=================================================================

               SECURITIES AND EXCHANGE COMMISSION

                     WASHINGTON, D.C.  20549

                            FORM 10-Q

     [XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF 
          THE SECURITIES EXCHANGE ACT OF 1934
          
          For the Quarterly Period Ended March 31, 1997

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

                  Commission File Number 1-7461

               ACCEPTANCE INSURANCE COMPANIES INC.
     (Exact name for 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 St., Suite 600 N.
      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 was required to file
such reports), and  (2) has been subject to such filing
requirements for the past 90 days.

          YES   XX                 NO
               -----                  ------

The number of shares of each class of the Registrant's common 
stock outstanding on May 13, 1997 was:

Class of Common Stock              No. of Shares Outstanding
Common Stock, $.40 Par Value              15,329,722

=================================================================






               ACCEPTANCE INSURANCE COMPANIES INC.

                            FORM 10-Q

TABLE OF CONTENTS

PART I.   FINANCIAL INFORMATION

     Item 1.   Financial Statements:

          Consolidated Balance Sheets
          March 31, 1997 (unaudited) and December 31, 1996
            (audited)

          Consolidated Statements of Operations (unaudited)
          Three Months Ended March 31, 1997 and 1996

          Consolidated Statements of Cash Flows (unaudited)
          Three Months Ended March 31, 1997 and 1996

          Notes to Interim Consolidated Financial Statements
            (unaudited)

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

PART II.  OTHER INFORMATION

     Item 6.   Exhibits and Reports on Form 8-K

     Signatures<PAGE>
PART 1.   FINANCIAL INFORMATION
-------------------------------
Item 1.   Financial Statements
<TABLE>
<CAPTION>
               ACCEPTANCE INSURANCE COMPANIES INC.
                   CONSOLIDATED BALANCE SHEETS
                         (in thousands)

                                      March  31,     December 31, 
                                         1997            1996
                                     ------------    -----------
                                     (unaudited)      (audited)
<S>                                  <C>               <C>
ASSETS
Investments:
Fixed maturities available for 
  sale                               $  294,513        $ 268,004
Marketable equity securities -
  preferred stock                        70,943           62,964
Marketable equity securities -
  common stock                           21,922           20,873
Mortgage loans and other 
  investments                            10,977           11,149
Real estate                               3,339            3,342
Short-term investments, at cost,
  which approximates market              30,559           39,594
                                       ----------        -------  
                                        432,253          405,926

Cash                                      7,908           10,697
Investment in Major
  Realty Corporation                      8,772            8,827
Receivables, net                        121,373          133,363
Reinsurance recoverable on 
  unpaid loss and loss               
  adjustment expenses                   129,256          185,421
Prepaid reinsurance premiums             41,371           36,140
Property and equipment, net              10,193            8,988
Deferred policy acquisition costs        30,050           29,437 
Excess of cost over acquired net 
  assets                                 35,500           35,783
Deferred income tax                      18,798           21,172
Other assets                             13,143            8,626
                                     ----------       ----------  
   Total assets                      $  848,617        $ 884,380
                                     ==========       ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses  $  380,529       $  432,173
Unearned premiums                       145,700          140,217
Amounts payable to reinsurers            26,978           10,157
Accounts payable and accrued
  liabilities                            15,348           25,013
Bank borrowings                          69,000           69,000
                                     ----------        ---------
Total liabilities                       637,555          676,560

Contingencies                             --             --

Stockholders' equity:
  Preferred stock, no par value,
  5,000,000 shares authorized, 
  none issued                             --             --
Common stock, $.40 par value,
  20,000,000 shares authorized;
  15,329,548 and 15,256,507
  shares issued                           6,109            6,103
Capital in excess of par value          196,259          196,090
Unrealized gain (loss) on 
  available for sale securities,
  net of tax                             (2,323)          (1,476)
Retained earnings                        15,346           11,432
                                     ----------         --------  
                                        215,391          212,149

