SECURITIES AND EXCHANGE COMMISSION

                      Washington, DC  20549

                            Form 10-Q

[X]  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 for the transition period
     from ______________ to ____________.

                              0-16533        
                     (Commission File Number)

                      Old Guard Group, Inc.                
     (Exact Name of Registrant as Specified in its Charter) 

      Pennsylvania                              23-2852984       
(State of Incorporation)                 (IRS Employer ID Number)

    2929  Lititz Pike, Lancaster, PA                    17604    
(Address of Principal Executive Offices)              (Zip Code) 

                          717-569-5361         
                (Registrant's Telephone Number) 

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

     Number of Shares Outstanding as of July 31, 1998:

Common Stock (No Par Value)                        4,110,919     
      (Title of Class)                       (Outstanding Shares)






                                                    Page 1 of 21
  PAGE 1
<PAGE>
                      OLD GUARD GROUP, INC

                            Form 10-Q

               For the Quarter Ended June 30, 1998

                            Contents
                                                       Page No.

Part I    -    FINANCIAL INFORMATION         

Item 1.   -    Financial Statements 

               Consolidated Balance Sheets as of 
               June 30, 1998 and December 31, 1997          3

               Consolidated Statements of Income for the 
               Three Months Ended June 30, 1998 and 1997    4

               Consolidated Statements of Income for the  
               Six Months Ended June 30, 1998 and 1997      5

               Consolidated Statement of Shareholders' 
               Equity for the Six Months Ended June 30,
               1998                                         6

               Consolidated Statements of Cash Flows 
               for the Six Months Ended June 30, 1998 and
               1997                                         7

               Notes to Consolidated Financial Statements   8

Item 2.        Management's Discussion and Analysis of 
               Financial Condition and Results of
               Operations                                   11
          
PART II  -     OTHER INFORMATION 

Item 1.        Legal Proceedings                            16

Item 2.        Change in Securities                         16   

Item 3.        Defaults upon Senior Securities              16

Item 4.        Submission of Matters to a Vote of 
               Security Holders                             16   

Item 5.        Other Information                            17

Item 6.        Exhibits and Reports on Form 8 - K           17
  PAGE 2
<PAGE>
<TABLE>
<CAPTION>
                         OLD GUARD GROUP, INC. AND SUBSIDIARIES
                         Consolidated Balance Sheets
                         (UNAUDITED)

                                                      As of              As of
                                                      June 30, 1998      December 31, 1997
<S>                                                   <C>                <C>
ASSETS
Investments:
 Fixed income securities
   Held to maturity, at amortized cost                    $36,248,944        $38,382,722 
   Available for sale, at fair value                       54,418,919         57,237,836 
 Preferred stocks, available for sale, at fair value        5,667,440          4,626,565 
 Common stocks, available for sale, at fair value          13,965,730         12,208,318 
 Other invested assets                                      7,069,092          5,668,025 

     Total investments                                    117,370,125        118,123,466 
                                                                      
Cash and cash equivalents                                   6,997,053         10,214,908 
Receivables:
 Premiums                                                   9,018,885          7,945,218 
 Reinsurance                                               13,255,550         10,767,770 
 Investment income                                          1,212,868          1,236,186 
 Affiliates                                                 2,253,455          1,093,062 
Prepaid reinsurance premiums                                3,263,225          6,285,844 
Deferred policy acquisition costs                           9,124,375          7,318,767 
Deferred income taxes                                               -            262,750 
Property and equipment                                     13,390,731         10,112,212 
Goodwill                                                      744,451            772,023 
Other assets                                                3,316,515          1,266,509 
                                                                      
     Total assets                                        $179,947,233       $175,398,715
                                                         ============       ============ 

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
 Losses and loss adjustment expenses                       49,921,751         48,718,666 
 Unearned premiums                                         40,474,868         36,535,108 
 Accrued expenses                                           1,529,841          2,541,896 
 Capital lease obligations                                    447,657            796,558 
 Deferred income taxes                                        442,038                  - 
 ESOP liability                                             3,702,029          3,840,566 
 Other liabilities                                          1,664,319          3,662,423 

   Total liabilities                                       98,182,503         96,095,217 

Minority Interest                                             692,030            649,125 

Shareholders' Equity:
 Preferred stock (5,000,000 shares authorized;
   0 issued and outstanding)                                        -                  - 
  Common Stock (15,000,000 shares authorized;
   4,239,459 and 4,204,910 shares issued; 4,110,919
   and 4,084,370 shares outstanding; no par)               38,641,398         38,317,908 
 Additional paid-in capital                                 4,750,206          4,787,703 
 Deferred compensation                                     (5,728,340)        (6,277,553)
 Retained earnings                                         40,977,643         40,259,736 
 Net unrealized investment gains, net of deferred
   income taxes                                             4,875,826          3,856,612 
 Treasury stock, at cost (128,540 and  
   120,540 shares)                                         (2,444,033)        (2,290,033)

