UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                                       OR

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

                  For the Quarterly Period Ended June 30, 2000
                          Commission File Number 1-7461

                       ACCEPTANCE INSURANCE COMPANIES INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                   31-0742926
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                   Identification Number)


222 South 15th Street, Suite 600 North
          Omaha, Nebraska                               68102
 (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (402) 344-8800

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 has been required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.

                       YES   X                   NO

The number of shares of each class of the Registrant's common stock outstanding
on August 4, 2000 was:

         Class of Common Stock                  No. of Shares Outstanding
         ______________________                 __________________________
      Common Stock, $.40 Par Value                    14,308,290


<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES


                                    FORM 10-Q

                                TABLE OF CONTENTS




PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements:

                  Consolidated Balance Sheets
                  June 30, 2000 and December 31, 1999

                  Consolidated Statements of Operations
                  Three Months and Six Months Ended June 30, 2000 and 1999

                  Consolidated Statements of Cash Flows
                  Six Months Ended June 30, 2000 and 1999

                  Notes to Interim Consolidated Financial Statements

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

         Item 3.  Quantitative and Qualitative Disclosure about Market Risk

PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings

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

         Item 6.  Exhibits and Reports on Form 8-K

         Signatures

         Exhibit Index


<PAGE>



PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)
<TABLE>
<CAPTION>


                                                                                      June 30,    December 31,
                                                                                         2000        1999
                                                                                    ____________ ______________
<S>                                                                               <C>            <C>
         ASSETS
Investments:
   Fixed maturities available-for-sale, at fair value......................       $  248,690     $   250,389
   Marketable equity securities - preferred stock available-for-sale, at
       fair value..........................................................           13,287          14,178
   Marketable equity securities - common stock available-for-sale, at
       fair value..........................................................            7,521          10,903
   Mortgage loan ..........................................................            8,662           8,914
   Real estate...........................................................              3,055           3,182
   Short-term investments, at cost, which approximates  market.............           73,787         104,702
   Restricted short-term investments, at cost, which approximates market..            31,350          31,350
                                                                                  ___________    ____________
                                                                                     386,352         423,618

Cash.......................................................................           15,188           2,579
Receivables, net...........................................................          167,609         177,296
Income tax receivable......................................................              --           14,177
Reinsurance recoverable on unpaid losses and loss adjustment expenses......          363,340         502,537
Prepaid reinsurance premiums...............................................           47,349          54,888
Property and equipment, net................................................           19,036          18,723
Deferred policy acquisition costs..........................................            9,995          17,495
Excess of cost over acquired net assets....................................           28,031          28,515
Deferred income tax........................................................           28,380          27,387
Other assets...............................................................           22,880          11,097
                                                                                  ___________     ___________
       Total assets........................................................       $1,088,160      $1,278,312
                                                                                  ===========     ===========

         LIABILITIES AND STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses........................................       $  623,378      $  781,377
Unearned premiums..........................................................           89,998         127,938
Amounts payable to reinsurers..............................................           72,528          49,224
Accounts payable and accrued liabilities...................................           24,302          41,400
Company-obligated mandatorily redeemable Preferred Securities of
  AICI  Capital Trust, holding solely Junior Subordinated Debentures
  of the Company...........................................................           94,875          94,875
                                                                                  ___________     ___________
    Total liabilities     .................................................          905,081       1,094,814
Common stock subject to redemption ........................................            2,652           2,540
Stockholders' equity:
   Preferred stock, no par value, 5,000,000 shares  authorized, none issued             --              --
   Common stock, $.40 par value, 40,000,000
     shares authorized; 15,536,377 and 15,494,334  shares issued...........            6,215           6,198
   Capital in excess of par value..........................................          199,070         198,932
   Accumulated other comprehensive income (loss), net of tax..............           (10,771)        (12,568)
   Retained earnings.......................................................           14,841          17,212
   Common stock subject to redemption....................................             (2,652)         (2,540)
   Treasury stock, at cost, 1,209,520 shares..............................           (26,047)        (26,047)
   Contingent stock, 20,396 shares........................................              (229)           (229)
                                                                                  ___________     ___________
     Total stockholders' equity............................................          180,427         180,958
                                                                                  ___________     ___________
     Total liabilities and stockholders' equity............................       $1,088,160      $1,278,312
                                                                                  ===========     ===========
</TABLE>

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

<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands except per share data)
        for the three months and six months ended June 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                       Three Months               Six Months
                                                                                  _______________________     ____________________
                                                                                     2000         1999          2000         1999
                                                                                   ________      _______      ________    ________
<S>                                                                                <C>           <C>          <C>         <C>
Revenues:
   Insurance premiums earned...................................................... $ 41,912      $58,001      $ 94,308    $111,572
   Net investment income..........................................................    6,056        6,394        11,474      12,638
   Net realized capital gains.....................................................      101        2,862         1,666       5,342
                                                                                   _________     ________     ________    ________
                                                                                     48,069       67,257       107,448     129,552
Costs and expenses:
   Costs of revenues:
    Insurance losses and loss adjustment expenses.................................   34,943       41,955        74,656      78,831
    Insurance underwriting expenses...............................................   11,529       17,089        31,828      35,257
    General and administrative expenses...........................................      671          637         1,160       1,190
                                                                                   _________     ________     _________   ________
                                                                                     47,143       59,681       107,644     115,278
                                                                                   _________     ________     _________   ________
Operating profit (loss)...........................................................      926        7,576          (196)     14,274
                                                                                   _________     ________     _________   ________

Other income (expense):
    Interest expense..............................................................   (2,168)      (2,270)       (4,336)     (4,660)
    Other, net....................................................................      --             7           --           21
                                                                                   _________     ________     _________   _________
                                                                                     (2,168)      (2,263)       (4,336)     (4,639)
Income (loss) before income taxes and cumulative effect
   of change in accounting principle  .......................................        (1,242)       5,313        (4,532)      9,635
Income tax expense (benefit):
   Current........................................................................        5          262          (197)     (2,305)
   Deferred................................................................            (727)       1,150        (1,925)      4,677
                                                                                   _________     ________     _________   _________

Income (loss) before cumulative effect of change in
  accounting principle.......................................................          (520)       3,901        (2,410)      7,263

Cumulative effect of change in accounting principle..........................           --           --            --          338
                                                                                   __________    ________     _________    ________

Net income (loss)............................................................      $   (520)     $ 3,901      $ (2,410)   $  6,925
                                                                                   ==========    ========     =========   =========
Income (loss) per share:
   Basic:
    Income (loss) before cumulative effect of change in
       accounting principle..................................................      $   (.04)     $   .27      $   (.17)   $    .51