Less:
Treasury stock, at cost, 38,680
  shares                                 (1,629)          (1,629)
Contingent stock, 240,000 shares         (2,700)          (2,700) 
                                     ----------         --------
Total stockholders' equity                                    
                                        211,062          207,820
                                     ----------         --------
Total liabilities and 
  stockholders' equity               $  848,617        $ 844,380
                                     ==========      ===========

<FN>
       The accompanying notes are an integral part of the 
           interim consolidated financial statements.
</FN>
/TABLE
<PAGE>
<TABLE>
<CAPTION>
               ACCEPTANCE INSURANCE COMPANIES INC.
              CONSOLIDATED STATEMENTS OF OPERATIONS
                   for the three months ended
                     March 31, 1997 and 1996
              (in thousands, except per share data)
                         (unaudited)

                                         1997            1996
                                       ----------      --------  
<S>                                     <C>            <C>  
Revenues:
Insurance premiums earned               $71,062        $ 67,504
Net investment income                     6,520           6,464  
Net realized capital gains                1,311           1,181  
                                        --------       --------
                                         78,893          75,149 
                                        --------       --------
Costs and expenses:
Cost of revenues:
Insurance losses and loss 
  adjustment expenses                    49,807          45,883 
Insurance underwriting expenses          22,044          21,274
General and administrative
  expenses                                  524             535
                                        --------       --------
                                         72,375          67,692
                                        --------       --------
Operating profit                          6,518           7,457 
                                        --------       --------

Other income (expense):
Interest expense                         (1,157)         (1,253)
Share of net loss of investee               (54)            (64)
Other, net                                   16             156   
                                        --------        --------
                                         (1,195)         (1,161)
                                        --------        --------
Income before income taxes                5,323           6,296 
Income tax expense (benefit):
Current                                  (1,421)            755 
Deferred                                  2,830           1,063 

Net income                              $ 3,914        $  4,478 
                                        ========       ========
Net income per share:
Primary                                 $   .26        $    .30  
                                        ========        =======
Fully diluted                           $   .25        $    .29 
                                        ========       ========
<FN>
       The accompanying notes are an integral part of the
           interim consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
               ACCEPTANCE INSURANCE COMPANIES INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS
            for the three months ended March 31, 1997
                         (in thousands)
                           (unaudited)

                                           1997        1996
                                         --------    --------
<S>                                      <C>        <C>
Cash flows from operating 
  activities:
Net income                               $  3,914    $   4,478
Net adjustment to reconcile net 
  income to net cash provided by 
  operating activities                     21,250       14,961
                                         ---------   ---------
Net cash provided by operating 
  activities                               25,164       19,439
                                         ---------   ---------
Cash flows from investing 
  activities:
Proceeds from sales of investments
  available for sale                       11,877       29,169
Proceeds from maturities of 
  investments                               2,712        3,520
Proceeds from maturities of 
  investments available for sale           17,096        3,086
Purchases of investment                    (1,819)     (11,106)
Purchases of investments available        
  for sale                                (64,519)     (44,997)
Purchases of property and equipment        (1,773)      (1,520)
                                         ---------   ---------
Net cash used for investing 
  activities                              (36,426)     (21,848)
                                         ---------   ---------
Cash flows from financing activities:
Proceeds from issuance of 
  common stock                                175           28
                                         ---------   ---------
Net cash provided by financing
  activities                                  175           28
                                         ---------   ---------
Net increase (decrease) in cash and 
  short-term investments                  (11,087)      (2,381)
Cash and short-term investments
  at beginning of period                   41,627       84,740
                                         ---------   ---------
Cash and short-term investments
  at end of period                       $ 30,540    $  82,359
                                         =========   =========
Supplemental disclosure of cash
  flow information:
Cash paid during the period for 
  interest                               $  1,134    $   1,207 
                                         =========   =========
Cash paid during the period for 
  income taxes                           $      0    $     450
                                         =========   =========
<FN>
       The accompanying notes are an integral part of the 
            interim consolidated financial statements
</FN>
</TABLE>
<PAGE>
               ACCEPTANCE INSURANCE COMPANIES INC.

       NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                           (unaudited)

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.

     Management's Opinion

     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 March 31, 1997 and December
     31, 1996, and the results of operations for the three months
     ended March 31, 1997 and 1996 and cash flows for the three
     months ended March 31, 1997 and 1996.

     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 March
     31, 1997 approximately $7,927,000 of short-term investments
     had a maturity date at acquisition of greater than three
     months.

     Recent Statements of Financial Accounting Standards

     
     In October 1995, the Financial Accounting Standards Board
     issued Statement of Financial Accounting Standards No. 123
     (SFAS No. 123), "Accounting for Stock-Based Compensation,"
     which was effective for the Company on January 1, 1996.  SFAS
     No. 123 requires expanded disclosures of stock-based
     compensation arrangements with employees and encourages (but
     does not require) compensation cost to be measured based on
     the fair value of the equity instrument awarded.  Companies
     are permitted, however, to continue to apply APB Opinion No.
     25, which recognizes compensation cost based on the intrinsic
     value of the equity instruments awarded.  The Company
     continued to apply APB No. 25 in its accounting for stock-
     based compensation awards to employees and directors, while
     expanding its disclosures as required by SFAS NO. 123.

     Reclassifications

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

          
2.   Investments:

     The amortized cost and related market values of debt and
     equity securities in the accompanying balance sheets are as
     follows (in thousands):

<TABLE>
<CAPTION>

                                   Gross      Gross
                       Amortized Unrealized Unrealized Market
                         Cost      Gains      Losses   Value
                       --------- ---------- ---------- -------

<S>                    <C>       <C>       <C>       <C>
March 31, 1997:
Fixed maturities
  available for sale:
U.S. Treasury and
  government 
  securities           $ 99,009  $   100   $   781   $ 98,328
States, municipalities
  and political sub-
  divisions             112,245    1,232       910    112,567
Mortgage-backed 
  securities             59,650      153     8,265     51,538
Other debt securities    32,588      570     1,078     32,080
                       ________  _______   _______   ________
                       $303,492  $ 2,055  $ 11,034   $294,513    
                       ========  =======   =======   ========
Marketable equity
  securities - 
  preferred stock      $ 68,853  $ 2,457  $    367   $ 70,943  
                       ========  =======   =======   ========
Marketable equity
  securities -
  common stock         $ 18,607  $ 4,529   $ 1,214   $ 21,922     
                       ========  =======   =======   ========

December 31, 1996:
Fixed maturities 
  available for sale:  
U.S. Treasury and 
  government 
  securities           $ 86,359  $   154   $   260   $ 86,253
States, municipalities
  and political sub-
  divisions              93,293    1,620       306     94,607
Mortgage-backed 
  securities             60,138      205     7,508     52,835
Other debt securities    34,581      685       957     34,309     
                       --------  -------   -------   --------     
                       $274,371 $  2,664   $ 9,031   $268,004
                       ========  =======   =======   ========
Marketable equity
  securities -
  preferred stock      $ 62,628 $    932  $    596   $ 62,964     
                       ========  =======   =======   ========
Marketable equity
  securities -
  common stock         $ 17,112 $  4,641  $    880   $ 20,873     

                       ========  =======   =======   ========
</TABLE>

3.   Insurance Premiums and Claims

     Insurance premiums written and earned by the Company's
     insurance subsidiaries for the three months ended March 31,
     1997 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
                                            Three Months          
                                       ---------------------      
                                         1997         1996        
                                       --------     --------
<S>                                    <C>          <C>
Direct premiums written                $120,376     $113,709
Assumed premiums written                  4,969       10,020  
Ceded premiums written                  (54,030)     (52,895)
                                       --------     --------
     Net premiums written              $ 71,315     $ 70,834
                                       ========     ========