      Total shareholders' equity                           81,072,700         78,654,373 

      Total liabilities and shareholders' equity         $179,947,233       $175,398,715 
                                                         ============       ============
</TABLE>  <PAGE 3>
     The accompanying notes are an integral part of the
consolidated financial statements.
  PAGE 4
<PAGE>
<TABLE>
<CAPTION>
           OLD GUARD GROUP, INC. AND SUBSIDIARIES
           Consolidated Statements of Income
           (UNAUDITED)

                                                For the Three   For the Three
                                                Months Ended    Months Ended
                                                June 30, 1998   June 30, 1997
<S>                                             <C>             <C>
Revenue:
  Net premiums written                           $21,864,934     $18,061,209 
  Change in unearned premiums                     (3,417,596)     (2,260,382)

  Net premiums earned                             18,447,338      15,800,827 

  Investment income, net of expenses               1,548,070       1,560,761 
  Net realized investment gains                      936,818         415,829 
  Other revenue                                      609,562         142,800 

  Total revenue                                   21,541,788      17,920,217
                                                 ===========     =========== 

Expenses:
  Losses and loss adjustment expenses incurred    14,274,556      10,046,229 
  Operating expenses                               8,178,437       6,150,051 
  Interest expense                                   103,504         159,352 

  Total expenses                                  22,556,497      16,355,632 

Income (loss) before income tax (benefit)
  and minority interest                           (1,014,709)      1,564,585 

Income tax expense (benefit)                        (374,757)        635,824 

Income (loss) before minority interest              (639,952)        928,761 

Minority interest in earnings of consolidated
  subsidiary                                           9,818           4,501 

Net income (loss)                                   (649,770)        924,260 

Other comprehensive income, before tax:
  Unrealized holding gains                           393,929       3,490,785 
  Less: Reclassification adjustment for gains
       included in net income                        936,818         415,829 

Other comprehensive income (loss), before tax       (542,889)      3,074,956 
Income tax expense (benefit) related to items
  of other comprehensive income                     (190,355)      1,095,717 

Other comprehensive income (loss), net of tax       (352,534)      1,979,239 

Comprehensive income (loss)                      $(1,002,304)     $2,903,499

Earnings (loss) per share                        ===========      ==========
  Basic                                                (0.17)           0.24
  Diluted                                              (0.17)           0.24
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
  PAGE 5
<PAGE>
<TABLE>
<CAPTION>
           OLD GUARD GROUP, INC. AND SUBSIDIARIES
             Consolidated Statements of Income
           (UNAUDITED)

                                                For the Six      For the Six
                                                Months Ended     Months Ended
                                                June 30, 1998    June 30, 1997
<S>                                             <C>              <C>
Revenue:
  Net premiums written                           $43,139,144      $34,813,770 
  Change in unearned premiums                     (6,962,379)      (4,305,997)

  Net premiums earned                             36,176,765       30,507,773 

  Investment income, net of expenses               3,051,824        2,933,997 
  Net realized investment gains                    1,744,199          883,087 
  Other revenue                                    1,208,213          231,690 

  Total revenue                                   42,181,001       34,556,547 

Expenses:
  Losses and loss adjustment expenses incurred    23,814,571       18,931,456 
  Operating expenses                              16,680,045       12,006,807 
  Interest expense                                   215,213          295,881 

  Total expenses                                  40,709,829       31,234,144 
                                                 ===========      ===========

Income before income tax and minority interest     1,471,172        3,322,403 

Income tax expense                                   500,113        1,254,714 

Income before minority interest                      971,059        2,067,689 

Minority interest in earnings of consolidated
  subsidiary                                          42,905           14,775 

Net income                                           928,154        2,052,914 

Other comprehensive income, before tax:
  Unrealized holding gains                         3,287,742        2,458,326 
  Less: Reclassification adjustment for gains
       included in net income                      1,744,199          883,087 

Other comprehensive income, before tax             1,543,543        1,575,239 
Income tax expense related to items of other
  comprehensive income                               524,329          533,683 

Other comprehensive income, net of tax             1,019,214        1,041,556 

Comprehensive income                              $1,947,368       $3,094,470

Earnings per share                                ==========       ==========
  Basic                                                 0.25             0.54
  Diluted                                               0.24             0.54
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
  PAGE 6
<PAGE>
             OLD GUARD GROUP, INC. AND SUBSIDIARIES
         Consolidated Statement of Shareholders' Equity
             For the Six Months Ended June 30, 1998 
                           (UNAUDITED)
                                                                  