   Cumulative effect of change in accounting principle.......................            --          --             --        (.02)
   Net income (loss).........................................................          (.04)         .27          (.17)        .49

   Diluted:
    Income (loss) before cumulative effect of change in
     accounting principle....................................................      $   (.04)    $   .27       $   (.17)   $    .51
    Cumulative effect of change in accounting principle......................            --          --             --        (.02)
    Net income (loss).........................................................         (.04)        .27           (.17)        .48

</TABLE>

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


<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                 for the six months ended June 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                         2000             1999
                                                                                      __________      ___________
<S>                                                                                   <C>             <C>
Cash flows from operating activities:
   Net income (loss)...............................................................   $  (2,410)      $    6,925
   Adjustments to reconcile net income (loss) to net cash from
     operating activities..........................................................     (26,059)          (9,828)
                                                                                      __________      ___________

       Net cash from operating activities..........................................     (28,469)          (2,903)
                                                                                      __________      ___________

Cash flows from investing activities:
   Proceeds from sales of investments available-for-sale.........................        39,519           89,930
   Proceeds from sales of short-term investments...................................      33,715             --
   Proceeds from maturities of short-term investments .............................       1,337            6,570
   Proceeds from maturities of investments available-for-sale......................       5,797           31,575
   Purchases of short-term investments.............................................     (90,413)         (25,701)
   Purchases of investments available-for-sale.....................................     (34,924)        (129,155)
   Other, net......................................................................      (1,926)          (4,152)
                                                                                      ___________     ___________

        Net cash from investing activities.........................................     (46,895)         (30,933)
                                                                                      ___________     ___________


Cash flows from financing activities:
   Repayment of bank borrowings..................................................           --           (15,000)
   Proceeds from issuance of common stock..........................................         155              192
                                                                                       __________     ___________

        Net cash from financing activities.........................................         155          (14,808)
                                                                                       __________     ___________

Net increase (decrease) in cash and short-term investments.........................     (75,209)         (48,644)
Cash and short-term investments at beginning of period.............................     105,724           72,822
                                                                                       __________     ___________

Cash and short-term investments at end of period...................................   $  30,515       $   24,178
                                                                                      ===========     ===========
Supplemental disclosure of cash flow information:
   Cash paid during the period for interest........................................   $   4,270       $    4,733
                                                                                      ===========     ===========
   Cash paid during the period for income taxes....................................   $    --         $      --
                                                                                      ===========     ===========

</TABLE>


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





<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS


1. Summary of Significant Accounting Policies:

   Principles of Consolidation

   The Company's consolidated financial statements include the accounts of
   Acceptance Insurance Companies Inc. and its majority-owned subsidiaries
   (the "Company").  All significant intercompany transactions have been
   eliminated.

   General

   The accompanying consolidated financial statements reflect all adjustments,
   consisting only of normal recurring adjustments except as otherwise
   disclosed, which in the opinion of management are considered necessary to
   fairly present the Company's financial position as of June 30, 2000 and
   December 31, 1999, and the results of operations for the three months and
   six months ended June 30, 2000 and 1999 and cash flows for the six months
   ended June 30, 2000 and 1999. The results of operations for the three and
   six months ended June 30, 2000 and 1999 are not necessarily indicative of
   the results to be expected for the full year.

   The unaudited consolidated financial statements shall be read in conjunction
   with the consolidated financial statements included in the Company's annual
   report on Form 10-K for the year ended December 31, 1999.

   Statements of Cash Flows

   The Company aggregates cash and short-term investments with maturity dates
   of three months or less from the date of purchase for purposes of reporting
   cash flows.  As of June 30, 2000 approximately $58,460,000 of short-term
   investments had a maturity date at acquisition of greater than three months.
   Restricted short-term investments are not considered a cash equivalent.

   Restricted Short-Term Investments

   The restricted short-term investments balance is comprised of investments
   deposited with a trustee for the Company's issuance of an outstanding
   letter of credit relating to reinsurance coverage on certain crop insurance
   products.

   Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board (FASB) issued
   Statement of Financial Accounting Standards No. 133 (SFAS No. 133),
   "Accounting for Derivative Instruments and Hedging Activities", which
   establishes accounting and reporting standards for derivative instruments,
   including certain derivative instruments embedded in other contracts, and
   for hedging activities. SFAS No. 133 is effective for all fiscal quarters
   of fiscal years beginning after June 15, 2000.  The Company has not
   completed the process of evaluating the impact of the adoption of SFAS
   No. 133 on the Company's consolidated financial statements.

   Change in Accounting Principle

   In December 1997, the Accounting Standards Executive Committee of the
   American Institute of Certified Public Accountants (AcSEC) issued Statement
   of Position 97-3, "Accounting by Insurance and Other Enterprises for
   Insurance-Related Assessments" (SOP 97-3). SOP 97-3 provides guidance for
   determining when an entity should recognize a liability for guaranty-fund
   and other insurance-related assessments, how to measure that liability,
   and when an asset may be recognized for the recovery of such assessments
   through premium tax offsets. The Company adopted SOP 97-3 on January 1,
   1999 resulting in a cumulative effect of change in accounting principles
   of $338,000.

   Reclassifications

   Certain prior period amounts have been reclassified to conform with current
   year presentation.

<PAGE>

              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
          NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, Continued


2. Investments:

   The amortized cost and related estimated fair values of investments in the
   accompanying balance sheets are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                   Gross         Gross         Estimated
                                                   Amortized     Unrealized     Unrealized       Fair
                                                     Cost          Gains         Losses          Value
                                                 __________      __________     __________   ___________
<S>                                              <C>             <C>            <C>          <C>
June 30, 2000:
   Fixed maturities available-for-sale:
   U.S. Treasury and government
     securities.............................     $ 108,475       $    195       $  2,148     $  106,522
   States, municipalities and political
     subdivisions...........................       108,382             60          4,246        104,196
   Mortgage-backed securities...............        18,919             --          1,666         17,253
   Other debt securities....................        23,184             39          2,504         20,719
                                                 __________      ___________    __________   ____________
                                                 $ 258,960       $    294       $ 10,564     $  248,690
                                                 ==========      ===========    ==========   ============

   Marketable equity securities -
     preferred stock........................     $  15,111       $     45       $  1,869     $   13,287
                                                 ==========      ===========    ==========   ============

   Marketable equity securities -
     common stock...........................     $  11,997       $    128       $  4,604     $    7,521
                                                 ==========      ===========    ==========   ============