Direct premiums earned                 $115,905     $108,216
Assumed premiums earned                   3,956        8,982
Ceded premiums earned                   (48,799)     (49,694)
                                       ========     ========
     Net premiums earned               $ 71,062     $ 67,504
                                       ========     ========

</TABLE>

     Insurance loss and loss adjustment expenses have been reduced
     by recoveries recognized under reinsurance contracts of
     approximately $15,021,000 and $25,440,000 for the three months
     ended March 31, 1997 and 1996, respectively.  

4.   Bank Borrowings:

     On July 26, 1995, the Company amended its borrowing
     arrangements with its bank lenders providing a $75 million
     three year Revolving Credit Facility which, with the consent
     of the banks, can be renewed annually for three years, and a
     $15 million Term Loan Facility with a maturity of the earlier
     of July 1996 or one year from the date of the borrowing.  The
     Term Loan Facility expired on July 26, 1996 as the Company had
     not drawn upon this facility as of that date.  The Company is
     currently negotiating with its banks to restructure the credit
     facility to incorporate the previous Term Loan Facility and
     Revolving Credit Facility into one credit facility.  Further,
     the Company selects its interest rate as either the prime rate
     or LIBOR plus a margin of .75% to 1.5% depending on the
     Company's debt to equity ratio.  Interest is payable
     quarterly.  At March 31, 1997, the Company had $69 million
     outstanding under this arrangement at a weighted average
     interest cost of 6.7%.

5.   Income Taxes:

     As of March 31, 1997, management believes it is more likely
     than not that the Company will realize a portion of the
     deferred tax asset.  The valuation allowance at March 31, 1997
     primarily relates to capital loss items whose realization is
     uncertain.  The net deferred tax asset is as follows (in
     thousands):
<TABLE>
<CAPTION>

                                       March 31,     December 31,
                                         1997            1996
                                    --------------   -----------  
<S>                                     <C>           <C>
Unpaid losses and loss adjustment
  expenses                               11,759        13,322
Unearned premiums                         7,303         7,283
Allowances for doubtful accounts          1,363         1,213
Other                                     2,917         2,689
Unrealized loss on fixed maturities
  available for sale                      3,142         2,229
Major Realty basis difference             8,337         8,317   
                                        -------       -------
      Deferred tax asset                 34,821        35,053
                                        -------       -------

Deferred policy acquisition costs       (10,518)      (10,303)
Other                                    (2,520)       (1,071)
Unrealized gain on marketable
  equity securities                      (1,892)       (1,434)
                                        -------       -------
     Deferred tax liability             (14,930)      (12,808)
                                        -------       -------
                                         19,891        22,245
Valuation allowance                      (1,093)       (1,073)    
                                        -------       -------
     Net deferred tax asset             $18,798       $21,172     

                                        =======       =======
</TABLE>

     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>
                                               March 31,
                                           1997         1996
                                        ----------    ---------

<S>                                     <C>           <C>
Computed U.S. federal income taxes      $  1,873      $ 2,204 
Nondeductible amortization of
  goodwill and other intangibles             142          141
Tax-exempt interest income                  (410)        (350)
Dividends received deduction                (296)        (208)
Other                                        100           31 
                                        --------      -------
  Income taxes provided                 $  1,409      $ 1,818 
                                        ========      =======
</TABLE>

6.  Per Share Data:

Primary and fully diluted earnings per share are based on the
weighted average shares outstanding of approximately 15.2 million
and 15.5 million, respectively, for the three months ended March
31, 1997 and approximately 15.0 million and 15.3 million,
respectively, for the three months ended March 31, 1996. 

