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 June 30, 1998

                                       OR

         [ ] 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 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 St., Suite 600 N.
                              Omaha, Nebraska 68102
               (Address of principal executive offices) (Zip Code)

       Registrants'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 August 6, 1998 was:

          Class of Common Stock              No. of Shares Outstanding
        Common Stock, $.40 Par Value              14,529,504

                                  


 
                       ACCEPTANCE INSURANCE COMPANIES INC.


                                    FORM 10-Q

                                TABLE OF CONTENTS

                                        
                                  

PART I. FINANCIAL INFORMATION

        Item 1. Financial Statements:

                Consolidated Balance Sheets June 30, 1998 (unaudited)
                and December 31, 1997 (audited)                            

                Consolidated Statements of Operations (unaudited)
                Three Months and Six Months Ended June 30, 1998 
                and 1997                                                   

                Consolidated Statements of Cash Flows (unaudited)    
                Six Months Ended June 30, 1998 and 1997                    

                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 4. Submission of Matters to a Vote of Security Holders       

         Item 6. Exhibits and Reports on Form 8-K                          

         Signatures                                                        

                                       


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
                         ACCEPTANCE INSURANCE COMPANIES INC.
                               CONSOLIDATED BALANCE SHEETS
                                     (in thousands)
<TABLE>
<CAPTION>
                  
                                                                                    June 30,    December 31,
                                                                                     1998           1997 
                                                                                (unaudited)      (audited)
<S>                                                                               <C>             <C>           
ASSETS
Investments:
   Fixed maturities available-for-sale.....................................       $  386,755      $ 322,799
   Marketable equity securities - preferred stock..........................           35,048         53,309
   Marketable equity securities - common stock.............................           35,708         30,847
   Mortgage loans and other investments....................................            9,968         10,248
   Real estate.............................................................            3,322          3,329
   Short-term investments, at cost, which approximates
     market................................................................           51,463         32,185      
 
                                                                                     522,264        452,717

Cash.......................................................................            6,214          8,048
Investment in Major Realty Corporation.....................................              --           9,183
Receivables, net...........................................................          138,579        180,793
Reinsurance recoverable on unpaid loss and loss
  adjustment expenses......................................................          233,251        165,547
Prepaid reinsurance premiums...............................................           61,405         53,208
Property and equipment, net................................................           15,673         15,588
Deferred policy acquisition costs..........................................           32,019         30,328
Excess of cost over acquired net assets....................................           35,020         35,567
Deferred income tax........................................................            4,862         15,842
Other assets...............................................................           18,424         12,632    
  
       Total assets........................................................       $1,067,711      $ 979,453      

         LIABILITIES AND STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses........................................       $  499,856      $ 428,653
Unearned premiums..........................................................          168,150        157,134
Amounts payable to reinsurers..............................................           25,964         17,955
Accounts payable and accrued liabilities...................................           12,782         27,166
Company - obligated manditorily redeemable Preferred Securities of
   AICI Capital Trust, holding solely Junior Subordinated Debentures
   of the Company..........................................................           94,875         94,875    
        Total liabilities..................................................          801,627        725,783
Contingencies..............................................................             --             --

Stockholders' equity:
   Preferred stock, no par value, 5,000,000 shares
     authorized, none issued...............................................             --             --
   Common stock, $.40 par value, 40,000,000
     shares  authorized, 15,456,012 and 15,421,247
     shares issued.........................................................            6,182          6,168
   Capital in excess of par value..........................................          198,470        198,080
   Accumulated other comprehensive income, net of tax......................            8,335          6,885
   Retained earnings.......................................................           57,305         46,745   
 
                                                                                     270,292        257,878
Less:
Treasury stock, at cost, 209,520 and 209,519 shares........................           (3,979)        (3,979)
Contingent stock, 20,396 shares...........................................              (229)          (229)
   Total stockholders' equity..............................................          266,084        253,670   
   Total liabilities and stockholders' equity..............................       $1,067,711      $ 979,453    
</TABLE>
                 The accompanying notes are an integral part of
                 the interim consolidated financial statements.
                                       

                                    
                       ACCEPTANCE INSURANCE COMPANIES INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
        for the three months and six months ended June 30, 1998 and 1997
                      (in thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>
 