December 31, 1999:
   Fixed maturities available-for-sale:
   U.S. Treasury and government
     securities.............................     $  87,421       $     31       $  2,358     $   85,094
   States, municipalities and political
     subdivisions...........................       132,805            323          6,933        126,195
   Mortgage-backed securities...............        19,191             --          1,368         17,823
   Other debt securities....................        24,902             --          3,625         21,277
                                                 __________      ___________    __________   ____________

                                                 $ 264,319       $    354       $ 14,284     $  250,389
                                                 ===========     ===========    ==========   ============

   Marketable equity securities -
     preferred stock........................     $  15,111       $     87       $  1,020     $   14,178
                                                 ===========     ===========    ==========   ============

   Marketable equity securities -
     common stock...........................     $  15,377       $  1,241       $  5,715     $   10,903
                                                 ===========     ===========    ==========   ============
</TABLE>



<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
          NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, Continued


3.       Insurance Premiums and Claims:

         Insurance premiums written and earned by the Company's insurance
         subsidiaries for the three months and six months  ended June 30, 2000
         and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                     Three Months               Six Months
                                                                                _______________________    ____________________
                                                                                   2000          1999         2000       1999
                                                                                __________    _________    _________  _________
               <S>                                                              <C>           <C>          <C>        <C>
               Direct premiums written..........................................$ 139,157     $ 158,877    $ 251,583  $  280,524
               Assumed premiums written.........................................    7,183         7,990       10,803      12,457
               Ceded premiums written........................................... (121,215)     (109,886)    (198,479)   (184,948)
                                                                                __________    __________   __________ __________
                  Net premiums written..........................................$  25,125     $  56,981    $  63,907  $  108,033
                                                                                ==========    ==========   ========== ==========

               Direct premiums earned...........................................$ 157,750     $ 159,093    $ 284,104  $  285,892
               Assumed premiums earned..........................................    7,172        10,215       16,221      16,712
               Ceded premiums earned............................................ (123,010)     (111,307)    (206,017)   (191,032)
                                                                                __________    __________   __________ ___________
                  Net premiums earned ..........................................$  41,912     $  58,001    $  94,308  $  111,572
                                                                                ==========    ==========   ========== ===========

</TABLE>

              Insurance losses and loss adjustment expenses have been reduced
              by recoveries recognized under reinsurance contracts of  $65.1
              million and $127.6 million for the three months ended June 30,
              2000 and 1999,  respectively.  Insurance losses and loss
              adjustment expenses have been reduced by recoveries recognized
              under reinsurance contracts of $152.0 million and $190.1 million
              for the six months ended June 30, 2000 and 1999, respectively.

4.       Commitments and Contingencies:

         The Company is involved in various insurance related claims arising
         from the normal conduct of business. Management believes that the
         outcome of these proceedings will not have a material adverse effect
         on the consolidated financial statements of the Company.

         The Company was a defendant in a class-action lawsuit filed in August
         1999 and transferred to the Arkansas United States District Court.
         Plaintiffs in this suit asserted the Company made false
         representations and engaged in deceptive trade practices related to
         the Company's 1999 CropRevenue CoveragePlus (R) coverage for rice. The
         plaintiffs sought compensatory damages, interest, attorney fees and
         all appropriate damages or relief. The District Court denied
         plaintiffs' request for class action status on March 10, 2000. On May
         1, 2000 representatives of the putative class, consisting of all
         persons who applied for CropRevenueCoveragePlus(R) rice coverage
         during 1999, entered into a settlement agreement with the Company.
         Under the agreement, the Company recognized a class for settlement
         purposes only and paid the settlement class $3.7 million in exchange
         for a complete, immediate, unconditional release from all class
         members and dismissal of this suit.  During the three months ending
         June 30, 2000 the Court approved this settlement, the settlement was
         completed and this suit was dismissed with prejudice. During 2000, the
         Company expensed approximately $4.0 million for this settlement and
         related costs.

         In December 1999, the Company and certain of its officers and
         directors were sued in the Nebraska United States District Court by a
         plaintiff alleging, on behalf of a putative class of persons who
         purchased the Company's common stock during the period from July 29,
         1997 to November 16, 1999, that the Company knowingly and
         intentionally understated the Company's liabilities  and made untrue
         statements of material fact in order to maintain the market price of
         the Company's common stock at artificially high levels. Subsequently
         several additional actions making substantially identical allegations
         as to both the Company's common stock and the Company's Redeemable
         Preferred Securities also were filed in the Nebraska United States
         District Court. Plaintiffs in all actions seek compensatory damages,
         interest, costs and attorney fees. On April 24, 2000 the Court entered
         an order consolidating all such actions presently known to the Company
         as In Re Acceptance Insurance Companies Securities Litigation Master
         File No. 8:99CV547  and appointed  Lead Plaintiffs and Co-Lead Counsel
         as required by law. On June 16, 1999 plantiffs filed a single amended
         and consolidated complaint with respect to all of these actions.
         While the Company believes these actions are without merit, and
         intends to defend the pending suits vigorously, the ultimate outcome
         of this litigation cannot be predicted at this time and the Company
         currently is unable to determine the potential effect on the Company's
         financial position, results of operations or cash flows.


<PAGE>

              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
          NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, Continued


5.       Company-Obligated Mandatorily Redeemable Preferred Securities of AICI
         Capital Trust, Holding Solely Junior Subordinated Debentures of the
         Company:

         In August 1997, AICI Capital Trust, a Delaware business trust
         organized by the Company (the "Issuer Trust") issued 3.795 million
         shares or $94.875 million aggregate liquidation amount of its 9%
         Preferred Securities (liquidation amount $25 per Preferred Security).
         The Company owns all of the common securities (the "Common
         Securities") of the Issuer Trust.  The Preferred Securities represent
         preferred undivided beneficial interests in the Issuer Trust's assets.
         The assets of the Issuer Trust consist solely of the Company's 9%
         Junior Subordinated Debentures due in 2027, which were issued
         in August 1997 in an amount equal to the total of the Preferred
         Securities and the Common Securities.

         Distributions on the Preferred Securities and Junior Subordinated
         Debentures are cumulative, accrue from the date of issuance and are
         payable quarterly in arrears.  The Junior Subordinated Debentures are
         subordinate and junior in right of payment to all senior indebtedness
         of the Company and are subject to certain events of default and can be
         called at par value after September 30, 2002,  all as described in the
         Junior Debenture Indenture.  At June 30, 2000, the Company had
         Preferred Securities of $94.875 million outstanding at a weighted
         average interest cost of  9.1%.