In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, (SFAS No.
128), "Earnings Per Share".  This statement establishes accounting
standards for the presentation of basic and diluted earnings per
share.  This statement is effective for periods ending after
December 15, 1997.  While early adoption of the statement is
prohibited, disclosure of pro forma date prior to adoption is
permitted.  For the three months ended March 31, 1997 and 1996 pro
forma earnings per share based upon applying SFAS No. 128, are as
follows:

<TABLE>
<CAPTION>

                                         1997            1996
                                    --------------   -----------  
<S>                                         <C>            <C>
Pro forma earnings per share:
Basic                                     $ .26          $ .30
Diluted                                   $ .26          $ .30
</TABLE>
PART 1.
-------
ITEM 2.
               ACCEPTANCE INSURANCE COMPANIES INC.
              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 is based upon the Company's interim consolidated
financial statements and the notes thereto included in this report.

RESULTS OF OPERATIONS

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.  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 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.  Results from the crop lines
are not generally known until the third and fourth quarters of the
year, after crops are harvested.  Crop results are particularly
dependent on events beyond the Company's control, notably weather
conditions during the crop growing season in the states where the
Company writes a substantial amount of its crop insurance. 
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
1997 crop season, or the various other factors noted above which
may affect crop and non-crop operating results.

Three months ended March 31, 1997
Compared to three months ended March 31, 1996

The Company's operating profit and net income both decreased 12.6%
during the three months ended March 31, 1997 as compared to the
same period in 1996.  The decrease in operating profit was
approximately $1 million, decreasing from $7.5 million in the first
quarter of 1996 to $6.5 million in the first quarter of 1997, while
the decrease in net income was approximately $600,000, decreasing
from $4.5 million during the first quarter of 1996 to $3.9 million
during the first quarter of 1997.  The principal component of the
decrease in operating profit was a reduction in the income realized
by the Company's Crop Division during the first three months of
1997 as compared to the first three months of 1996.  This negative
impact was partially offset by an improvement in the Company's
Property and Casualty Division's operating results and an increase
in both investment income and realized capital gains.  In addition,
the Company's net income in the first quarter of 1997 was
positively impacted by lower interest expense and a decrease in the
Company's expense for income taxes, but was adversely effected by
a decrease in other income.  

During the first quarter of 1996, the Company's operating income
benefitted from a $2.8 million profit in the Company's Crop
Division.  The principal component of this $2.8 million profit was
the recording of an additional $3.8 million in profit sharing under
the Company's Multi-Peril Crop Insurance (MPCI) program.  The
Company's estimate of its profit sharing under the MPCI program at
December 31, 1995 was effected by a volatile crop growing season
during which many of the rules pertaining to preventive planting
payments were changed and a combination of unusual weather
conditions manifested themselves in an unusually late harvest.  As
claims were closed during the first quarter of 1996 and the final
preventive planting rules applied to these losses, the Company was
able to earn additional profit sharing.  The 1996 growing year did
not experience this same degree of volatility, and the harvest was
not delayed by unusual weather conditions.  Consequently, the MPCI
profit sharing income recorded at December 31, 1996 more accurately
estimated actual results than had the profit sharing recorded at
December 31, 1995.  During the first quarter of 1997, the Company
experienced operating income of approximately $900,000 from its
Crop Division operations.  The Company believes that the crop
results for the first quarter of 1997 were more typical of a normal
year than those experienced in the first quarter of 1996.  

