agreements.



18



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##### Table of Contents

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:



|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -------- |  | - | --------- | - |  | ----- | --
|                                |  | 2007 |           |   | 2006 |   |           | $ Change |  |   | % Change  |  
|Loss and LAE:                   |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Personal                        |  | $    | 4,165,283 |   |      | $ | 2,938,461 |          |  | $ | 1,226,822 |   |  | 41.8  | % 
|Commercial                      |  |      | 1,098,391 |   |      |   | 1,366,839 |          |  |   | (268,448  | ) |  | (19.6 | %)
|Farm                            |  |      | 512,646   |   |      |   | 222,396   |          |  |   | 290,250   |   |  | 130.5 | % 
|Marine                          |  |      | 54,350    |   |      |   | 6,497     |          |  |   | 47,853    |   |  | 736.5 | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|                                |  | $    | 5,830,670 |   |      | $ | 4,534,193 |          |  | $ | 1,296,477 |   |  | 28.6  | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Incurred Claim Count:           |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Personal                        |  |      | 1,650     |   |      |   | 1,371     |          |  |   | 279       |   |  | 20.4  | % 
|Commercial                      |  |      | 169       |   |      |   | 163       |          |  |   | 6         |   |  | 3.7   | % 
|Farm                            |  |      | 72        |   |      |   | 91        |          |  |   | (19       | ) |  | (20.9 | %)
|Marine                          |  |      | 33        |   |      |   | 29        |          |  |   | 4         |   |  | 13.8  | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|                                |  |      | 1,924     |   |      |   | 1,654     |          |  |   | 270       |   |  | 16.3  | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Average Loss and LAE per Claim: |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Personal                        |  | $    | 2,524     |   |      | $ | 2,143     |          |  | $ | 381       |   |  | 17.8  | % 
|Commercial                      |  |      | 6,499     |   |      |   | 8,386     |          |  |   | (1,886    | ) |  | (22.5 | %)
|Farm                            |  |      | 7,120     |   |      |   | 2,444     |          |  |   | 4,676     |   |  | 191.3 | % 
|Marine                          |  |      | 1,647     |   |      |   | 224       |          |  |   | 1,423     |   |  | 635.1 | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|                                |  | $    | 3,030     |   |      | $ | 2,741     |          |  | $ | 289       |   |  | 10.5  | % 
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Loss and LAE Ratio:             |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|Personal                        |  |      | 59.9      | % |      |   | 47.4      | %        |  |   |           |   |  |       |   
|Commercial                      |  |      | 60.8      | % |      |   | 70.5      | %        |  |   |           |   |  |       |   
|Farm                            |  |      | 47.5      | % |      |   | 21.7      | %        |  |   |           |   |  |       |   
|Marine                          |  |      | 12.8      | % |      |   | 1.7       | %        |  |   |           |   |  |       |   
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   
|                                |  |      | 56.8      | % |      |   | 47.5      | %        |  |   |           |   |  |       |   
|                                |  |      |           |   |      |   |           |          |  |   |           |   |  |       |   

The personal segment experienced an increase in incurred loss and loss adjusting expense as well
as the loss and LAE ratio driven by increased severity in the homeowner product line coupled with increased claim frequency in the personal auto line. The homeowner line experienced increased loss severity driven by fire losses, snow and ice damage
as well as water damage losses as a result of the colder winter weather. During the first quarter of 2007 Michigan experienced a more normalized winter weather pattern evidenced by consistent below-freezing temperatures and significant snow
accumulation. As a result of the colder temperatures the Company experienced increased fire related losses attributable to insureds increased utilization of home heating systems and candle burning. The colder temperatures also increased the
severity of claims resulting from freezing pipes and the associated water damage. Snow and ice damage also increased due to the weather. During the first quarter of 2006 Michigan did not experience the consistent below freezing temperatures as those
experienced in 2007 which resulted in lower claim severity in 2006. Fire, ice and snow and water damage related losses account for approximately $660,000 of the increase in loss and LAE for the personal segment. Loss and LAE from personal auto
physical damage increased $452,000 due to increased frequency driven by volume growth in this line. The personal auto lines direct premiums written increased 36% during the first quarter of 2007 as compared to 2006. The vast majority of the
increase in the incurred claim count for the personal segment was from increased personal auto claims. The commercial segment experienced a decline in incurred loss and LAE as well as the loss and LAE ratio due to a drop in claim severity primarily
in the businessowners product line. The farm segment experienced higher loss and LAE during the quarter due to an increase in losses attributable to the weather conditions experienced in the 2007 quarter.