                                                                           Three Months                           Six Months        

                                                                  1998            1997              1998              1997   
<S>                                                            <C>              <C>              <C>                  <C>
Revenues:
   Insurance premiums earned...............................    $ 72,084         $72,944          $141,087             $144,006
   Net investment income...................................       7,212           6,791            14,132               13,311
   Net realized capital gains..............................       2,642           2,020             5,483                3,331 
                                                                 81,938          81,755           160,702              160,648 
Costs and expenses:
   Costs of revenues:
     Insurance losses and loss adjustment expenses.........      51,482          52,588            97,783              102,395
     Insurance underwriting expenses.......................      21,665          21,459            42,865               43,503
General and administrative expenses                                 562             573             1,218                1,097  
                                                                 73,709          74,620           141,866              146,995  
Operating profit...........................................       8,229           7,135            18,836               13,653  

Other income (expense):
   Interest expense........................................      (2,165)         (1,247)           (4,330)              (2,404)
   Loss on investee........................................         --              (63)             (704)                (117)
   Other, net..............................................         (91)             (4)              (57)                  12  
                                                                 (2,256)         (1,314)           (5,091)              (2,509) 

Income before income taxes ................................       5,973           5,821            13,745               11,144
Income tax expense (benefit):
     Current...............................................      (8,423)          2,390            (7,014)                 969
     Deferred..............................................       9,994            (811)           10,199                2,019  

Net income.................................................    $  4,402         $ 4,242         $  10,560            $   8,156  

Net income per share:
   Basic  .................................................    $    .29         $   .28         $     .69            $     .54  

   Diluted.................................................    $    .29         $   .28         $     .68            $     .53   
</TABLE>


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

                                       

                       ACCEPTANCE INSURANCE COMPANIES INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 for the six months ended June 30, 1998 and 1997
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>    

                                                                                              1998               1997     

<S>                                                                                       <C>                 <C>
Cash flows from operating activities:
   Net income........................................................................     $   10,560          $   8,156
   Net adjustment to reconcile net income to net cash provided by
     operating activities............................................................         50,891             19,995    

       Net cash provided by operating activities.....................................         61,451             28,151    

Cash flows from investing activities:
   Proceeds from sales of investments available-for-sale.............................         75,287             45,717
   Proceeds from maturities of investments ..........................................          1,970              3,932
   Proceeds from maturities of investments available-for-sale........................         43,388             26,662
   Purchases of investments..........................................................         (1,666)            (5,837)
   Purchases of investments available-for-sale.......................................       (161,123)           (86,907)
   Purchases of property and equipment...............................................         (2,177)            (6,383)   

        Net cash used for investing activities.......................................        (44,321)           (22,816)   

 
Cash flows from financing activities:
   Proceeds from bank borrowings.....................................................            --              21,000
   Proceeds from issuance of common stock............................................            404                820   
 
        Net cash provided by financing activities....................................            404             21,820    

Net increase in cash and short-term investments......................................         17,534             27,155
Cash and short-term investments at beginning of period...............................         38,316             41,627    

Cash and short-term investments at end of period.....................................     $   55,850          $  68,782    

Supplemental disclosure of cash flow information:
   Cash paid during the period for interest..........................................     $    4,269          $   2,721     
   Cash paid during the period for income taxes......................................     $       97          $  (1,878)     
</TABLE>
 




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







                                       

                       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 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 June 30, 1998 and 
   December 31, 1997, and the results of operations for the three months and 
   six months ended June 30, 1998 and 1997 and cash flows for the six months 
   ended June 30, 1998 and 1997.

   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, 1998 approximately $1,827,000 of short-term
   investments had a maturity date at acquisition of greater than three months.

   Recent Statements of Financial Accounting Standards

   In June 1997, the Financial Accounting Standards Board (FASB)issued 
   Statement of Financial Accounting Standards No. 130 (SFAS No. 130),
   " Reporting Comprehensive Income". SFAS No. 130 establishes standards for 
   the reporting and display of comprehensive income.  The purpose of reporting 
   comprehensive income is to present a measure of all changes in shareholders' 
   equity that result from recognized transactions and other economic events of 
   the period, other than transactions with owners in their capacity as owners.
   SFAS No. 130 is effective for financial statements issued for periods 
   beginning after December 15, 1997.  See Note 8.