The negative effect on operating income from the Company's Crop
Division results was partially offset by improved operating results
in the Company's Property and Casualty Division.  During the first
three months of 1997, the Company's Property and Casualty Division
recorded a combined loss and expense ratio of 102.4% as compared to
a combined ratio of 103.9% during the same period in 1996.  This
improvement resulted from a reduction in the Company's underwriting
expense ratio from 33.4% to 32.0% as the Company's loss ratio in
its Property and Casualty Divisions remained approximately constant
at 70.4% during both periods.  The Company's property and casualty
underwriting results during the first three months of 1997 were
adversely effected by results in its commercial automobile lines of
business.  For example, the  combined ratio for the Company's
Transportation Department increased from 105.7% during the first
quarter of 1996 to 121.0% during the first quarter of 1997, and the
Company's commercial auto operations in its General Agency Division
saw its combined ratio increase from 118.7% during the first
quarter of 1996 to 131.7% during the first quarter of 1997.  These
adverse auto results were effected by an increase in both the
severity and frequency of accidents, many of which were related to
severe weather activity during the first quarter of 1997.  The
Company believes that this extremely adverse quarter for its
commercial automobile business was an anomaly, and the Company's
experience in this line of business should return to more normal
levels during the remainder of 1997.  Excluding the commercial
automobile lines, the Company saw improvement in its loss ratios in
its other property and casualty business.  

The Company's operating profit was also positively impacted during
the first quarter of 1997 as compared to the first quarter of 1996
by an increase in the Company's investment income of 0.9% and an
increase in net realized capital gains of 11.0%.  The increase in
the Company's net investment income resulted from an increase in
the average size of the Company's portfolio from $380.8 million
during the three months ended March 31, 1996 to $423.7 million
during the three months ended March 31, 1997.  This increase in the
size of the portfolio was largely offset by a decrease in the
annualized investment yield of the portfolio from 6.8% during the
first three months of 1996 to 6.2% during the same period in 1997. 
This decrease in annualized investment yields was principally a
result of an increase in the amount of tax advantaged securities
within the Company's portfolio during the first quarter of 1997 as
compared to the first quarter of 1996.  At March 31, 1997, the
percentage of the Company's portfolio in municipal bonds and
preferred stocks was 25.8% and 15.8%, respectively, while at March
31, 1996 the percentages for these two classes of securities was
17.4% and 13.3%, respectively.  The impact of this shift to more
tax advantaged securities can be seen in the reduction in the
Company's effective income tax rate during the two periods being
compared.  

The Company's net income during the first three months of 1997 as
compared to the same period a year earlier was positively impacted
by a decrease in interest expense of approximately $100,000 or
7.7%.  This decrease in interest expense resulted from a decrease
in the Company's average interest rate under its bank credit
facility from 7.3% during the three months ended March 31, 1996 to
6.7% during the three months ended March 31, 1997.  The Company's
borrowings under the bank credit facility were $69 million during
both periods of time.  

A decrease of $130,000 in the Company's other income was primarily
a result of the Company's decision to curtail its agency operations
within its Transportation Division during the second half of 1996. 


In addition, net income was also effected by a lower effective
income tax rate during the first quarter of 1997 as compared to the
first quarter of 1996 as the Company's tax rate decreased from
28.9% during the first quarter of 1996 to 26.5% during the same
period in 1997.  This reduction in the Company's income tax rate
reflected additional income from tax advantaged securities in the
Company's investment portfolio such as preferred stocks and
municipal bonds as noted above.

Recent Statement of Financial Accounting Standards

In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 (SFAS No. 123),
"Accounting for Stock-Based Compensation," which is effective for
the Company on January 1, 1996.  SFAS No. 123 requires expanded
disclosures of stock-based compensation arrangements with employees
and encourages (but does not require) compensation cost to be
measured based on the fair value of the equity instrument awarded. 
Companies are permitted, however, to continue to apply APB Opinion
No. 25, which recognizes compensation cost based on the intrinsic
value of the equity instruments awarded.  The Company continued to
apply APB Opinion No.25 in its accounting for stock based
compensation awards to employees and directors, while expanding its
disclosures as required by SFAS No. 123.

LIQUIDITY AND CAPITAL RESOURCES

The Company has included a discussion of the liquidity and capital
resources requirements of the Company and the Company's insurance
subsidiaries.  

