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

                       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, 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 August 6, 1997 was:

Class of Common Stock                      No. of Shares Outstanding
Common Stock, $.40 Par Value                       15,337,618

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






                       ACCEPTANCE INSURANCE COMPANIES INC.

                                    FORM 10-Q

TABLE OF CONTENTS

PART I.     FINANCIAL INFORMATION

      Item 1.     Financial Statements:

            Consolidated Balance Sheets
            June 30, 1997 (unaudited) and December 31, 1996
              (audited)

            Consolidated Statements of Operations (unaudited)
            Three Months and Six Months Ended June 30, 1997
              and 1996

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

                                                June 30,         December 31,

                                                  1997              1996
                                              ------------       -----------   
(unaudited)                                     (audited)
<S>                                           <C>                 <C>
ASSETS
Investments:
Fixed maturities available for 
  sale                                        $  291,387           $268,004
Marketable equity securities -
  preferred stock                                 60,597             62,964
Marketable equity securities -
  common stock                                    23,953             20,873
Mortgage loans and other 
  investments                                     11,142             11,149
Real estate                                        3,335              3,342
Short-term investments, at cost,
  which approximates market                       69,029             39,594
                                              ----------         ----------      
                                                 459,443            405,926

Cash                                              10,154             10,697
Equity investment in Major
  Realty Corporation                               9,015              8,827
Receivables, net                                 112,930            133,363
Reinsurance recoverable on 
  unpaid loss and loss                        
  adjustment expenses                            182,565            185,421
Prepaid reinsurance premiums                      48,279             36,140
Property and equipment, net                       13,966              8,988
Deferred policy acquisition costs                 29,781             29,437
Excess of cost over acquired net 
  assets                                          35,380             35,783
Deferred income tax                               17,011             21,172
Other assets                                      14,099              8,626
                                              ----------         ----------
      Total assets                            $  932,623          $ 884,380
                                              ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses           $  440,237          $432,173
Unearned premiums                                151,542           140,217
Amounts payable to reinsurers                     19,450            10,157
Accounts payable and accrued
  liabilities                                     10,624            25,013
Bank borrowings                                   90,000            69,000
                                              ----------         ---------

      Total liabilities                          711,853           676,560

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;
  15,336,379 and 15,256,507
  shares issued                                    6,135             6,103
Capital in excess of par value                   196,878           196,090
Unrealized gain (loss) on 
  available-for-sale securities,
  net of tax                                       2,498            (1,476)
Retained earnings                                 19,588            11,432 
                                              ----------         ---------
                                                 225,099           212,149
Less:
Treasury stock, at cost, 38,681
  and 38,680 shares                               (1,629)           (1,629)
Contingent stock, 240,000 shares                  (2,700)           (2,700)
                                              ----------         ---------
Total stockholders' equity                       220,770           207,820
                                              ----------         ---------
Total liabilities and 
  stockholders' equity                        $  932,623          $884,380
                                              ==========         =========

<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 and six months ended
                             June 30, 1997 and 1996
                      (in thousands, except per share data)
                                   (unaudited)

                               Three Months                 Six Months
                           --------------------         ------------------
                             1997           1996          1997        1996
                           ---------      --------      --------    --------

<S>                        <C>            <C>           <C>         <C>
Revenues:
Insurance premiums
  earned                   $ 72,944       $ 76,896      $144,006    $144,400
Net investment 
  income                      6,791          6,528        13,311      12,992
Net realized capital
  gains                       2,020          1,586         3,331       2,767
                           --------       --------      --------    --------   
                             81,755         85,010       160,648     160,159
                           --------       --------      --------    --------
Costs and expenses:
Cost of revenues:
Insurance losses 
  and loss adjust-
  ment expenses              52,588         55,239       102,395     101,122
Insurance under-
  writing expenses           21,459         23,868        43,503      45,142

General and
  administrative
  expenses                      573            528         1,097       1,063
                           --------       --------      --------    --------
                             74,620         79,635       146,995     147,327
                           --------       --------      --------    --------
Operating profit              7,135          5,375        13,653      12,832 
                           --------       --------      --------    --------