<TABLE>
<CAPTION>
                                                                                          Net Unrealized
                                                                                             Investment
                                                   Additional                              Gains, Net of
                                Common Stock        Paid-In       Deferred     Retained       Deferred        Treasury 
                            Shares      Amount      Capital     Compensation    Earnings    Income Taxes       Stock       Total   
<S>                       <C>        <C>          <C>          <C>            <C>          <C>             <C>          <C>
Balance, January 1, 1998  4,084,370  $38,317,908  $4,787,703   $(6,277,553)   $40,259,736    $3,856,612    $(2,290,033) $78,654,373

Comprehensive income:
  Net income                                                                     928,154                                    928,154
  Unrealized gains on
    investments, net of
    reclassification 
    adjustment                                                                               1,019,214                    1,019,214
Comprehensive income                                                                                                      1,947,368

Dividends ($.05 per
  share)                                                                         (210,247)                                 (210,247)

Exercise of common stock
  options                    32,349      323,490                                                                            323,490

Purchase of treasury stock   (8,000)                                                                         (154,000)     (154,000)

MRP stock-based
  compensation                2,200                 (162,632)      410,676                                                  248,044

ESOP compensation earned                             125,135       138,537                                                  263,672
                                                                                                                         
Balance, June 30, 1998    4,110,919  $38,641,398  $4,750,206   $(5,728,340)   $40,977,643   $4,875,826    $(2,444,033)  $81,072,700
                          =========  ===========  ==========   ===========    ===========   ==========    ===========   ===========
</TABLE>
     The accompanying notes are an integral part of the
consolidated financial statement. 
  PAGE 7
<PAGE>
             OLD GUARD GROUP, INC. AND SUBSIDIARIES
              Consolidated Statements of Cash Flows
                           (UNAUDITED)

[CAPTION]
<TABLE>
                                                           For the Six      For the Six
                                                           Months Ended    Months Ended
                                                          June 30, 1998   June 30, 1997
<S>                                                       <C>             <C>
Cash flows from operating activities:
  Net income                                               $   928,154     $  2,052,914 

  Adjustments to reconcile net income to net cash
    provided (used) by operating activities:
  Depreciation and amortization                                606,880          711,485 
  Net realized investment gains                             (1,741,199)        (883,087)
  Deferred income tax provision                                180,458          475,164 
  Non-cash compensation expense                                511,716          120,034 
  Other                                                         39,905           14,775 
  (Increase) decrease in assets:
    Receivables                                             (4,698,522)      (2,058,445)
    Prepaid reinsurance premiums                             3,022,619        1,497,773 
    Deferred policy acquisition costs                       (1,805,608)        (944,047)
    Other assets                                            (2,000,006)         152,467 
  Increase (decrease) in liabilities:
    Losses and loss adjustment expenses                      1,203,085       (2,217,575)
    Unearned premiums                                        3,939,760        1,994,551 
    Accrued expenses                                        (1,012,055)        (846,322)
    Other liabilities                                         (678,757)         466,445 

  Net cash provided (used) by operating activities          (1,503,570)         536,132 

Cash flows from investing activities:
  Cost of purchases of fixed income securities 
    Held to maturity                                        (4,991,611)     (28,987,512)
    Available for sale                                      (7,700,659)               - 
  Proceeds from sales of fixed income securities 
    Available for sale                                      10,820,521        3,911,883 
  Proceeds from maturities of fixed income securities
    Held to maturity                                         7,072,238                - 
    Available for sale                                       1,022,511        5,226,743 
  Cost of equity securities acquired                        (4,139,288)      (4,795,895)
  Proceeds from sales of equity securities                   3,190,235        3,320,106 
  Cost of purchases of other invested assets                   (50,000)      (2,640,000)
  Proceeds from sales of other invested assets              (1,250,000)         588,582 
  FDIC acquisition, net of cash acquired                             -         (626,175)
  Cost of purchases of property and equipment               (3,843,692)      (2,747,445)
  Proceeds from sales of property and equipment                  3,000                - 

    Net cash provided (used) by investing activities           133,255      (26,749,713)

Cash flows from financing activities:
  Proceeds from sale of stock, net of issuance costs           323,490       33,772,098 
  Purchase of treasury stock                                (1,473,345)               - 
  Payment of dividends                                        (210,247)               - 
  Proceeds from bank loans                                           -        5,054,770 
  Payments on principal of capital lease or bank loan         (487,438)      (2,005,230)