19



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##### Table of Contents

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



|                                                         |  |      |            |   |      |   |           |        |  |   |          |   |  |      |  
|-------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | ------ |  | - | -------- | - |  | ---- | -
|                                                         |  | 2007 |            |   | 2006 |   |           | Change |  |   | % Change |  
|Amortization of deferred policy acquisition costs        |  | $    | 1,799,993  |   |      | $ | 1,674,555 |        |  | $ | 125,438  |   |  | 7.5  | %
|Other underwriting expenses                              |  |      | 2,048,141  |   |      |   | 1,633,591 |        |  |   | 414,550  |   |  | 25.4 | %
|                                                         |  |      |            |   |      |   |           |        |  |   |          |   |  |      |  
|Total policy acquisition and other underwriting expenses |  | $    | 3,848,134  |   |      | $ | 3,308,146 |        |  | $ | 539,988  |   |  | 16.3 | %
|                                                         |  |      |            |   |      |   |           |        |  |   |          |   |  |      |  
|Net premiums earned                                      |  | $    | 10,265,293 |   |      | $ | 9,553,595 |        |  | $ | 711,698  |   |  | 7.4  | %
|                                                         |  |      |            |   |      |   |           |        |  |   |          |   |  |      |  
|Expense ratio                                            |  |      | 37.5       | % |      |   | 34.6      | %      |  |   | 2.9      | % |  |      |  
|                                                         |  |      |            |   |      |   |           |        |  |   |          |   |  |      |  

Amortization of deferred policy acquisition costs increased during the first quarter of 2007 as
compared to the same period in 2006 as a result of increased earned premium volume. The increase in other underwriting expenses was caused by increased compensation expense ($86,000), higher depreciation ($108,000) and increased legal and auditing
fees ($90,000). Furthermore, in 2006 other underwriting expenses included approximately $172,000 in premium tax refunds on prior year amended returns. Compensation expense increased due to annual merit increases, an increase in compensation
allocated to other underwriting expenses and increased expense associated with the vesting of stock options.

The increase in depreciation
is due to the Companys continued investment in its web-based rating platform  Fremont Complete. Fremont Complete is a significant technological step forward for the Company and provides a strong foundation for future growth. Not only
does the rating platform enhance the ease of doing business with our agency force it also provides a direct inter-phase between our independent agents management systems and the Companys policy processing system.

As of December 31, 2006, the personal auto and businessowner product lines were available through Fremont Complete. During the first quarter of
2007 we rolled out our homeowner and mobilowner product lines and we are in the testing phase for rolling out our marine product line. Through March 31, 2007, we have invested over $1,386,000 in Fremont Complete. Feedback from our agency force
has been very positive and we continue to experience growth in the product lines which are available through Fremont Complete. Moving forward we will continue to evaluate adding additional product lines to the web-based platform. The Company
recognizes the fact that the additional depreciation of the development costs puts pressure on our expense ratio over the short term particularly during the current soft market. However, from a longer term perspective Fremont Complete provides a
robust processing infrastructure which is necessary for the Company to achieve its long-term growth goals.