 
   In June 1997, the FASB issued SFAS No. 131," Disclosures About Segments of 
   an Enterprise and Related Information". SFAS No. 131 specifies revised 
   guidelines for determining an entity's operating segments and the type and 
   level of financial information to be disclosed.  SFAS No. 131 is effective 
   for fiscal years beginning after December 15, 1997.  Adoption of
   SFAS No. 131 may result in additional disclosures in the Company's financial 
   statements but will not impact the Company's reported net income or net 
   income per share.

   In June 1998, the FASB issued 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 15,1999. Management is currently evaluating the impact of 
   SFAS No.133 on the Company's consolidated financial statements.
 
   Reclassifications

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

 

2. Investments:

   The amortized cost and related estimated fair values of debt and equity 
   securities 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, 1998:
   Fixed maturities available-for- sale:
   U.S. Treasury and government
     securities.............................     $ 129,275          $        604     $      32              $ 129,847  
   States, municipalities and political
     subdivisions...........................       142,786                 3,941           164                146,563
  Mortgage-backed securities...............         56,970                   128         1,474                 55,624
   Other debt securities....................        55,739                 1,138         2,156                 54,721             

                                                 $ 384,770          $      5,811     $   3,826              $ 386,755             
   Marketable equity securities -
     preferred stock........................     $  33,311          $      1,737     $    --                $  35,048             


   Marketable equity securities -
     common stock...........................     $  26,608          $     10,804     $   1,704               $ 35,708         

December 31, 1997:
   Fixed maturities available-for-sale:
   U.S. Treasury and government
     securities.............................     $ 104,039          $        536      $     41              $ 104,534  
   States, municipalities and political
     subdivisions...........................       129,378                 4,520            38                133,860
   Mortgage-backed securities...............        48,056                   132         3,381                 44,807
   Other debt securities....................        40,131                   792         1,325                 39,598   

                                                 $ 321,604          $      5,980      $  4,785              $ 322,799   

   Marketable equity securities -
     preferred stock........................     $  51,185          $      2,291      $    167              $  53,309  

   Marketable equity securities -
     common stock...........................     $  23,574          $      8,439      $  1,166              $  30,847  

</TABLE>


   



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, 1998 
         and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                       Three Months                     Six Months  
                                                                  1998            1997             1998           1997  
         <S>                                                  <C>               <C>            <C>              <C>   
         Direct premiums written..........................    $  157,057        $138,512       $  285,385       $258,888
         Assumed premiums written.........................        11,025           7,315           20,057         12,284
         Ceded premiums written...........................       (99,781)        (73,952)        (161,549)      (127,982) 

              Net premiums written........................    $   68,301        $ 71,875       $  143,893       $143,190  

         Direct premiums earned...........................    $  154,798        $133,931       $  276,469       $249,836
         Assumed premiums earned..........................         8,311           6,053           17,955         10,009
         Ceded premiums earned............................       (91,025)        (67,040)        (153,337)      (115,839)  

              Net premiums earned.........................    $   72,084        $ 72,944       $  141,087       $144,006  


</TABLE>

 
         Insurance loss and loss adjustment expenses have been reduced by 
         recoveries recognized under reinsurance contracts of approximately  
         $127,291,000 and $74,710,000 for the three months ended June 30, 1998 
         and 1997, respectively. Insurance loss and loss adjustment expenses  
         have been reduced by recoveries recognized under reinsurance 
         contracts of approximately $150,708,000 and $89,731,000 for the six 
         months ended June 30, 1998 and 1997, respectively.


4.       Bank Borrowings: 

         On June 6, 1997, the Company amended its borrowing arrangements with 
         its bank lenders providing a $100 million five-year Revolving Credit 
         Facility.  In August 1997, the Company used the net proceeds from the 
         issuance of Junior Subordinated Debentures to repay the Company's 
         outstanding indebtedness of $90 million under the Revolving Credit
         Facility.  As a result of the issuance of the Junior Subordinated 
         Debentures, the Revolving Credit Facility was reduced from  
         $100 million to $65 million.  The Company selects its interest rate 
         as either the prime rate or LIBOR plus a margin of .50% to 1.25% 
         depending on the Company's debt to equity ratio.  Interest is payable 
         quarterly.  At June 30, 1998, the Company had no outstanding 
         indebtedness under this arrangement. On August 5, 1998, the Company 
         borrowed $8 million under this arrangement (See Note 9).   