    Net cash provided (used) by financing activities        (1,847,540)      36,821,638 

    Net increase (decrease) in cash and cash equivalents    (3,217,855)      10,608,057 
  <PAGE 8>
Cash and cash equivalents at beginning of period            10,214,908        5,668,369 

Cash and cash equivalents at end of period                 $ 6,997,053     $ 16,276,426 
</TABLE>

     The accompanying notes are an integral part of the
consolidated financial statements.
  PAGE 9
<PAGE>
             OLD GUARD GROUP, INC. AND SUBSIDIARIES
                           (UNAUDITED)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Organization

     The consolidated financial statements include the accounts
of Old Guard Group, Inc. (OGGI) and its wholly-owned subsidiaries
(the Group), Old Guard Insurance Company (Old Guard), Old Guard
Fire Insurance Company (Old Guard Fire), First Patriot Insurance
Company (First Patriot), Old Guard Insurance Management Company
(OGIM), 2929 Service Corporation and OGGI's 80% owned subsidiary,
First Delaware Insurance Company (First Delaware).

     The Group is a regional insurance holding company that, on
February 11, 1997, completed a subscription offering in which it
raised $38.3 million, net of issuance costs of $3.7 million, in
exchange for 4.2 million shares of no par common stock. 
Concurrent with the offering and in accordance with a plan of
conversion, Old Guard, Old Guard Fire and First Patriot
(collectively, the Insurance Companies) were converted from
mutual to stock insurance companies and issued shares of common
stock to the Group in exchange for $16.0 million.  As a result of
the conversion, the Insurance Companies are wholly-owned
subsidiaries of the Group.

2.   Basis of Presentation

     The financial information for the interim periods included
herein is unaudited; however, such information reflects all
adjustments, consisting of normal recurring adjustments, which
are, in the opinion of management, necessary to a fair
presentation of the financial position, results of operations,
and cash flows for the interim periods.  The results of
operations for interim periods are not necessarily indicative of
results to be expected for the full year.

     These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
for the year ended December 31, 1997 included in the Group's 1997
Annual Report on Form 10-K filed with the Securities and Exchange
Commission.

     Certain amounts in the 1997 financial statements have been
reclassified to conform with the current year presentation.

3.   Earnings Per Share

     The following table reconciles the numerator and denominator
used in basic earnings per share to diluted earnings per share
for the six months ended:
  <PAGE 10>
                                   June 30, 1998   June 30, 1997
 
     Net income - for basic and
       diluted earnings per share    $  928,154       $2,052,914

     Common shares outstanding        3,720,243        3,802,235  

     Dilutive shares

       Treasury stock in MRP trust      126,682            -   

       Outstanding stock options         98,900            -    

     Total common and dilutive
       shares                         3,945,825        3,802,235

4.   Supplemental Cash Flow Disclosure

     Interest paid for the six months ended June 30, 1998 and
1997 was $215,213 and $271,095, respectively.  Net income taxes
paid for the six months ended June 30, 1998 and 1997 was
$1,322,200 and $271,095, respectively.

5.   New Accounting Pronouncements 

     In June 1997, Statement of Financial Accounting Standards
(SFAS) No. 130, "Comprehensive Income," was issued.  SFAS No. 130
establishes standards for the reporting and disclosure of
comprehensive income and its components (revenues, expenses,
gains and losses).  SFAS No. 130 requires that all items that are
required to be recognized under accounting standards as
components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other
financial statements.  SFAS No. 130 requires that an enterprise
(a) classify items of other comprehensive income by their nature
in a financial statement and (b) display the accumulated balance
of other comprehensive income separately from retained earnings
and additional paid-in capital in the equity section of a
statement of financial position.  The effects of adopting SFAS
No. 130 are included in the consolidated financial statements
included herein.

     In June 1997, SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," was issued.  SFAS No. 131
establishes standards for the way that public business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about operating segments in interim
financial reports issued to shareholders.  SFAS No. 131 also
establishes standards for related disclosures about products and
services, geographic areas and major customers.  SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. 
The Group is currently in the process of determining the effect
of SFAS No. 131 upon its financial reporting requirements and 
<PAGE 11> will adopt SFAS No. 131 for its year-end 1998 financial
reporting.