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:



|                                               |  |      |            |   |      |   |            |        |  |   |           |   |  |       |   
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ------ |  | - | --------- | - |  | ----- | --
|                                               |  | 2007 |            |   | 2006 |   |            | Change |  |   | % Change  |  
|Fixed maturities                               |  | $    | 500,693    |   |      | $ | 449,090    |        |  | $ | 51,603    |   |  | 11.5  | % 
|Equity securities                              |  |      | 11,319     |   |      |   | 20,989     |        |  |   | (9,670    | ) |  | (46.1 | %)
|Cash and cash equivalents                      |  |      | 57,579     |   |      |   | 29,781     |        |  |   | 27,798    |   |  | 93.3  | % 
|                                               |  |      |            |   |      |   |            |        |  |   |           |   |  |       |   
|Gross investment income                        |  |      | 569,591    |   |      |   | 499,860    |        |  |   | 69,731    |   |  | 14.0  | % 
|Less: Investment expenses                      |  |      | (78,184    | ) |      |   | (80,092    | )      |  |   | (1,908    | ) |  | (2.4  | %)
|                                               |  |      |            |   |      |   |            |        |  |   |           |   |  |       |   
|Net investment income                          |  | $    | 491,407    |   |      | $ | 419,768    |        |  | $ | 71,639    |   |  | 17.1  | % 
|                                               |  |      |            |   |      |   |            |        |  |   |           |   |  |       |   
|Average invested assets (amortized cost basis) |  | $    | 59,868,294 |   |      | $ | 52,644,105 |        |  | $ | 7,224,189 |   |  | 13.7  | % 
|                                               |  |      |            |   |      |   |            |        |  |   |           |   |  |       |   
|Rate of return on average invested assets      |  |      | 3.3        | % |      |   | 3.2        | %      |  |   | 0.1       | % |  |       |   
|                                               |  |      |            |   |      |   |            |        |  |   |           |   |  |       |   

Gross investment income on a pre-tax basis from fixed maturities increased approximately $52,000
in the first quarter as a result of two factors. First, approximately two-thirds of the increase was due to growth in the invested assets from 2006 to 2007. The remainder of the increase was due to higher yields earned by the
portfolio. The average portfolio yield increased in the first quarter of 2007 compared to the same period in 2006 as lower yielding securities which had been purchased in prior years matured, and the proceeds were reinvested into securities
carrying higher yields. On an after-tax basis, the increase in gross investment income was greater than on a pre-tax basis because a larger portion of the portfolio assets are now invested in tax-exempt securities than in 2006. Yields on the
portfolio can be calculated on a tax-equivalent basis to make direct comparisons between time periods with different tax-exempt allocations. The tax-equivalent portfolio yield was 4.93% at the end of the first quarter of 2007 as compared to
4.54% at the end of the first quarter of 2006. This increase is due to two factors mentioned above: maturing securities being reinvested at higher



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yields, and an increase in tax-exempt security holdings which carry higher tax-equivalent yields than taxable securities. The decrease in investment income
from the equity portfolio is largely driven by the shift within the portfolio from holding common and preferred stocks to holding mutual funds. During the quarter ended March 31, 2006 the Company received dividends from common and preferred
stocks it held during this time. Whereas during the quarter ended March 31, 2007 the Company only held mutual funds which typically do not pay dividends. Investment income from cash and cash equivalents was higher during the first quarter of
2007 due to higher yields and the fact that the Company increased its holding of shorter term cash equivalents in contemplation of paying off surplus notes in September 2007.

Investment expenses decreased slightly driven by a decline in compensation expense allocated to investment activities. As a result of the items above,
the annualized rate of return on average invested assets increased to 3.3% during the first quarter of 2007 from 3.2% during the same period in 2006.