5.       Company-obligated mandatorily redeemable Preferred Securities of AICI 
         Capital Trust, holding solely Junior Subordinated Debentures of the 
         Company:

         In August of 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 2027 which were issued in August of 1997
         in an amount equal to the total of the Preferred Securities and the 
         Common Securities.  The Company primarily used the net proceeds in the 
         amount of approximately $90.9 million from the sale of the Junior 
         Subordinated Debentures to pay down the $90.0 million of borrowings 
         under its Revolving Credit Facility.

         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 
         redemption provisions, all as described in the Junior Debenture 
         Indenture.  At June 30, 1998, the Company had $94.875 million
         outstanding at a weighted average interest cost of 9.1%.

         
                                       
               


6.       Income Taxes:

         As of June 30, 1998, management believes it is more likely than not 
         that the Company will realize a portion of the deferred tax asset.  
         The valuation allowance at June 30, 1998 primarily relates to capital 
         loss items whose realization is uncertain.  The net deferred tax 
         asset is as follows (in thousands):



<TABLE>

                                                                                          June 30,           December 31,
                                                                                            1998                 1997      
<CAPTION>
         <S>                                                                                <C>                <C>      
         Unpaid losses and loss adjustment expenses...........................              $11,547            $12,311
         Unearned premiums....................................................                7,472              7,275
         Allowances for doubtful accounts ....................................                2,004              1,745
         Other................................................................                1,407              2,618
         Major  Realty basis difference.......................................                  --               8,391  
         Deferred tax asset...................................................               22,430             32,340   


         Deferred policy acquisition costs....................................              (11,207)           (10,615)
         Other................................................................               (1,798)            (1,064)
         Unrealized gain on fixed maturites available-for-sale................                 (695)              (418)
         Unrealized gain on marketable equity securities......................               (3,793)            (3,289)  

         Deferred tax liability...............................................              (17,493)           (15,386)   
                                                                                              4,937             16,954
         Valuation allowance..................................................                  (75)            (1,112) 

         Net deferred tax asset...............................................              $ 4,862            $15,842    

</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>
                                                                                                       June 30,      

                                                                                              1998             1997    
<CAPTION>
         <S>                                                                                <C>               <C>          
         Computed U.S. federal income taxes...................................              $ 4,835           $  3,906
         Nondeductible amortization of goodwill and other intangibles.........                  221                284
         Tax-exempt interest income...........................................               (1,042)              (893)
         Dividends received deduction.........................................                 (516)              (612)
         Reduction of the valuation allowance ................................               (1,037)               --
         Other................................................................                  724                303  

         Income taxes provided................................................              $ 3,185           $  2,988    

</TABLE>


                                  
                    
 7.       Net Income Per Share:
 
          Basic and diluted net income per share for the three months and six
          months ended June 30, 1998, and 1997 are as follows:
<TABLE>
<CAPTION>

                                                                   Three Months                              Six Months           
                                                             1998                   1997              1998                1997 
    <S>                                                   <C>                     <C>                <C>                 <C>      
    Net income                                            $  4,402                $  4,242           $10,560             $ 8,156

        Weighted average common shares outstanding          15,221                  15,052            15,216              15,021
                Dilutive effect of contingent shares            21                      90                21                  83
                Dilutive effect of stock options               195                     186               209                 207  

        Diluted weighted average common and equivalent 
        shares outstanding                                  15,437                  15,328            15,446              15,311

        Basic net income per share                        $   0.29                $   0.28            $ 0.69              $ 0.54

        Diluted net income per share                      $   0.29                $   0.28            $ 0.68              $ 0.53
</TABLE>

8.      Comprehensive Income:

        Effective January 1, 1998, the Company adopted SFAS No. 130, 
        "Reporting Comprehensive Income."  The comprehensive income for the 
        three months  and six months ended June 30, 1998, and 1997 are as 
        follows:
<TABLE>
<CAPTION>