The Company-Parent Only

As an insurance holding company, the Company's assets consist
primarily of the capital stock of its subsidiaries, two surplus
notes issued by one of its insurance company subsidiaries and
investments held at the holding company level.  The Company's
primary sources of liquidity are dividends and other distributions
from subsidiaries, interest payments on the surplus notes, tax
sharing payments from its subsidiaries and net investment income
from, and proceeds from  the sale of, holding company investments. 
The Company's liquidity needs are primarily to service debt, pay
operating expenses and taxes and make investments in subsidiaries.

Dividends from the insurance subsidiaries of the Company are
regulated by the state 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.  As of March 31,
1997, the statutory limitation on dividends from insurance company
subsidiaries to the parent without further insurance departmental
approval was approximately $10.4 million.  In addition to dividends
from the insurance companies, the Company also may receive
distributions from its non-insurance subsidiaries which are engaged
in agency, premium finance and claim service operations.  

The Company currently holds two surplus notes, each in the amount
of $20.0 million, issued by one 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
this surplus note requires insurance department approval, no prior
approval of interest payment is currently required.

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.

The Company is also party to a $75 million Credit Agreement with a
group of bank lenders, secured by substantially all of the
Company's assets.  The Credit Agreement provides for a three-year
Revolving Credit Facility in amounts not exceeding $75 million. 
Interest is payable quarterly at a rate selected by the Company
equal to either the prime rate or LIBOR plus a margin which varies
depending on the Company's debt-to-equity ratio.  At March 31,
1997, the outstanding balance under the facility was $69 million,
bearing interest at 6.7%.  Borrowings under the facility were used
to provide capital for the Insurance Companies and to repay other
debt.  The Credit Agreement expires on July 26, 1998, and may be
extended annually by additional one-year periods with the consent
of the lenders.  The Company is currently negotiating with its
banks to increase the size of the Revolving Credit Facility and to
extend the expiration date of the agreement.  The Company expects
to complete these negotiations during the second quarter of 1997.

Insurance Companies

The principal liquidity needs of the Insurance Companies are to
fund losses and loss adjustment expense payments, to pay
underwriting expenses, including commissions to agents, to pay
interest under the surplus notes described above and to make tax
payments.  Available sources for these requirements are premiums
received and cash flows from investment activities.  Together,
these sources historically have been adequate to meet the described
requirements on a timely basis.  The Company monitors the cash
flows of its insurance company subsidiaries 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 the payment of loss and loss
adjustment expenses.

Changes in Financial Condition

The Company's stockholders' equity increased by approximately $3.2
million at March 31, 1997 as compared to December 31, 1996.  The
principal components of this increase were net income of $3.9
million in the first quarter of 1997 and an increase in the
unrealized loss on available for sale securities net of tax, in the
Company's investment portfolio of approximately $800,000.  This was
comprised of an increase of $1.7 million net of tax in the
unrealized loss of the Company's fixed maturity portfolio as the
general interest rate environment rose and an increase of $0.9
million net of tax in the unrealized gains on the Company's equity
portfolio.

Consolidated Cash Flow

Cash flows from operating activities increased from $19.4 million
during the first three months of 1996 to $25.2 million during the
same three months in 1997.  The largest component of net cash
provided by operating activities in both periods was profit sharing
payments received from the federal government's Multi-Peril Crop
insurance program.  During the first three months of 1996 this
component of operating cash flows was $15.9 million while in the
first three months of 1997 it was $25.5 million.

Cash flows for the Company's MPCI and crop hail businesses differ
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 promptly remitted 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 administration expenses.

In the crop hail business, premiums are generally not received
until after the harvest, while losses and other expenses are paid
throughout the year.

Inflation

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



PART II.  OTHER INFORMATION
---------------------------

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits
     
     See Exhibit Index.

(b)  No reports on Form 8-K were filed by the registrant during 
     the quarter for which this report is filed.<PAGE>
                  

                            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.

                              ACCEPTANCE INSURANCE COMPANIES INC.