During the three months ended March 31, 2007 the Company recorded net realized gains from the equity portfolio of approximately $28,000. During the three months ended March 31, 2006 the Company realized a
net gain on the sale of fixed maturity and equity securities of approximately $13,000 and $305,000, respectively, for a total net realized gain of approximately $318,000. Realized gains were higher during 2006 as a result of increased equity sales
due to the Companys strategy in 2006 to shift the equity portfolio from common and preferred stocks to mutual funds. This shift was substantially completed as of March 31, 2006. During 2007 there has not been significant selling activity
within the portfolio.

Interest Expense. Interest expense decreased $26,000 during the three months ended March 31, 2007
as compared to the same period in 2006. The decrease is due to the fact that the Company is no longer incurring interest expense related to the funds withheld account balance associated with the previously commuted quota share reinsurance agreement.
The quota share reinsurance contract, which was commuted on March 31, 2006, was structured on a funds withheld basis and required the Company to accrue interest at an annual rate of 2.5%.

Income Tax Expense. During the three months ended March 31, 2007 and 2006 the Company recorded income tax expense of approximately
$356,000 and $808,000, respectively. The decrease is due to a decline in pre-tax income in the 2007 period compared to the prior year period. The effective tax rate for the three months ended March 31, 2007 was 30.7% compared to 32.7% in the
prior year period. The decrease in the effective tax rate is due increased tax-exempt interest income received during the first quarter of 2007 compared to 2006.

Liquidity and Capital Resources

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

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

Cash flow used in operations was $576,000 and $558,000 for the three months ended March 31, 2007 and 2006, respectively, an increase of $18,000.
During the three months ended March 31, 2007 as compared to the same period in 2006, net premiums collected increased $699,000, net loss and LAE payments increased $580,000, policy acquisition and other underwriting expenses paid increased
$310,000 and federal income taxes paid decreased $175,000. Other cash used in operations increased $2,000 during the three months ended March 31, 2007 compared to the same period in 2006.

During the three months ended March 31, 2007 cash flow used in investing activities was $788,000 while during the same period in 2006 cash flow
provided by investing activities was $404,000. The shift in cash flow used in investing activities is due to lower selling activity within the investment portfolio in 2007 compared to 2006. During the 2006 period the Company was shifting the equity
portfolio out of common and preferred stocks and into mutual funds.

Our debt structure consists of Series B Surplus Notes which carry a 7
percent interest rate and mature on September 30, 2007. At March 31, 2007 and December 31, 2006, there were $2,890,000 Series B Surplus Notes outstanding. The Company intends to repay the surplus notes at maturity with existing funds
held in cash and cash equivalents coupled with cash generated from operations.

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



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The cost or amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of
investments at March 31, 2007 and December 31, 2006 are as follows:



|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|------------------------------------------------------------------------------------- |  | -------------------- | ---------- | -------------------- | - | --------------------- |  | ------------------- | ------- |  | - | ----------
|                                                                                      |  | March 31, 2007      
|                                                                                      |  | Cost orAmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFair Value
|Fixed maturities:                                                                     |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 6,091,167  |                      | $ | 2,623                 |  | $                   | 71,108  |  | $ | 6,022,682 
|States and political subdivisions                                                     |  |                      | 13,385,118 |                      |   | 18,444                |  |                     | 47,222  |  |   | 13,356,340
|Corporate securities                                                                  |  |                      | 11,539,777 |                      |   | 1,428                 |  |                     | 259,057 |  |   | 11,282,148
|Mortgage-backed securities                                                            |  |                      | 14,911,022 |                      |   | 76,317                |  |                     | 182,174 |  |   | 14,805,165
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|                                                                                      |  |                      | 45,927,084 |                      |   | 98,812                |  |                     | 559,561 |  |   | 45,466,335
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|Equity securities - mutual funds                                                      |  |                      | 9,979,905  |                      |   | 2,099,191             |  |                     |        |  |   | 12,079,096
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|Total                                                                                 |  | $                    | 55,906,989 |                      | $ | 2,198,003             |  | $                   | 559,561 |  | $ | 57,545,431
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|                                                                                      | 
|                                                                                      |  | December 31, 2006   
|                                                                                      |  | Cost orAmortizedCost |            | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedFair Value
|Fixed maturities:                                                                     |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 6,074,385  |                      | $ | 2,756                 |  | $                   | 87,898  |  | $ | 5,989,243 
|States and political subdivisions                                                     |  |                      | 13,414,841 |                      |   | 37,133                |  |                     | 47,155  |  |   | 13,404,819
|Corporate securities                                                                  |  |                      | 11,058,724 |                      |   | 901                   |  |                     | 305,359 |  |   | 10,754,266
|Mortgage-backed securities                                                            |  |                      | 14,965,481 |                      |   | 69,226                |  |                     | 223,769 |  |   | 14,810,938
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|                                                                                      |  |                      | 45,513,431 |                      |   | 110,016               |  |                     | 664,181 |  |   | 44,959,266
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|Equity securities - common stocks and mutual funds                                    |  |                      | 9,940,606  |                      |   | 1,756,784             |  |                     | 7,634   |  |   | 11,689,756
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           
|Total                                                                                 |  | $                    | 55,454,037 |                      | $ | 1,866,800             |  | $                   | 671,815 |  | $ | 56,649,022
|                                                                                      |  |                      |            |                      |   |                       |  |                     |         |  |   |           