                                                                   Three Months                              Six Months           
                                                             1998                  1997               1998               1997  
 <S>                                                      <C>                    <C>                <C>                 <C>       
 Net income                                               $  4,402               $   4,242          $ 10,560            $  8,156
        Other comprehensive income (loss):                                                
               Net unrealized gains (losses) on 
               securities                                     (967)                  4,821             1,450               3,974
             Comprehensive income                            3,435                   9,063          $ 12,010            $ 12,130   
   
</TABLE>


9.      Stock Repurchase

        On June 1, 1998 the Company's Board of Directors authorized the 
        repurchase of up to one million shares of its common stock. Purchases 
        may be made from time to time in the open market and in private 
        transations. The actual number of shares purchased will depend upon the 
        price and prevailing market conditions. As if August 6,1998, the 
        Company has repurchased 700,700 shares of its common stock at an 
        average cost of $22.60 per share. The Company funded these repurchases 
        using available cash and $8 million of borrowings under its Revolving 
        Credit Facility.

                      
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, and, with the 
introduction of the Company's Crop Revenue Coverage, the market price of grains
on various commodity exchanges.  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 1998 crop season, or the 
various other factors noted above which may affect crop and non-crop operating 
results.

                Three months and six months ended June 30, 1998
          Compared to three months and six months ended June 30, 1997

The Company's net income for the three months and six months ended 
June 30, 1998 increased 3.8% and 29.5% respectively from the same periods in 
1997.  The first six months of 1998 were positively impacted by an improvement 
in the Company's loss and loss adjustment expense ratio, an increase in 
investment income and realized gains, and a lower income tax rate.  These 
positive factors were partially offset by lower net premiums earned, an 
increase in interest expense, and an increase in the expense ratio of the 
Company.

The Company's loss and loss adjustment expense ratio declined from 72.1% and 
71.1% respectively during the three months and six months ended June 30, 1997 
to 71.4% and 69.3% respectively during the three months and six months ended 
June 30, 1998.  This reduction in the Company's loss ratio resulted from 
improved results in the Company's Crop Division and improved underwriting 
results in the Company's Property and Casualty Divisions during the first
six months of 1998 as compared to the same period in 1997.  During the first 
six months of 1998, the Company recognized underwriting income of $3.3 million 
in its Crop Division as compared with $1.1 million during the first six months 
of 1997.  In both periods, the principal source of profits was derived from the
recording of additional profit sharing from the previous year 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, 1997 was affected by 
a severe early winter snow storm which affected geographic areas where the 
Company had a high concentration of crop insurance.  As the crops were 
harvested, the effect of this snow storm was minimal, and therefore, the 
Company made a larger adjustment during the first six months of 1998 for its
previous year's results than had occurred in 1997.  In addition, the Company's 
loss and loss adjustment expense ratio in its Property and Casualty Divisions 
improved from 69.9% and 70.2% respectively during the three and six months 
ended June 30, 1997 to 69.0% and 69.3% respectively during the three and six 
months ended June 30, 1998.  While the improvement in underwriting loss and 
loss adjustment expense ratio for the Property and Casualty Divisions for
the six months ended June 30, 1998 was minor, the loss ratio for the twelve 
months ended June 30, 1998 was 72.1% as compared to a loss ratio for the 
twelve months ended June 30, 1997 of 77.6%, a considerable improvement.  The 
Company believes that this is indicative of the continued improvement in its 
Property and Casualty Divisions over the last twelve months.

The improvement in the Company's loss and loss adjustment expense ratio during 
the first six months of 1998 as compared with the same period a year earlier 
was offset somewhat by a decline in net premiums earned as well as a slight 
increase in the Company's expense ratio.  The Company's net premiums earned 
decreased by 1.2% and 2.0% during the three and six months ended June 30, 1998 
as compared with the same periods in 1997.  This decrease in net premiums
earned resulted from an increase in the Company's premiums ceded to reinsurers,
as the gross premiums written by the Company actually increased 15.3% and 12.6%
during the three and six months ended June 30, 1998 as compared to the three 
and six months ended June 30, 1997.  The increase in premiums ceded to 
reinsurers resulted from growth in lines of business where the Company cedes a 
higher percentage of its premiums to reinsurers.  These lines included new
programs where the Company historically takes less risk until it is confident 
regarding a program's performance as well as property lines where the costs of 
individual risk capacity and catastrophe protection result in more premiums 
ceded to reinsurers than in the Company's casualty programs.