May 13, 1997                  /s/  KENNETH C. COON
                              ---------------------------------
                              Kenneth C. Coon
                              Chief Executive Officer

May 13, 1997                  /s/  GEORGIA M. MACE
                              ---------------------------------
                              Georgia M. Mace
                              Treasurer and Chief Accounting
                                Officer

<PAGE>
               ACCEPTANCE INSURANCE COMPANIES INC.
                  QUARTERLY REPORT ON FORM 10-Q
            FOR THE THREE MONTHS ENDED MARCH 31, 1997

                          EXHIBIT INDEX

NUMBER    EXHIBIT DESCRIPTION

3.1       Registrant's Restated Certificate of Incorporation,
          incorporated by reference to Registrant's Annual
          Report of Form 10-K for the period ending December
          31, 1993, and Amendment thereto, incorporated by
          reference to Registrant's Quarterly Report on Form
          10-Q for the period ended June 30, 1995.

3.2       Restated By-laws of Acceptance Insurance Companies
          Inc.  Incorporated by reference to Registrant's
          Annual Report on Form 10-K for the fiscal year
          ended December 31, 1993.

10.1      $90,000,000 Credit Agreement By and Among the
          Registrant, NBD Bank, N.A., First National Bank of
          Omaha, FirsTier Bank, N.A., Comerica Bank, First
          Interstate Bank of Arizona and NBD Bank, N.A., As
          Agent, dated as of July 26, 1995.  Incorporated by
          reference to Exhibit 10.1 to the Registrant's
          Quarterly Report on Form 10-Q for the period ended
          June 30, 1995.


10.2      Intercompany Federal Income Tax Allocation
          Agreement between Acceptance Insurance Holdings
          Inc. and its subsidiaries and the Registrant dated
          April 12, 1990, and related agreements. 
          Incorporated by reference to Exhibit 10i to the
          Registrant's Annual Report on Form 10-K for the
          fiscal year ended August 31, 1990.

10.3      Employment Agreement dated February 19, 1990
          between Acceptance Insurance Holdings, Inc., the
          Registrant and Kenneth C. Coon.  Incorporated by
          reference to Exhibit 10.65 to the Registrant's
          Annual Report on Form 10-K for the fiscal year
          ended December 31, 1991.

10.4      Employment Agreement dated July 2, 1993 between the
          Registrant and John P. Nelson.  Incorporated by
          reference to Exhibit 10.6 to the Registrant's
          Quarterly Report on Form 10-Q for the period ended
          September 30, 1994.

10.5      Employment Agreement dated July 2, 1993 between the
          Registrant and Richard C. Gibson.  Incorporated by
          reference to Exhibit 10.6 to the Registrant's
          Quarterly Report on Form 10-Q for the period ended
          September 30, 1994.

11        Computation of Income per share.

27        Financial Data Schedule.

99.1      Registrant's Amended Employee Stock Purchase Plan.
          Incorporated by reference to the Registrant's
          Proxy Statement filed on or about April 29, 1994.

99.2      The Registrant's Employee Stock Ownership and Tax
          Deferred Savings Plan as merged, amended and
          restated effective October 1, 1990.  Incorporated
          by reference to Exhibit 10.4 to the Registrant's
          Quarterly Report on Form 10-Q for the quarter ended
          November 30, 1990.

99.3      First Amendment to the Registrant's Employee Stock
          Ownership and Tax Deferred Savings Plan. 
          Incorporated by reference to Exhibit 99.4 to the
          Registrant's Annual Report on Form 10-K for the
          fiscal year ended December 31, 1993.

99.4      Second Amendment to the Registrant's Employee Stock
          Ownership and Tax Deferred Savings Plan. 
          Incorporated by reference to Exhibit 99.5 to the
          Registrant's Annual Report on Form 10-K for the
          fiscal year ended December 31, 1993.

99.5      The Registrant's 1996 Incentive Stock Option Plan. 
          Incorporated by reference to the Registrant's Proxy
          Statement filed on or about May 3, 1996.

<PAGE>