At March 31, 2007, corporate securities accounted for 25% of our fixed maturity portfolio,
mortgage backed securities were 33%, states and political subdivisions were 29% and U. S. government and government agency bonds were 13%. At March 31, 2007, our equity portfolio, which consists entirely of mutual funds, was spread among the
following mutual fund types: large-cap  22%, mid-cap  24%, small-cap  28% and international  27%.

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, 2007 were generally determined to have temporary declines in value due to geopolitical reasons or a reaction to their particular industry rather than fundamental reasons. Fixed maturity securities with unrealized losses at
March 31, 2007 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.



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The following table summarizes the length of time securities with unrealized losses at March 31,
2007 have been in an unrealized loss position:



|                                                                                      |  |                     |           |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |        
|------------------------------------------------------------------------------------- |  | ------------------- | --------- | --------------------- | - | ------------------- |  | --------------------- | ---------- | ------------------- | - | --------------------- |  | - | ---------- |  | - | -------
|                                                                                      |  | Less than 12 Months |           | 12 Months or More     |   | Total              
|                                                                                      |  | EstimatedFair Value |           | GrossUnrealizedLosses |   | EstimatedFair Value |  | GrossUnrealizedLosses |            | EstimatedFair Value |   | GrossUnrealizedLosses
|Fixed maturities:                                                                     |  |                     |           |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |        
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                   |          |                       | $ |                    |  | $                     | 5,139,825  |                     | $ | 71,108                |  | $ | 5,139,825  |  | $ | 71,108 
|States and political subdivisions                                                     |  |                     | 6,120,408 |                       |   | 34,903              |  |                       | 2,106,296  |                     |   | 12,319                |  |   | 8,226,704  |  |   | 47,222 
|Corporate securities                                                                  |  |                     | 496,345   |                       |   | 6,350               |  |                       | 10,377,496 |                     |   | 252,707               |  |   | 10,873,841 |  |   | 259,057
|Mortgage-backed securities                                                            |  |                     | 1,689,790 |                       |   | 8,653               |  |                       | 8,457,436  |                     |   | 173,521               |  |   | 10,147,226 |  |   | 182,174
|                                                                                      |  |                     |           |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |        
|                                                                                      |  |                     | 8,306,543 |                       |   | 49,906              |  |                       | 26,081,053 |                     |   | 509,655               |  |   | 34,387,596 |  |   | 559,561
|                                                                                      |  |                     |           |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |        
|Common stocks and mutual funds                                                        |  |                     |          |                       |   |                    |  |                       |           |                     |   |                      |  |   |           |  |   |       
|                                                                                      |  |                     |           |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |        
|Total                                                                                 |  | $                   | 8,306,543 |                       | $ | 49,906              |  | $                     | 26,081,053 |                     | $ | 509,655               |  | $ | 34,387,596 |  | $ | 559,561
|                                                                                      |  |                     |           |                       |   |                     |  |                       |            |                     |   |                       |  |   |            |  |   |        