6.       Income Taxes:

         The Company recognizes a net deferred tax asset or liability for all
         temporary differences and a related valuation allowance when
         realization of the asset is uncertain.  The valuation allowance at
         June 30, 2000 and December 31, 1999 relates to capital loss items.
         The net deferred tax asset as of June 30, is as follows
         (in thousands):
<TABLE>
<CAPTION>

                                                                                            June 30,       December 31,
                                                                                             2000             1999
                                                                                          ___________      ___________
        <S>                                                                               <C>               <C>
        Unpaid losses and loss adjustment expenses.................................       $   9,155         $ 11,075
        Unearned premiums..........................................................           2,985            5,113
        Allowances for doubtful accounts...........................................           2,595            2,463
        Net operating loss carryforward............................... . . . . . .           11,024            6,109
        Unrealized loss on marketable equity securities available-for-sale. . . . .           2,205            1,892
        Unrealized loss on fixed maturities available-for-sale......... . . . . . .           3,595            4,876
        Other......................................................................           5,913            5,389
                                                                                          __________        _________
        Deferred tax asset. . . . . . . . . . . . . . . . . . . . . . . . .  . . ..          37,472           36,917
                                                                                          __________        _________

        Deferred policy acquisition costs..........................................          (3,498)          (6,123)
        Other......................................................................          (5,519)          (3,332)
                                                                                          __________        _________
        Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (9,017)          (9,455)
                                                                                          __________        _________
                                                                                             28,455           27,462

        Valuation allowance........................................................             (75)             (75)
                                                                                          __________        _________
        Net deferred tax asset.....................................................       $  28,380         $ 27,387
                                                                                          ==========        =========
</TABLE>


<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
          NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, Continued

Income taxes computed by applying statutory rates to income before income
taxes are reconciled to the provision for income taxes set forth in the
consolidated financial statements as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                June 30,
                                                                                        __________________________
                                                                                            2000           1999
                                                                                        ___________     __________
        <S>                                                                             <C>             <C>
        Computed U.S. federal income taxes.........................................     $  (1,586)      $   3,372
        Nondeductible amortization of goodwill and other intangibles..........                198             226
        Tax-exempt interest income............................................               (880)         (1,271)
        Dividends received deduction..........................................               (200)           (341)
        State income tax......................................................               (197)            164
        Other......................................................................           543             222
                                                                                        ___________     __________
           Income tax expense (benefit)....................................             $  (2,122)      $   2,372
                                                                                        ===========     ==========
</TABLE>

7.      Net Income (Loss) Per Share:

        The net income (loss) per share for both basic and diluted for the
        three months and six months ended June 30, 2000 and 1999 are as follows
        (in thousands except per share data):

<TABLE>
<CAPTION>

                                                                                       Three Months              Six Months
                                                                                 _______________________    ____________________
                                                                                     2000         1999         2000       1999
                                                                                 _________     _________    _________   ________
        <S>                                                                      <C>           <C>          <C>         <C>
        Income (loss) before cumulative effect of change in accounting principle $   (520)     $   3,901    $ (2,410)   $  7,263
        Cumulative effect of change in accounting principle                           --             --          --          338
                                                                                 _________     _________    _________   ________
        Net income (loss)                                                        $   (520)     $   3,901    $ (2,410)   $  6,925
                                                                                 =========     =========    =========   ========

        Weighted average common shares outstanding                                 14,300         14,245      14,292      14,243
             Dilutive effect of contingent shares                                    --               21         --           21
             Dilutive effect of stock options                                        --               29         --           54
                                                                                 _________     __________   _________   _________


        Diluted weighted average common and equivalent shares outstanding          14,300         14,295      14,292      14,318
                                                                                 =========     ==========   ==========  =========

        Income (loss) per share:
             Basic:
                Income (loss) before cumulative effect of change in
                  accounting principle                                           $   (.04)     $     .27    $   (.17)   $    .51
             Cumulative effect of change in accounting principle                       --            --          --         (.02)
             Net income (loss)                                                       (.04)           .27        (.17)        .49

             Diluted:
                Income (loss) before cumulative effect of change in
                      accounting principle                                       $   (.04)     $     .27    $   (.17)   $    .51
                Cumulative effect of change in accounting principle                    --             --         --         (.02)
                Net income (loss)                                                    (.04)           .27        (.17)        .48

</TABLE>
<PAGE>


              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
          NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, Continued



8.      Other Comprehensive Income (Loss):

        Other comprehensive income (loss) determined in accordance with SFAS
        No. 130 for the three months and six months ended June 30, 2000 and
        1999 are as follows (in thousands):

<TABLE>
<CAPTION>                                                               Three Months             Six Months
                                                                   ______________________    ____________________
                                                                      2000         1999         2000      1999
                                                                   __________   _________    _________  _________

        <S>                                                        <C>          <C>          <C>        <C>
        Net income (loss)                                          $   (520)    $  3,901     $ (2,410)  $  6,925

        Unrealized holding  gains (losses) of investments,
          net of reclassification adjustment                           (259)      (3,706)       2,765     (9,432)
        Income tax expense (benefit)                                    (90)      (1,297)         968     (3,301)
                                                                   __________   _________   __________  _________

                                                                       (169)      (2,409)       1,797     (6,131)
                                                                   __________   _________   __________  _________

        Other comprehensive income (loss)                          $   (689)    $  1,492     $   (613)  $    794
                                                                   ==========   =========    =========  =========
</TABLE>




9.      Business Segments:

        The Company is engaged in the specialty property and casualty and the
        crop insurance business. The property and casualty insurance segment
        primarily consists of commercial property, commercial casualty, inland
        marine and workers' compensation. The principal lines of the crop
        insurance segment are MPCI, supplemental coverages and named peril
        insurance.

        The accounting policies of the segments are the same as those described
        in the summary of significant accounting policies (see Note 1).
        Management evaluates the performance of and allocates its resources to
        its operating segments based on income before income taxes. Interest
        income and interest expense are primarily allocated to segments based
        upon estimated investments and capital, respectively. For the three
        months and six months ended June 30, 2000 and 1999, there were no
        material intersegment transactions.  Management does not utilize assets
        as a significant measurement tool for evaluating segments.