Other income
  (expense):
Interest expense             (1,247)        (1,242)       (2,404)     (2,495)
Loss on investee                (63)           (53)         (117)       (117)
Other, net                       (4)           (35)           12         121
                           --------       --------      --------    --------
                             (1,314)        (1,330)       (2,509)     (2,491)
                           --------       --------      --------    --------
Income before
 income taxes                 5,821          4,045        11,144      10,341 
Income tax
  expense (benefit):
Current                       2,390          1,098           969       1,853
Deferred                       (811)           (78)        2,019         985 
                           ---------       --------     --------    ---------
Net income                 $  4,242       $  3,025      $  8,156    $  7,503 
                           ========       ========      ========    ========
Net income 
  per share:
Primary                    $    .28       $    .20      $    .54    $    .50
                           ========       ========      ========    ========
Fully diluted              $    .27       $    .20      $    .53    $    .49
                           ========       ========      ========    ========
<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 six months ended June 30, 1997 and 1996
                                 (in thousands)
                                   (unaudited)

                                                     1997           1996
                                                   ---------     --------
<S>                                                <C>           <C>
Cash flows from operating 
  activities:
Net income (loss)                                  $   8,156     $   7,503
Net adjustment to reconcile net 
  income to net cash provided by 
  operating activities                                19,995        16,645
                                                   ---------     ---------
Net cash provided by operating 
  activities                                          28,151        24,148
                                                   ---------     ---------
Cash flows from investing 
  activities:
Proceeds from sales of investments
  available for sale                                  45,717        73,930
Proceeds from maturities of 
  investments                                          3,932        15,637
Proceeds from maturities of 
  investments available for sale                      26,662         5,315
Purchases of investment                               (5,837)      (11,106)
Purchases of investments available                 
  for sale                                           (86,907)     (139,650)
Purchases of property and equipment                   (6,383)       (2,958)
                                                   ---------     ---------
Net cash used for investing 
  activities                                         (22,816)      (58,832)
                                                   ---------     ---------
Cash flows from financing activities:
Proceeds from bank borrowings                         21,000        --
Proceeds from issuance of 
  common stock                                           820         1,015
                                                   ---------     ---------
Net cash provided by financing
  activities                                          21,820         1,015
                                                   ---------     ---------
Net increase (decrease) in cash and 
  short-term investments                              27,155       (33,669)
Cash and short-term investments
  at beginning of period                              41,627        84,740
                                                   ---------     ---------
Cash and short-term investments
  at end of period                                 $  68,782     $  51,071
                                                   =========     =========
Supplemental disclosure of cash
  flow information:
Cash paid during the period for 
  interest                                         $   2,721     $   2,420
                                                   =========     =========
Cash paid during the period for 
  income taxes                                     $  (1,878)    $   2,050
                                                   =========     =========
<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 June 30, 1997
      and December 31, 1996, and the results of operations for the
      three months and six months ended June 30, 1997 and 1996 and
      cash flows for the six months ended June 30, 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 June
      30, 1997 approximately $10,401,000 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 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 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 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, 1997:
Fixed maturities
  available for sale:
U.S. Treasury and
  government 
  securities                $ 95,981     $   207     $   287     $ 95,901
States, municipalities
  and political sub-
  divisions                  111,933       2,048         380      113,601
Mortgage-backed 
  securities                  54,051         164       6,114       48,101
Other debt securities         33,408         928         552       33,784
                            --------     -------     -------     --------
                            $295,373     $ 3,347     $ 7,333     $291,387
                            ========     =======     =======     ========
Marketable equity
  securities - 
  preferred stock           $ 59,006     $ 2,163     $   572     $ 60,597
                            ========     =======     =======     ========
Marketable equity
  securities -
  common stock              $ 17,714     $ 7,288     $ 1,049     $ 23,953
                            ========     =======     =======     ========

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 and six months
      ended June 30, 1997 and 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
                              Three Months        Six Months
                          -------------------  -----------------  
                         1997      1996       1997      1996
                          --------  ---------  --------  -------
<S>                            <C>          <C>          <C>         <C>

Direct premiums written         $138,512    $135,487     $258,888    $249,196
Assumed premiums written           7,315       9,564       12,284      19,584
Ceded premiums written           (73,952)    (49,727)    (127,982)   (102,622)
                                --------    --------     --------    --------
Net premiums written            $ 71,875    $ 95,324     $143,190    $166,158
                                ========    ========     ========    ========