The Company's expense ratio increased from 29.4% and 30.2% during the three 
and six months ended June 30, 1997 to 30.1% and 30.4% during the three and six 
months ended June 30, 1998. The principal reason for the increase in the 
expense ratio, was additional expenses the Company incurred in its project to 
update its information systems into a Year 2000 compliant mode. During the 
first six months of 1997, the Company's expenditures on this project were only
$87,000 whereas during the first six months of 1998 these expenditures were 
approximately $900,000 (see Year 2000).  Without the increased Year 2000 
expenditures, the Company's expense ratio would have actually been less during 
the six months ended June 30, 1998 as compared to the same period a year 
earlier.

The Company's operating profit was also positively impacted during the three 
and six months ended June 30, 1998 as compared with the same periods in 1997 
by an increase in the Company's investment income of 6.2% in both the three and
six months ended June 30, 1998 and an increase in the net realized capital 
gains of 30.8% and 64.6% respectively during the three and six months ended 
June 30, 1998 as compared with the same periods a year earlier.  The increase 
in the Company's net investment income resulted from an increase in the average
size of the Company's portfolio from $444.9 million and $434.3 million during 
the three and six months ended June 30, 1997 to $502.6 million and 
$487.2 million during the three and six months ended June 30, 1998.  This 
increase in the size of the portfolio was offset somewhat by a decrease in the
annualized investment yield of the portfolio from 6.1% during the three and six
months ended June 30, 1997 to 5.7% and 5.8% during the three and six months 
ended June 30, 1998.  This decrease in annualized investment yield was 
principally a result of an increase in the amount of municipal bond securities 
within the Company's portfolio during the first six months of 1998 as
compared to the first six months of 1997, an overall lower interest rate 
environment, and to a lesser extent, an increase in the size of the Company's 
investments in common stock.  A lower interest rate environment and positive 
results in the Company's equity investments provided the Company with 
additional opportunities to realize gains in the Company's investment portfolio
during the first six months of 1998.

The Company's net income during the three and six months ended June 30, 1998 
as compared to the same period a year earlier was adversely effected by an 
increase in the interest expense of 73.6% and 80.1% for the three and six 
months ended June 30, 1998.  This increase in interest expense was a result of 
both an increase in the Company's average outstanding borrowings from
$69.1 million during the six months ended June 30, 1997 to $94.9 million during
the six months ended June 30, 1998, and an increase in the average interest 
rates from 7.0% during the six months ended June 30, 1997 to 9.1% during the 
six months ended June 30, 1998.  The increased borrowings were used to add 
statutory surplus to the Company's insurance company subsidiaries. The increase
in the Company's average interest rate paid resulted from the issuance of 
$94.875 million in Trust Preferred Securities and the retirement of the 
Company's outstanding bank debt during the third quarters of 1997 (See 
Liquidity and Capital Resources).

The Company's effective income tax rate declined from 27.1% and 26.8% during 
the three and six months ended June 30, 1997 to 26.3% and 23.2% during the 
three and six months ended June 30, 1998.  This lower effective tax rate 
resulted from an increase in the size of the Company's investment in tax 
advantaged municipal securities as well as the tax benefit of the sale of its
approximate 33% equity investment in Major Realty Corporation during the second
quarter of 1998.  As of June 30, 1997, the Company held an approximate 33% 
equity investment in Major Realty Corporation, a publicly traded real estate 
company engaged in the ownership and development of its undeveloped land in 
Orlando, Florida.  On March 6, 1998, the Company, with certain stockholders of 
Major Realty who together held a majority interest in Major Realty, entered 
into a Stockholder Agreement with an outside party whereby Major Realty was to 
be merged with this outside party and all shares of Major Realty converted into
the right to receive cash.  This transaction was completed in May of 1998.  The
Company recorded this transaction as a net loss from investee of approximately 
$.7 million and a tax benefit to income tax expense of approximately 
$.7 million.  Thus, this transaction lowered the Company's effective tax rate,
but due to the net loss from investee, had no material effect on the results of
the Company for the six months ended June 30, 1998.