<PAGE>



              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
          NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, Continued


        Segment revenues and segment operating profit (loss) for the three
        months and six months ended June 30, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              Three Months                            Six Months
                                                   ____________________________________   ____________________________________
                                                   Property and                           Property and
                                                   Casualty       Crop                    Casualty      Crop
                                                   Insurance      Insurance     Total     Insurance     Insurance     Total
                                                   ___________   __________   _________    __________  __________    _________
        <S>                                        <C>           <C>          <C>          <C>          <C>          <C>
                                    2000
        Revenues                                   $  41,972     $   6,097    $  48,069    $  91,865    $ 15,583     $107,448
                                                   ==========    ==========   ==========   ==========   =========    =========

        Operating profit (loss)                         (259)        1,185          926         (517)        321         (196)

        Interest expense and other                       667         1,501        2,168        1,334       3,002        4,336
                                                   __________    __________   __________   __________   _________    _________

        Income (loss) before income taxes          $    (926)    $    (316)   $  (1,242)   $  (1,851)   $ (2,681)    $ (4,532)
                                                   ==========    ==========   ==========   ===========  =========    =========


                                  1999
        Revenues                                   $  62,883     $   4,374    $  67,257    $ 124,006    $  5,546     $129,552
                                                   ==========    ==========   ==========   ===========  =========    =========

        Operating profit (loss)                        6,118         1,458        7,576       11,629       2,645       14,274

        Interest expense and other                     1,367           896        2,263        2,802       1,837        4,639
                                                   __________    __________   __________   __________   _________   __________

        Income before income taxes and
        cumulative effect of change in
        accounting principle                       $   4,751     $     562    $   5,313    $   8,827    $    808     $  9,635
                                                   ==========    ==========   ==========   ==========   =========    =========

</TABLE>


10.    Sale of Redland Insurance Company:

       In April 2000, the Company signed a definitive agreement to sell
       Redland Insurance Company ("Redland") to Clarendon National Insurance
       Company ("Clarendon").This sale closed effective as of July 1,
       2000. This transaction includes the appointment of other Company
       subsidiaries as the exclusive producer and administrator of Redland for
       the business the Company currently writes through Redland. The Company
       will also reinsure certain portions of the business written by Redland
       in the future, and the Company and Clarendon may jointly develop
       additional specialty program business through Redland. The sale was a
       cash transaction of approximately $10.8 million based upon the market
       value of Redland after the divestiture of  various assets, including the
       Redland subsidiaries to a wholly owned subsidiary of Acceptance
       Insurance Companies Inc. At closing, the Company pledged approximately
       $87 million of investments to Clarendon to secure the Company's
       obligations under reinsurance agreements. The Company does not
       expect to realize a significant gain or loss from the transaction.

<PAGE>


PART I.
ITEM 2.
              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of
operations of the Company and its consolidated subsidiaries should be read in
conjunction with the Company's Interim Consolidated Financial Statements and
the notes thereto included elsewhere herein.


Forward-Looking Information

Except for the historical information contained in this Quarterly Report on
Form 10-Q, matters discussed herein may constitute forward-looking information,
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking information reflects the Company's current best estimates
regarding future operations, but, since these are only estimates, actual
results may differ materially from such estimates.

A variety of events, most of which are outside the Company's control, cannot be
accurately predicted and may materially impact estimates of future operations.
Important among such factors are weather conditions, natural disasters, changes
in commodity prices,  changes in state and federal regulations, price
competition impacting premium levels, changes in tax laws, financial market
performance, changes in court decisions effecting coverages and general
economic conditions.

The Company's results are significantly impacted by its crop business,
particularly its MPCI line.  Estimated results from the crop lines are
not generally recorded until the fourth quarter of the year, after crops are
harvested and final market prices are established.  Crop segment results are
particularly dependent on events beyond the Company's control, notably weather
conditions during the crop growing seasons in the states where the Company
writes a substantial amount of its crop insurance, the market price of grains
on various commodity exchanges and overall worldwide supply and demand, the
continuing globalization of the crop industry and its effect on the export of
crops to other countries and the volatility of crop prices resulting from
domestic and foreign policy decisions.  Additionally, federal regulations
governing aspects of crop insurance are frequently modified, and any such
changes may impact crop insurance results.

Forward-looking information set forth herein does not take into account any
impact from any adverse weather conditions during the 2000 crop season, or the
various other factors noted below which may affect crop and noncrop operation
results.

General

The Company underwrites its insurance products through five wholly owned
insurance company subsidiaries: Acceptance Insurance Company ("Acceptance
Insurance"), Acceptance Indemnity Insurance Company ("Acceptance Indemnity"),
Acceptance Casualty Insurance Company ("Acceptance Casualty"), American Growers
Insurance Company ('American Growers") and Redland Insurance Company
("Redland") (collectively referred to herein as the "Insurance Companies").
Redland was sold effective July 1, 2000(see "Sale of Redland Insurance
Company"). The Company continues to focus its emphasis on its crop segment
which has recorded operating profits during each of the last six years. The
principal lines of the Company's crop insurance segment are MPCI, supplemental
coverages,  and named peril insurance.  MPCI is a federally subsidized risk
management program designed to encourage farmers to manage their risk through
the purchase of insurance policies.  MPCI provides farmers with yield coverage
for crop damage from substantially all natural perils.  CRC is an extension of
the MPCI program which provides farmers with protection from revenue loss
caused by changes in crop prices, low yields or both.  As used herein, the
term MPCI includes CRC, unless the context indicates otherwise.

<PAGE>

The accounting treatment for MPCI is different than the more traditional
property and casualty insurance lines.  For income statement purposes, gross
premiums written consist of the aggregate amount of MPCI premiums paid by
farmers, and does not include any related federal premium subsidies. The
Company's profit or loss from its MPCI business is determined after the crop
season ends on the basis of a profit sharing formula established by law and the
RMA.  For income statement purposes, any such profit share earned by the
Company, net of the cost of third party reinsurance, is shown as net premiums
written, which equals net premiums earned for MPCI business; whereas, any
share of losses payable by the Company is charged to losses and loss adjustment
expenses.  Due to various factors, including timing and severity of losses from
storms and other natural perils and crop production cycles, the profit or loss
on MPCI premiums is primarily recognized in the fourth quarter of the year.
The Company relies on loss information from the field to determine (utilizing a
formula established by the RMA) the level of losses that should be considered
in estimating the profit or loss during this period.  Based upon available loss
information, the Company has historically recorded an estimate of the profit or
loss during the third quarter and then re-evaluated the estimate using
additional loss information available.  Due to the nature of several of the
CRC products whereby results are based on the market prices of various
commodities in the fourth quarter, as well as yields,  and the increasing
significance of CRC as a percentage of MPCI, the Company intends to now record
its initial estimate of the profit or loss for the 2000 crop results in the
fourth quarter of 2000.

Certain characteristics of the Company's crop business may affect comparisons,
including: (i) the seasonal nature of the business whereby profits or losses
generally can not be estimated until the fourth quarter of the year; (ii) the
nature of crop business whereby losses are known within a one year period; and
(iii) the limited amount of investment income associated with crop business.
In addition, cash flows from such business differ from cash flows from certain
more traditional lines.  With the Company's increased emphasis on the crop
segment, the seasonal and short term nature of the Company's crop business, as
well as the impact on the crop business of weather and other natural perils,
may produce more volatility in the Company's operating results on a quarter to
quarter or year to year basis than has historically been the case.