Direct premiums earned          $133,931    $123,970     $249,836    $232,186
Assumed premiums earned            6,053       9,341       10,009      18,323
Ceded premiums earned            (67,040)    (56,415)    (115,839)   (106,109)
                                ========    ========     ========    ========
Net premiums earned             $ 72,944    $ 76,896     $114,006    $144,400
                                ========    ========     ========    ========

</TABLE>

      Insurance loss and loss adjustment expenses have been
      reduced by recoveries recognized under reinsurance contracts
      of approximately $74,710,000 and $99,897,000 for the three
      months ended June 30, 1997 and 1996, respectively. 
      Insurance loss and loss adjustment expenses have been
      reduced by recoveries recognized under reinsurance contracts
      of approximately $89,731,000 and $125,337,000 for the six
      months ended June 30, 1997 and 1996, respectively.

4.    Bank Borrowings, Term Debt and Other Borrowings:

      On June 6, 1997, the Company amended its borrowing
      arrangements with its bank lenders providing a $100 million
      five year Revolving Credit Facility.  Further 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, 1997, the Company had $90 million outstanding under
      this arrangement at a weighted average interest cost of
      7.0%.

      On August 4, 1997, the Company used the net proceeds of
      $79.6 million from the issuance of Junior Subordinated
      Debentures to repay a portion of the Company's outstanding
      indebtedness under the Revolving Credit Facility.  As of
      that date, the outstanding indebtedness under the Revolving
      Credit Facility was reduced from $90.0 million to $10.4
      million. The net proceeds to be received on August 18, 1997
      from the additional issuance of Junior Subordinated
      Debentures in connection with the underwriters exercise of
      the Option will be used primarily to pay down the remaining
      $10.4 million in outstanding indebtedness under the
      Revolving Credit Facility.  As a result of the issuance of
      the Junior Subordinated Debentures, the Revolving Credit
      Facility will be reduced from $100 million to approximately
      $63.6 million. (See Note 7).
 
5.    Income Taxes:

      As of June 30, 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 June 30,
      1997 primarily relates to capital loss items whose
      realization is uncertain.  The net deferred tax asset is as
      follows (in thousands):
<TABLE>
<CAPTION>

                                       June 30,     December 31,
                                         1997            1996
                                    --------------   ----------
<S>                                              <C>               <C>
Unpaid losses and loss adjustment
  expenses                                        13,059            13,322
Unearned premiums                                  7,228             7,283
Allowances for doubtful accounts                   1,422             1,213
Other                                              2,560             2,689
Unrealized loss on fixed maturities
  available for sale                               1,395             2,229
Major Realty basis difference                      8,359             8,317
                                                 -------           -------
      Deferred tax asset                          34,023            35,053
                                                 -------           -------

Deferred policy acquisition costs                (10,423)          (10,303)
Other                                             (2,710)           (1,071)
Unrealized gain on marketable
  equity securities                               (2,741)           (1,434)
                                                 -------           -------
     Deferred tax liability                      (15,874)          (12,808)
                                                 -------           -------
                                                  18,149            22,245
Valuation allowance                               (1,138)           (1,073)
                                                 -------           -------
     Net deferred tax asset                      $17,011           $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>
                                                         June 30,
                                                    1997             1996
                                                 ----------        ---------

<S>                                              <C>               <C>
Computed U.S. federal income taxes               $  3,906          $ 3,619
Nondeductible amortization of
  goodwill and other intangibles                      284              284
Tax-exempt interest income                           (893)            (669)
Dividends received deduction                         (612)            (497)
Other                                                 303              101 
                                                 --------          -------
  Income taxes provided                          $  2,988          $ 2,838 
                                                 ========          =======

</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 June 30, 1997 and approximately 15.1 million
      and 15.3 million, respectively, for the three months ended
      June 30, 1996.  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 six months ended June 30, 1997 and approximately
      15.0 million and 15.3 million, respectively, for the six
      months ended June 30, 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 this statement is prohibited, disclosure
      of pro forma data prior to adoption is permitted.  For the
      three months and six months ended June 30, 1997 and 1996 pro
      forma earnings per share, based upon applying SFAS No. 128
      are as follows:

<TABLE>
<CAPTION>
                                    Three Months                   Six Months
                                1997       1996     1997    1996
                                                 
      <S>                         <C>        <C>      <C>     <C>
      Pro forma earnings
       per share:     
            Basic                 $  .28    $ .20     $ .54   $.50
            Diluted                  .28      .20       .53   $.50

</TABLE> 


7.    Subsequent Event:

      On August 4, 1997, AICI Capital Trust, a Delaware business
      trust organized by the Company (the "Issuer Trust") issued
      3.3 million shares or $82.5 million aggregate liquidation
      amount of its 9% Preferred Securities (liquidation amount
      $25 per Preferred Security). In addition, the Company has
      granted the underwriters an option, exercisable within 30
      days of July 29, 1997, (the "Option") to purchase up to an
      additional 495,000 shares or $12.375 million aggregate
      liquidation amount of Preferred Securities on the same terms
      as the Preferred Securities previously issued, solely to
      cover over-allotments, if any.  On August 12, 1997, the
      Company was notified by Avest, Inc. that the underwriters
      would exercise the Option and purchase an additional 495,000
      shares or $12.375 million aggregate liquidation amount of
      the Issuer Trust's 9% Preferred Securities.  The Company
      anticipates the closing for the sale of these Preferred
      Securities to be completed on August 18, 1997.                

      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 August 4, 1997 and are
      intended to be issued on August 18, 1997 in an amount equal
      to the total of the Preferred Securities and the Common
      Securities.  The Company used the net proceeds received on
      August 4, 1997 in the amount of $79.6 million from the sale
      of the Junior Subordinate Debentures to pay down borrowings
      under its Revolving Credit Facility.  The net proceeds to be
      received on August 18, 1997 from the additional issuance of
      Junior Subordinated Debentures will be used primarily to pay
      down the remaining $10.4 million in outstanding indebtedness
      under the Revolving Credit Facility.

      Distribution on the Preferred Securities and Junior
      Subordinate Debentures are cumulative, accrue from the date
      of issuance and are payable quarterly in arrears commencing
      September 30, 1997.  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.<PAGE>

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 and six months ended June 30, 1997
Compared to three months and six months ended June 30, 1996

The Company's net income for the three months and six months
ended June 30, 1997 increased 40.2% and 8.7% respectively from
the same periods in 1996.  The first six months of 1997 were
positively impacted by an improvement in the profitability of the
Property and Casualty operations.  This improvement in the
profitability of the Property and Casualty lines was partially
offset by reduced income realized in the Company's Crop Division
during the first three months of 1997 as compared to the first
three months of 1996.  The net income during the first six months
of 1997 also benefited from an increase in the Company's net
investment income and net realized capital gains.  

While the Company's insurance premiums earned decreased slightly
for both the three months and six months ended June 30, 1997 as
compared to the same periods a year earlier, the Company's
operating ratios in its Property and Casualty operations improved
during these same periods. The decrease in net insurance premiums
earned was a result of increased cessions to reinsurers rather
than a drop in direct premiums written.  The increased cessions
to reinsurers resulted from a change in the mix of the Company's
business as well as increased cessions to reinsurers in lines in
which the Company was not meeting its profitability goals.  These
changes in reinsurance structure and mix of business combined
with the Company's efforts to reduce operating expenses resulted
in a decrease of the Company's combined loss and expense ratio in
its Property and Casualty lines from 103.7% and 103.8% during the
three and six months ended June 30, 1996 respectively to 101.9%
and 102.1% during the three and six months ended June 30, 1997. 
These improved ratios combined with a reduction in net earned
premiums resulted in a decrease of the Company's underwriting
loss from property and casualty operations from $2.6 million and
$5.1 million during the three and six months ended June 30, 1996
to $1.3 million and $3.0 million during the three and six months
ended June 30, 1997.  

During the first quarter of 1996, the Company's operating income
benefited 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 Mutli-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.  Crop results
during the second three months of 1996 and 1997 were roughly
equivalent with an underwriting income of approximately $400,000
for the three months ended June 30, 1996 and $200,000 for the
three months ended June 30, 1997.  Thus, the Company experienced
a larger benefit during the first six months of 1996 from crop
operations than it did during the first six months of 1997.  