Changes in Interest Rates

Fluctuations in near-term interest rates could have an impact on our results of operations and cash flows due to some rate sensitive investments we hold. Certain fixed maturity securities have call features that allow
the issuer to pre-pay the obligation. In a declining interest rate environment, these securities may be called by their issuer and can only be replaced with similar securities bearing lower interest rates. In a rising interest rate environment,
because of our strategy of holding these securities to maturity, our ability to invest in higher yielding securities would be limited.

Effects of
Inflation

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

Contractual Obligations and Commitments

There were no material changes outside the ordinary course of our business in our
contractual obligations during the three months ended March 31, 2007.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

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

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



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|               |  |                |        |                |   |        |  
|-------------- |  | -------------- | ------ | -------------- | - | ------ | -
|Change in Rate |  | PortfolioValue |        | Change inValue |  
|               |  | (In thousands) |       
|2%             |  | $              | 41,745 |                | $ | (3,721 | )
|1%             |  |                | 43,647 |                |   | (1,819 | )
|0              |  |                | 45,466 |                |   |       |  
|-1%            |  |                | 47,203 |                |   | 1,737  |  
|-2%            |  |                | 48,857 |                |   | 3,391  |  

Credit Risk. At March 31, 2007, all of our fixed maturity securities were rated
by Moodys as investment grade with an average credit quality rating of AA+ and an average duration of 3.8 years.

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

ITEM 4. CONTROLS AND PROCEDURES.

The Company maintains disclosure controls and procedures designed to
ensure that information required to be disclosed in the Companys reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms, and that such information is accumulated and communicated to the Companys management, including its Chief Executive Officer and Vice President of Finance, as appropriate, to allow for timely decisions
regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures.

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

PART IIOTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is party to litigation in the normal course of business. Based
upon information presently available to us, we do not consider any litigation to be material. 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, 2006.

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

We do not intend to pay dividends in
the foreseeable future and cannot assure our shareholders that dividends will be paid in the future. The Holding Companys principal source of cash available for payment of dividends is dividends from the Insurance Company. The payment of
dividends by the Insurance Company is subject to limitations imposed by the Michigan Insurance Code. The Insurance Company may not pay an extraordinary dividend unless it notifies the Insurance Commissioner and she does not disapprove the payment.
An extraordinary dividend includes any dividend which, when taken together with other dividends paid within the preceding 12 months, exceeds the greater of 10% of the Insurance Companys statutory policyholders surplus as of
December 31 of the immediately preceding year or its statutory net income, excluding realized capital gains, for the 12-month period ending December 31 of the immediately preceding year. During the year ended December 31, 2007, the
Insurance Company can pay a non-extraordinary dividend of up to $3,367,000 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



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statutory earned surplus. Also, dividends may not exceed the amount of the Insurance Companys statutory capital stock account in any one-year unless it
meets certain other requirements.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

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

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.



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



|       |  |                                                                                                            
|------ |  | -----------------------------------------------------------------------------------------------------------
|NUMBER |  | TITLE                                                                                                      
|       | 
|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 9, 2007 |  |  |  | By:                               |  | /s/ Richard E. Dunning
|                  |  |  |  |                                   |  |                        |  | Richard E. Dunning President and Chief Executive
Officer                               
|                  |  |  | 
|Date: May 9, 2007 |  |  |  | By:                               |  | /s/ Kevin G. Kaastra  
|                  |  |  |  |                                   |  |                        |  | Kevin G. Kaastra Vice President of Finance
(principal financial and accounting officer)



26