Results of Operations
                 Three Months and Six Months Ended June 30, 2000
           Compared to Three Months and Six Months Ended June 30, 1999

The Company's net income decreased from $3.9 million and $6.9 million for the
three months and six months ended June 30, 1999 to  net losses of $.5 million
and $2.4 million  for the three months and six months ended June 30, 2000. The
reduction in net income was primarily a result of the development of  CRCPlus
losses, the decrease in investment income and realized gains, an increase in
the loss ratio in the Company's property and casualty segment, and a
$4.0 million charge related to the settlement of the class action suit by rice
producers in the first quarter of 2000.  Partially offsetting these effects was
the additional profit sharing recognized in the current year under the
Company's 1999 MPCI program.

The underwriting loss in the Company's crop segment increased by approximately
$2.0 million in the six months ended June 30, 2000 in comparison to the same
period in 1999.  The results for 2000 include a $4.0 million expense related to
the settlement of the class action suit by rice producers. Additionally, the
three and six months ended June 30,  2000 results include $2.0 million and
$6.9 million, respectively, in underwriting charges related to loss development
resulting from higher than expected payments on the settlement of CRCPlus
losses. The results for the crop segment also included approximately $2.6
million and $9.3 million  in underwriting profits recognized in the three and
six months ended June 30, 2000, respectively,  primarily related to an increase
in the estimated 1999 MPCI profit share.

The Company's property and casualty segment was impacted in  2000 by the sale
of its nonstandard automobile business in third quarter of 1999, and by the
transfer in the first quarter of 2000 of renewal rights for all business
previously produced and serviced by the Company's Scottsdale, Arizona office
and for its "long haul" trucking business.  Accordingly, gross written premiums
and net earned premiums decreased approximately 43% and 32%, respectively,
during the second quarter of 2000 compared to the same period in 1999 and
decreased approximately 38% and 25%,  respectively, during the six months ended
June 30, 2000 compared to the same period in 1999.  The Company expects further
reductions in property and casualty segment premiums as approximately 68% of
the net earned premiums for the six months ended June 30, 2000 are from
discontinued lines of business. The underwriting loss for the three months and
six months ended June 30, 2000 in the Company's property and casualty segment
was approximately $3.4 million and $7.5 million higher than the same periods in
the previous year.  This was attributable to an increase in the loss ratio from
approximately 70% and 69% in the three months and six months ended June 30,
1999 compared to approximately 80% for the same periods in 2000.  The six
months ended June 30, 2000 loss ratio of  80% is impacted by the 86% loss
ratio on discontinued lines.  The loss ratio for continuing lines for the six
months ended June 30, 2000 is approximately 67%.
<PAGE>

The Company's net investment income declined from approximately $6.4 million
and $12.6 million during the  three months and six months ended June 30, 1999
to $6.1 million and $11.5 million during the same period in  2000.  This
decline in investment income was primarily affected by a decline in the size
of the average outstanding portfolio of the Company from approximately $482
million and $485 million during the three months and six months ended June 30,
1999 to $410 million and $420 million in the same periods in 2000.


LIQUIDITY AND CAPITAL RESOURCES

The Company - Parent Only

As an insurance holding company, the Company's assets consist primarily of the
capital stock of its subsidiaries, surplus notes issued by two of its insurance
company subsidiaries and investments held at the holding company level.  The
Company's primary sources of liquidity are receipts from interest payments on
the surplus notes, payments from the profit sharing agreement with American
Agrisurance, the Company's wholly owned subsidiary which operates as the
general agent for the Company's crop insurance programs, tax sharing payments
from its subsidiaries, investment income from, and proceeds from the sale of,
holding company investments, and dividends and other distributions from
subsidiaries of the Company.  The Company's liquidity needs are primarily to
service debt, pay operating expenses and taxes, make investments in
subsidiaries, and repurchase shares of the Company's stock.

The Company currently holds two surplus notes, each in the amount of $20
million, issued by two of its insurance company subsidiaries, bearing interest
at the rate of  9% per annum payable quarterly.  Although repayment of all or
part of the principal of these surplus notes requires prior insurance
department approval, no prior approval of interest payment is currently
required.

Under the American Agrisurance profit sharing agreement, American Agrisurance
receives up to 50% of the crop insurance profit after certain expenses and a
margin retained by the Insurance Companies based upon a formula established by
the Company and approved by the Nebraska Department of Insurance. If the
calculated profit share is negative, such negative amounts are carried forward
and offset future profit sharing payments. These amounts are distributed from
time to time in the form of a dividend to the Company.

Dividends from the Insurance Companies are regulated by the regulatory
authorities of the states in which each subsidiary is domiciled.  The laws of
such states generally restrict dividends from insurance companies to parent
companies to certain statutorily approved limits.  For the first six months of
2000, the statutory limitation on dividends from the Insurance Companies to the
Company without further insurance departmental approval was approximately $7.4
million. Effective July 1, 2000, with the transactions related to the  sale of
Redland complete, the statutory limitation on dividends from the Insurance
Companies to the Company without further insurance department approval
increased to approximately $21.8 million for the remainder of 2000. This
increase resulted from the additional dividends that are available from
American Growers.

The Company is currently a party to a tax sharing agreement with its
subsidiaries, under which such subsidiaries pay the Company amounts in general
equal to the federal income tax that would be payable by such subsidiaries on
a stand-alone basis.
<PAGE>

In August 1997, AICI Capital Trust, a Delaware business trust organized by the
Company (the "Issuer Trust") issued 3.795 million shares or $94.875 million
aggregate liquidation amount of its 9% Preferred Securities (liquidation amount
$25 per Preferred Security).  The Company owns all of the common securities
(the "Common Securities") of the Issuer Trust.  The Preferred Securities
represent preferred undivided beneficial interests in the Issuer Trust's
assets.  The assets of the Issuer Trust consist solely of the Company's 9%
Junior Subordinated Debentures due in 2027 which were issued in August 1997 in
an amount equal to the total of the Preferred Securities and the Common
Securities.  Distributions on the Preferred Securities and Junior Subordinated
Debentures are cumulative, accrue from the date of issuance and are payable
quarterly in arrears.  The Junior Subordinated Debentures are subordinate and
junior in right of payment to all senior indebtedness of the Company and are
subject to certain events of default and redemptive provisions, all as
described in the Junior Debenture Indenture.  At June 30, 2000, the Company
had Preferred Securities of $94.875 million outstanding at a weighted average
interest cost of 9.1%.