The Company's net income was also positively impacted during the
three months and six months ended June 30, 1997 as compared to
the same period a year earlier by an increase in the Company's
investment income and net realized capital gains.  The Company's
investment income increased 4.0% and 2.5% respectively in the
three and six months ended June 30, 1997 as compared to the same
period in 1996, while the Company's net realized capital gains
increased 27.4% and 20.4% in the three and six months ended June
30, 1997 respectively as compared to 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 $386.6 million during the six months ended June
30, 1996 to $434.3 million during the six months ended June 30,
1997.  This increase in the size of the portfolio was largely
offset by a decrease in the annualized investment yield of the
portfolio from 6.7% during the three and six months ended June
30, 1996 to 6.1% during the three and six months ended June 30,
1997.  This decrease in annual investment yield was principally a
result of an increase in the average amount of tax advantaged
securities within the Company's portfolio during the first six
months of 1997 as compared to the first six months of 1996.  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 six months periods being compared.  

The Company's interest expense during the three months ended June
30, 1997 as compared to the same period a year earlier, was
relatively stable, while during the six months ended June 30,
1997 the Company's interest expense decreased by 3.6% from the
same period during 1996.  This decrease in interest expense
resulted from a decrease in the Company's average interest rate
under its bank credit facility from 7.2% during the six months
ended June 30, 1996 to 7.0% during the six months ended June 30,
1997.  The Company's average borrowings under the bank credit
facility were approximately $69 million during all periods being
compared.

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 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, three surplus
notes issued by 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 June 30,
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 three surplus notes, each in the
amount of $20.0 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 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.

On June 6, 1997, the Company amended its borrowing arrangements
with its bank lenders providing a $100 million five-year
Revolving Credit Facility.  Further, 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, 1997, the Company had
$90 million outstanding under this arrangement at a weighted
average interest cost of 7.0%.  

On August 4, 1997, AICI Capital Trust, a Delaware business trust
organized by the Company (the ""Issuer Trust") issued 3.3 million
shares or $82.5 million aggregate liquidation amount of its 9%
Preferred Securities (liquidation amount $25 per Preferred
Security).  In addition, the Company has granted the underwriters
an option, exercisable within 30 days of July 29, 1997, (the
"Option") to purchase up to an additional 495,000 shares or
$12.375 million aggregate liquidation amount of Preferred
Securities on the same terms as the Preferred Securities
previously issued, solely to cover over-allotments, if any.  On
August 12, 1997, the Company was notified by Advest, Inc. that
the underwriters would exercise the Option and purchase an
additional 495,000 shares or $12.375 million aggregate
liquidation amount of the Issuer Trust's 9% Preferred Securities. 
The Company anticipates the closing for the sale of these
Preferred Securities to be completed on August 18, 1997.

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 on August 4, 1997 and are intended to be issued on
August 18, 1997 in an amount equal to the total of the Preferred
Securities and the Common Securities.  The Company used the net
proceeds received on August 4, 1997 in the amount of $79.6
million from the sale of the Junior Subordinated Debentures to
pay down borrowings under its Revolving Credit Facility.  The net
proceeds to be received on August 18, 1997 from the additional
issuance of Junior Subordinated Debentures will be used primarily
to pay down the remaining $10.4 million in outstanding
indebtedness under the Revolving Credit Facility.  As a result of
the issuance of the Junior Subordinated Debentures, the Revolving
Credit Facility will be reduced from $100 million to
approximately $63.6 million.

Distributions on the Preferred Securities and Junior Subordinated
Debentures are cumulative, accrue from the date of issuance and
are payable quarterly in arrears commencing September 30, 1997. 
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 Subordinated
Indenture.

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
$13.0 million at June 30, 1997 as compared to December 31, 1996. 
The principal components of this increase were net income of $8.2
million during the first six months of 1997 and an increase in
the value of the Company's investment portfolio causing the
unrealized gain (loss) on available for sale securities net of
tax to improve from a loss of $1.5 million to a gain of $2.5
million.  This change in the unrealized gain (loss) on available
for sale securities was comprised of a decrease of $1.6 million
net of tax in the unrealized loss in the Company's fixed maturity
portfolio and an increase of $2.4 million net of tax in the
unrealized gains in the Company's equity portfolio.