               Recent Statement of Financial Accounting Standards

In June 1997, the Financial Accounting Standards Board (FASB) issued Statement 
of Financial Accounting Standards No. 130 (SFAS No. 130), "Reporting 
Comprehensive Income".  SFAS No. 130 establishes standards for the reporting 
and display of comprehensive income.  The purpose of reporting comprehensive 
income is to present a measure of all changes in shareholders' equity that 
result from recognized transactions and other economic events of the period, 
other than transactions with owners in their capacity as owners.  SFAS No. 130 
is effective for financial statements issued for periods beginning after 
December 15, 1997.  See Note 8.

In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an 
Enterprise and Related Information".  SFAS No. 131 specifies revised guidelines
for determining an entity's operating segments and the type and level of 
financial information to be disclosed.  SFAS No.131 is effective for fiscal 
years beginning after December 15, 1997.  Adoption of SFAS No. 131 may result 
in additional disclosures in the Company's financial statements but will not 
impact the Company's reported net income or net income per share.

In June 1998, the FASB issued 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, 1999.  Management is currently evaluating the impact of 
SFAS No. 133 on the Company's consolidated financial statements.

                        LIQUIDITY AND CAPITAL RESOURCES

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

                            The Company-Parent Only

As an insurance 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, and make investments in subsidiaries.

The Company currently holds three 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 semi-annually and 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.

Dividends from the insurance subsidiaries of the Company 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.  In 1998, the 
statutory limitation on dividends from insurance company subsidiaries to the
parent without further insurance departmental approval is approximately 
$21.7 million.

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.

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 2027 which were issued in August of 1997 in 
an amount equal to the Preferred Securities and the Common Securities. The 
Company primarily used the net proceeds in the amount of $90.9 million from the
sale of the Junior Subordinated Debenture to pay down the $90.0 million
of borrowings under its Revolving Credit Facility.  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 described in the Junior Debenture Indenture.  At
June 30, 1998, the Company had $94.875 million outstanding at a weighted annual
interest cost of 9.1%.

As of June 30, 1998, the Company maintains a five-year revolving credit 
facility (the "Revolving Credit Facility") with its bank lender in the amount 
of $65 million.  The Company selects its interest rate at either the prime rate
of LIBOR plus a margin which varies depending on the Company's funded debt to 
equity ratio.  Interest is payable quarterly.  During the first six months
of 1998, the Company had no outstanding indebtedness under this arrangement.  
The Revolving Credit Facility contains covenants which do not permit the 
payment of dividends by the Company, requires the Company to maintain certain 
operating and debt service coverage ratios, requires maintenance of specific 
levels of surplus and requires the Company to meet certain tests established by
the regulatory authorities.

At its May 29, 1998 meeting, the Company's Board of Directors approved a stock 
repurchase plan providing for the repurchase of up to one million shares of the
Company's stock.  As of August 6, 1998, the Company has repurchased 700,700 
shares at an average cost of $22.60 per share.  Funds for the repurchase of 
stock are provided by cash and invested assets held at the parent company 
level, cash flows to the parent from its subsidiaries and borrowings under the
Company's bank line of credit, under which the Company is authorized to spend 
up to $15 million for the repurchase of its stock.

As of June 30, 1998, the Company held cash and invested assets, excluding 
investment in subsidiaries, of $10.2 million.

                              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 the payments of
loss and loss adjustment expenses.

Cash flows from 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 
acquisition and 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.

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 years, 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.  Prior to the 1997 year, the 
amount carried forward to future years was any amount in excess of 15% of its 
MPCI retention.  The Company recognized $52.6 million during 1997 and the first
quarter of 1998 in profit sharing earned on 1997 MPCI business.  With the 
change in profit sharing payment rules including amounts payable for the 1997 
crop year, the Company received $57.0 million in payments under the MPCI 
program in February of 1998.

                         Changes in Financial Condition

The Company's stockholders' equity increased by approximately $12.4 million at 
June 30, 1998 as compared to December 31, 1997.  The principal components of 
this increase were net income of $10.6 million during the six months of 1998 
and an increase in the value of the Company's investment portfolio causing the 
unrealized gain on available-for-sale securities, net of tax, to improve from 
$6.9 million at December 31, 1997 to $8.3 million at June 30, 1998.  This 
change in the unrealized gain on available-for-sale securities was almost 
entirely attributable to an improvement in the unrealized gain in the Company's
equity portfolio.