During the first quarter of 2000, the Company replaced its $31.4 million Credit
Facility with a Security and Letter Loan Agreement for the same amount. The
entire amount of this loan was used as security for an existing outstanding
letter of credit relating to reinsurance coverage on certain crop insurance
products. Under this Agreement, the Company was not required to pledge the
stock of Redland Insurance Company or Acceptance Insurance Company, restrict
payment of dividends, or maintain certain financial covenants, all of which
were required by the previous Credit Facility. The Company believes the $20
million surplus note payment to it in December 1999 by one of its Insurance
Companies and the transfer of $20 million from Acceptance Insurance Company to
American Growers Insurance Company in December of 1999 in the form of a surplus
note have met the short-term capital needs of the Company.  The Company
continually reviews its capital needs and the surplus needs of the Insurance
Companies and from time to time may seek additional funding which may include,
among other things, an account receivable financing at the Insurance Companies
level, a new bank line of credit,  placement of equity or debt securities, or
the disposition or acquisition of certain lines of property and casualty
operations to satisfy liquidity needs that may arise in the future.

Insurance Companies

The principal liquidity needs of the Insurance Companies are to fund losses
and loss adjustment expense payments and to pay underwriting expenses,
including commissions and other expenses.  The available sources to fund these
requirements are net premiums received and, to a lesser extent, cash flows from
the Company's investment activities, which together have been adequate to meet
such requirements on a timely basis.  The Company monitors the cash flows of
the Insurance Companies and attempts to maintain sufficient cash to meet
current operating expenses, and to structure its investment portfolio at a
duration which approximates the estimated cash requirements for payments of
losses and loss adjustment expenses.

Cash flows from the Company's crop  business differs in certain respects from
cash flows associated with more traditional property and casualty lines.  MPCI
premiums are not received from farmers until the covered crops are harvested,
and when received are remitted within approximately 30 days of receipt by the
Company in full to the government.  Covered losses are paid by the Company
during the growing season as incurred, with such expenditures reimbursed by the
government within three business days.  Policy acquisition and administration
expenses are paid by the Company as incurred during the year.  The Company
periodically throughout the year receives a payment in reimbursement of its
policy acquisition and administration expenses.
<PAGE>
The Company's profit or loss from its MPCI business is determined after the
crop season ends on the basis of a profit sharing formula established by law
and the RMA.  Commencing with the 1997 year, the Company receives a profit
share in cash, with 60% of the amount in excess of 17.5% of its MPCI Retention
(as defined in the profit sharing agreement) in any year carried forward to
future years, or it must pay its share of losses.   The Company received $51.5
million in payments under the MPCI program in March of 1999.The Company
received a net payment of approximately $62.5 million under the MPCI program in
March of 2000.

The Company's losses and loss adjustment expense reserve estimate established
represents management's best estimate based on currently available evidence. An
independent actuarial study was completed as of June 30, 2000 and the study
disclosed the Company's estimate was above the actuary's point estimate and
within their recommended range.  Even with such extensive analyses, however,
the Company's lines of business are considered less predictable than standard
insurance coverages and, thus, its ultimate liability may from time to time
vary from such estimates.

Changes in Financial Condition

The Company's stockholders' equity decreased by approximately $.5  million at
June 30, 2000  as compared to December 31, 1999.  The principal component of
this decrease was the net loss of approximately $2.4 million for the six months
 ended June 30, 2000. This decrease was partially offset by an increase in the
value of the Company's investment portfolio causing the unrealized loss on
available-for-sale securities, net of tax, to decrease from $12.6 million at
December 31, 1999 to $10.8 million at June 30, 2000.

Consolidated Cash Flows

Cash used by operating activities was $28.5 million for the six months ended
June 30, 2000 compared to $2.9 million the same period in 1999.  This decrease
in cash flow from period to period was primarily a result of the declining
premium volume in the Company's property and casualty segment and loss payments
related to CRCPlus.

Inflation

The Company does not believe that inflation has had a material impact on its
financial condition or the results of operations.

Sale of Redland Insurance Company

In April 2000, the Company signed a definitive agreement to sell  Redland to
Clarendon National Insurance Company ("Clarendon"). This sale closed effective
as of July 1, 2000.  The transaction includes the appointment of other Company
subsidiaries as the exclusive producer and administrator of Redland for the
business the Company currently writes through Redland. The Company will also
reinsure certain portions of the business written by Redland in the future,
 and the Company and Clarendon may jointly develop additional specialty program
business through Redland. The sale was a cash transaction of approximately
$10.8 million based upon the market value of Redland after  the divestiture of
various assets, including the Redland subsidiaries to a wholly owned subsidiary
of Acceptance Insurance Companies Inc. At closing, the Company pledged
approximately $87 million of investments to Clarendon to secure the Company's
obligations under reinsurance agreements. The Company does not expect to
realize a significant gain or loss from the transaction.  The Company retained
an option to repurchase Redland under certain circumstances.  Redland is
expected to cede most of its business to Clarendon which maintains the rating
of A (Excellent) rating from A.M. Best. The Company  pursued the transaction as
part of its overall strategy to focus its property and casualty operations on
core lines of profitable specialty business and to meet the requirements of
current and future agents and customers for insurance products issued by an
insurance company that is rated A- or better by A.M. Best.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133 (SFAS No. 133), " Accounting for
Derivative Instruments and Hedging Activities", which establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. The Company has not completed the process of evaluating
the impact of the adoption of SFAS No. 133 on the Company's consolidated
financial statements.

<PAGE>




PART I
ITEM 3.

 Quantitative and Qualitative Disclosure about Market Risk

The Company's balance sheet includes a significant amount of assets and
liabilities whose fair value are subject to market risk. Market risk is the
risk of loss arising from adverse changes in market interest rates or prices.
The Company currently has interest rate risk as it relates to its fixed
maturity securities and mortgage loans and equity price risk as it relates to
its marketable equity securities. In addition, the Company is also subject to
interest rate risk at the time of refinancing as it relates to its mandatorily
redeemable Preferred Securities. The Company's market risk sensitive
instruments are entered into for purposes other than trading.

At June 30, 2000, the Company had $257.4 million of fixed maturity investments
and mortgage loans and $20.8 million of marketable equity securities that were
subject to market risk. The Company's investment strategy is to manage the
duration of the portfolio relative to the duration of the liabilities while
managing interest rate risk. In addition, the Company has the ability to hold
its fixed maturity investments until maturity and therefore would not expect to
realize a material adverse impact on income or cash flows.

The Company's Preferred Securities of $94.875 million at June 30, 2000, mature
in August 2027 and are redeemable at the Company's option in September 2002.
The Company will continue to monitor the interest rate environment and evaluate
refinancing opportunities as the redemption and maturity date approaches.