Consolidated Cash Flow

Cash flows from operating activities increased from $24.1 million
during the first six months of 1996 to $28.2 million during the
same six months in 1997.  The largest component of net cash
provided activities in both periods was profit sharing payments
received from the federal government's Multi-Peril Crop insurance
program.  During the first six months of 1996 this component of
operating cash flows was $15.9 million while in the first six
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.





<PAGE>
                       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 29, 
            1997, and the following matters were submitted to a vote of 
            shareholders at such Annual Meeting.

            At the Annual Meeting, nine Director 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               13,066,581         31,896
            Kenneth C. Coon                13,070,331         28,146
            Edward W. Elliott, Jr.         13,065,781         32,696
            Robert LeBuhn                  13,066,556         31,921
            Michael R. McCarthy            13,066,431         32,046
            John P. Nelson                 13,066,581         31,896
            R.L. Richards                  13,066,581         31,896
            David L. Treadwell             13,065,726         32,751
            Doug T. Valassis               13,066,481         31,996
</TABLE>
            Each nominee received at least 99.7% of the votes cast.

            At such Annual Meeting, there was submitted to shareholders a 
            proposal to approve the Registrant's 1997 Employee Stock Purchase 
            Plan, in the form of such Plan submitted with proxy materials for 
            the Annual Meeting.  The Plan was approved by shareholders by the 
            following vote:
<TABLE>
                              <S>             <C>
                                  FOR         11,769,170
                              AGAINST          1,300,100
                              ABSTAIN             29,207
                              NO VOTE                  0
</TABLE>
                                     
            Also submitted to shareholders at such Annual Meeting was a 
            proposal to ratify the appointment of Deloitte & Touche as the 
            Company's principal independent public accountants for 1997.  The 
            voting results of such proposal are as follows:
<TABLE>
                              <S>             <C>        
                                  FOR         13,069,249
                              AGAINST              4,689
                              ABSTAIN             20,179
                              NO VOTE              4,360
</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.<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.

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

August 13, 1996                /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 SIX MONTHS ENDED JUNE 30, 1997

                                  EXHIBIT INDEX

NUMBEREXHIBIT 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.

4.3         Form of Preferred Security (included in Exhibit 4.8).
            Incorporated by reference to Form S-3 Registration
            No.33-28749, filed July 29, 1997.

4.4         Form of Guarantee Agreement Between Acceptance Insurance Companies
            Inc. and Bankers Trust Company. Incorporated by reference to Form 
            S-3 Registration No.33-28749, filed July 29, 1997.

4.5         Form of Junior Subordinated Indentures Between Acceptance Insurance
            Companies Inc. and Bankers Trust Company.  Incorporated by 
            reference to Form S-3 Registration No. 33-28749, filed July 29, 
            1997.

4.6         Certification of Trust of AICI Capital Trust. Incorporated by 
            reference to Form S-3 Registration No. 33-28749, filed July 29, 
            1997.

4.7         Trust Agreement between Acceptance Insurance Companies Inc. and
            Bankers Trust (Delaware).  Incorporated by reference to Form S-3
            Registration No. 33-28749, filed July 29, 1997.

4.8         Form of Amended and Restated Trust Agreement among Acceptance
            Insurance Companies Inc., Bankers Trust Company and Bankers
            Trust (Delaware).  Incorporated by reference to Form S-3
            Registration No.33.28749, filed July 29, 1997.

10.1        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.

10.2        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.

10.3        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.

10.4        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.

10.5        $100,000,000 Amended and Restated Credit Agreement by and Among the
            Registrant, The First National Bank of Chicago, Comerica Bank,
            First National Bank of Omaha, First Bank, N.A., Wells Fargo Bank,
            National Association and Mercantile Bank, N.A. and The First
            National Bank of Chicago, As Agent, and Comerica Bank, First 
            National Bank of Omaha, and First Bank, N.A., As Co-Agents, 
            dated as of June 6, 1997.

11          Computation of Income per share.

27          Financial Data Schedule.

99.1        The 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.