                            Consolidated Cash Flows

Cash provided by operating activities was positive during the six months ended 
June 30, 1998 and 1997, with $61.5 million and $28.2 million in positive cash 
flow during the two periods respectively.  The major component of this cash 
flow during both periods was profit sharing payments received from the federal 
government under the Company's MPCI crop insurance program.  During the first 
three months of 1997, this component of operating cash flows was $25.5 million 
while in the first three months of 1998, it was $57.0 million.

                                   Inflation

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

                                   Year 2000

The Year 2000 issue is the result of computer programs which recognize only two
digits rather than four to identify the year.  Any of the Company's computer 
programs that have time sensitive software may recognize a date of "00" as the 
year 1900 rather than the year 2000.  If not corrected, this could cause 
computer systems to fail or perform miscalculations.

The Company has identified the computer system applications that require 
modification to be Year 2000 compliant.  The Company has developed a corrective
plan whereby internal and external resources are being utilized to make the 
necessary modifications to and testing of the Company's computer systems.  
While some of the Company's computer systems are currently Year 2000 compliant,
management expects the remaining systems to be Year 2000 compliant by 
December 31, 1998.  The Company expensed costs relating to the Year 2000 issue 
of approximately $0.9 million during the six months ended June 30, 1998, and 
anticipates an additional $0.9 to $1.6 million of expenses to complete the 
project.  The estimated costs and estimated date of completion of the 
Year 2000 project is based on management's best estimates. However, there can 
be no guarantee that these estimates will be achieved and actual results could
differ from the Company's plan.

In addition, the Company is communicating with others with which it does 
business to determine if they are Year 2000 compliant.  However, there can be 
no guarantee that the systems of these companies will achieve Year 2000 
compliance in a timely manner.

The Company is conducting a comprehensive review of potential Year 2000 related
claims which might arise from policies of insurance currently being 
underwritten.  From such review, the Company will develop a coordinated plan to
eliminate, reduce or mitigate any Year 2000 exposures indicated including the 
use of exclusionary language, new underwriting and pricing practices, 
withdrawal from certain classes of business, and effective claim management
techniques.  The Company expects to have such a plan in place by the end 
of 1998.





   
                                   ACCEPTANCE INSURANCE COMPANIES INC


PART II.          OTHER INFORMATION


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

                  The Registrant's Annual Meeting of shareholders was held on 
                  May 28, 1998, and the following matters were submitted to a 
                  vote of shareholders at such Annual Meeting.

                  At the Annual Meeting, nine 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:
<TABLE>
<CAPTION>
                  Name                                        Number of Votes
                                                       For                        Withheld
                 <S>                                <C>                        <C> 
                  Jay A. Bielfield                   11,336,719                  53,843
                  Kenneth C. Coon                    11,283,873                 106,689
                  Edward W. Elliott, Jr.             11,337,336                  53,226
                  Robert LeBuhn                      11,339,730                  50,772
                  Michael R. McCarthy                11,337,340                  53,222
                  John P. Nelson                     11,337,340                  53,222
                  R.L. Richards                      11,340,990                  49,572
                  David L. Treadwell                 11,280,860                 109,702
                  Doug T. Valassis                   11,337,315                  53,247
</TABLE>
                  Each nominee received at least 99.0% of the votes cast.

                  
                  Also submitted to shareholders at such Annual Meeting was a 
                  proposal to ratify the appointment of Deloitte and Touche as 
                  the Company's principal independent public accountants for 
                  1998.  The voting results of such proposal are as follows:

<TABLE>
<CAPTION>
                                        <S>                  <C>
                                            FOR               11,377,492
                                         AGAINST                   5,002
                                         ABSTAIN                   8,068
                                         
 </TABLE>
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.


                                   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.



August 13, 1998                      /s/ KENNETH C. COON                      
                

                                         Kenneth C. Coon
                                         Chief Executive Officer


August 13, 1998                      /s/ GEORGIA M. MACE                      

                                         Georgia M. Mace
                                         Treasurer and Chief Accounting Officer
                                       

                       ACCEPTANCE INSURANCE COMPANIES INC.
                          QUARTERLY REPORT ON FORM 10-Q
                     FOR THE SIX MONTHS ENDED JUNE 30, 1998

                                  EXHIBIT INDEX

NUMBER            EXHIBIT DESCRIPTION


27                Financial Data Schedule.