The Company uses two models to analyze the sensitivity of its market risk
assets and liabilities. For its fixed maturity securities, mortgage loans and
mandatorily redeemable Preferred Securities, the Company uses duration
modeling to calculate changes in fair value. For its marketable equity
securities, the Company uses a hypothetical 20% decrease in the fair value of
these securities. Actual results may differ from the hypothetical results
assumed in this disclosure due to possible actions taken by management to
mitigate adverse changes in fair value and because fair values of  securities
may be affected by credit concerns of the issuer, prepayment speeds, liquidity
of the security and other general market conditions. The sensitivity analysis
duration model used by the Company produces a loss in fair value of $10.6
million on its fixed maturity securities and mortgage loans and a decrease in
fair value of $5.4 million on its mandatorily redeemable Preferred Securities,
based on a 100 basis point increase in interest rates. The  hypothetical 20%
decrease in fair value of the Company's marketable equity securities produces
a loss in fair value of $4.2 million.

<PAGE>



ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

The Company was a defendant in a class action lawsuit filed in August 1999 and
transferred to the Arkansas United States District Court. Plaintiffs in this
suit asserted the Company made false representations and engaged in deceptive
trade practices related to the Company's 1999 CropRevenue CoveragePlus (R)
coverage for rice. The plaintiffs sought compensatory damages, interest,
attorney fees and all appropriate damages or relief. The District Court
denied plaintiffs' request for class action status on March 10, 2000. On May
1, 2000 representatives of the putative class, consisting of all persons who
applied for CropRevenueCoveragePlus(R) rice coverage during 1999, entered into
a settlement agreement with the Company.  Under the agreement, the Company
recognized a class for settlement purposes only and paid the settlement class
$3.7 million in exchange for a complete, immediate, unconditional release from
all class members and dismissal of this suit.  During the three months ending
June 30, 2000 the Court approved this settlement, the settlement was completed
and this suit was dismissed with prejudice. During 2000, the Company expensed
approximately $4.0 million for this settlement and related costs.

In December 1999, the Company and certain of its officers and directors were
sued in the Nebraska United States District Court by a plaintiff alleging, on
behalf of a putative class of persons who purchased the Company's common stock
during the period from July 29, 1997 to November 16, 1999, that the Company
knowingly and intentionally understated the Company's liabilities  and made
untrue statements of material fact in order to maintain the market price of the
Company's common stock at artificially high levels. Subsequently several
additional actions making substantially identical allegations  as to both the
Company's common stock and the Company's Redeemable Preferred Securities also
were filed in the Nebraska United States District Court. Plaintiffs in all
actions seek compensatory damages, interest, costs and attorney fees. On
April 24, 2000 the Court entered an order consolidating all such actions
presently known to the Company as  In Re Acceptance Insurance Companies
Securities Litigation Master File No. 8:99CV547  and appointed  Lead Plaintiffs
and Co-  Lead Counsel as required by law. On June 16, 1999 plantiffs filed a
single amended and consolidated complaint with respect to all of these actions.
While the Company believes these actions are without merit, and intends to
defend the pending suits vigorously, the ultimate outcome of this litigation
cannot be predicted at this time and the Company currently is unable to
determine the potential effect on the Company's financial position, results of
operations or cash flows.

<PAGE>

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

         The Registrant's Annual Meeting of shareholders was held on May 24,
         2000, and the following matters were submitted to a vote of
         shareholders at such Annual Meeting.

         At the Annual Meeting, seven Directors nominees were elected by
         shareholders to serve as Directors until the next Annual Meeting
         of shareholders, and until their successors are named.  The number of
         votes for each such Director and the number of votes withheld for
         each Director are set forth below:


                  Name                        Number of Votes
                                              For              Withheld
                  Jay A. Bielfield            12,430,587       582,928
                  Edward W. Elliott, Jr.      12,432,162       579,778
                  Michael R. McCarthy         12,129,662       887,739
                  John P. Nelson              12,360,954       656,447
                  R.L. Richards               12,430,583       586,818
                  David L. Treadwell          12,430,262       587,139
                  Doug T. Valassis            12,430,564       586,837

         A proposal to approve the adoption of  the Company's 2000 Stock Option
         Plan was submitted to the shareholders at the Annual Meeting.  The
         voting results of this proposal are as follows:

                  FOR                          7,402,320
                  AGAINST                      2,638,976
                  ABSTAIN                         46,116

         A proposal to ratify the grant of stock options to Michael R. McCarthy
         was submitted to the shareholders at the Annual Meeting. The voting
         results of this proposal are as follows:

                  FOR                          7,777,912
                  AGAINST                      2,267,538
                  ABSTAIN                         41,962

         A proposal to ratify the grant of stock options to John E. Martin was
         submitted to the shareholders at the Annual Meeting.  The voting
         results of this proposal are as follows:

                  FOR                          8,322,244
                  AGAINST                      1,711,219
                  ABSTAIN                         53,949

         Also submitted to shareholders at such Annual Meeting was a proposal
         to ratify the appointment of Deloitte and Touche LLP as the Company's
         principal independent public accountants for 2000.  The voting results
        of such proposal are as follows:

                  FOR                         12,826,957
                  AGAINST                        169,499
                  ABSTAIN                         20,951


Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  See Exhibit Index.

         (b)      Form 8-K

                  The following Current Reports on Form 8-K have been filed
                  during the last fiscal quarter of the period covered by this
                  report:

                                    Financial Statements    Date of
         Item                       Filed                   Report

         Item 5. Other Events.      No                      April 12, 2000

         Item 5. Other Events.      No                      May 1, 2000

<PAGE>


                                   SIGNATURES


Pursuant to the requirements of  Section 13 or 15(d) 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.



                                ACCEPTANCE INSURANCE COMPANIES INC.


                                By:      /s/  JOHN E. MARTIN
Dated:   August 11 , 2000       ______________________________________

                                John E. Martin
                                President and Chief Executive Officer


                                By:      /s/ JOHN E. MARTIN
Dated:   August 11, 2000        ______________________________________________

                                John E. Martin
                                Acting Chief Financial Officer and Treasurer *

*Mr. Martin currently is Acting Chief Financial Officer and Treasurer.
Dwayne D. Hallman has accepted the Company's offer of employment and is
expected to be appointed Chief Financial Officer and Treasurer effective
September 1, 2000.

<PAGE>



              ACCEPTANCE INSURANCE COMPANIES INC. AND SUBSIDIARIES
                          QUARTERLY REPORT ON FORM 10-Q
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000

                                  EXHIBIT INDEX


NUMBER            EXHIBIT DESCRIPTION



27                Financial Data Schedule.