     In June 1998, SFAS No. 133 was issued.  SFAS No. 133
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as "derivatives") and
for hedging activities.  SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value.  If certain conditions are met, a derivative may be
specifically designated as (i) a hedge of the exposure to changes
in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (ii) a hedge of the exposure of
variable cash flows of a forecasted transaction, or (iii) a hedge
of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale
security, or a foreign-currency-denominated forecasted
transaction.  The accounting for changes in the fair value of a
derivative (that is, gains and losses) depends on the intended
use of the derivative and the resulting designation.  SFAS
No. 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999.  While the Group is presently
evaluating the impact of SFAS No. 133, the adoption of SFAS
No. 133 is not expected to have a material impact on the Group's
financial condition or results of operations.
  PAGE 12
<PAGE>
Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS.

     Premiums.  Gross premiums written increased $996,000, or
4.1%, to $25.4 million, and $5.6 million, or 12.5%, to
$50.6 million for the three and six month ends June 30, 1998,
compared to the three and six months ended June 30, 1997.  The
primary cause of this increase was the assumption of 100% of the
net premiums of New Castle Mutual Insurance Company (New Castle),
which is affiliated with the Group through a management contract.
Assumed premiums from New Castle amounted to $1,428,000 in the
second quarter of 1998 versus $206,000 in 1997 and $5,815,000 for
the first six months of 1998 versus $504,000 in 1997.  Of the
$5,815,000 of premiums assumed from New Castle, $3,015,000 is
attributable to the one time transfer of New Castle's unearned
premium reserve as of January 1, 1998. 

     Premiums ceded to reinsurers decreased $2,781,000, or 44.1%,
to $3,529,000, and $2,920,000, or 28.7%, to $7,266,000 for the
three and six months ended June 30, 1998 compared to the three
and six months ended June 30, 1997.  The decrease in premiums
ceded was attributable to the elimination, on a run-off basis, of
the quota share reinsurance agreement effective January 1, 1998. 
As a result, no premiums are ceded under the quota share
reinsurance treaty in 1998.  This compares to $3,098,000 and
$4,131,000 of ceded premiums ceded under this treaty for the
three and six months ended June 30, 1997, respectively, and
negative ceded premiums of $1,395,000 under the surplus
reinsurance treaty during the six months ended June 30, 1997 as a
result of its cancellation.

     Net premiums written increased $3,804,000, or 21.1%, to
$21,865,000, and $8,325,000, or 23.9%, to $43,139,000 for the
three and six months ended June 30, 1998 compared to the three
and six months ended June 30, 1997.  Net premiums earned
increased $2,647,000, or 16.8%, to $18,447,000, and $5,659,000,
or 18.6%, to $36,177,000 during the three and six months ended
June 30, 1998 compared to the three and six months periods ended
June 30, 1997.  The increases in net premiums written and earned
were directly attributable to the effects of the changes
instituted in the Group's reinsurance program and increases in
gross premiums written as previously discussed.

     Net Investment Income.  Cash and invested assets decreased
$3,971,000 million, or 3.1%, to $124.4 million on June 30, 1998
from $128.3 million on December 31, 1997.  This decrease is
primarily a result of additional investments in computer software
and hardware and constructions costs associated with the Group's
home office expansion in Lancaster, Pennsylvania offset by gross
unrealized gains on the investment portfolio that are carried at
fair value of approximately $1,544,000.  For the six months ended
June 30, 1998, the yield on average cash and invested assets was
5.1% compared to 5.2% for the comparable period of 1997.  Despite
the overall decrease in invested assets and yield, net investment 
<PAGE 13> income for the six months ended June 30, 1998 increased
$118,000 over the comparable period in 1997 because the proceeds
from the Group's subscription offering completed in the first
quarter of 1997 were invested for the entire six months of 1998.

     Net Realized Investment Gains.  Net realized investment
gains were $937,000 and $1,744,000 for the three and six months
ended June 30, 1998, respectively, compared to $416,000 and
$883,000 for the comparable periods in 1997.  The increase can be
attributed to profits taken in both the Group's fixed income and
equity portfolios.

     Other Revenue.  Other revenue increased $467,000, or 326.9%,
to $610,000, and $977,000, or 421.5%, to $1,208,000 for the three
and six months ended June 30, 1998 compared to the three and six
months ended June 30, 1997.  The increase is attributable to the
management agreement entered into with New Castle effective
January 1, 1998.

     Losses and Loss Adjustment Expenses.  Net losses and loss
adjustment expenses incurred increased by $4,228,000, or 42.1%,
to $14,275,000, and $4,883,000, or 25.8%, to $23,815,000 for the
three and six months ended June 30, 1998 compared to the three
and six months ended June 30, 1997.  The loss and loss adjustment
expense ratio was 77.4% and 65.8% for the three and six months
ended June 30, 1998, respectively, versus 63.6% and 62.1% for the
comparable periods in 1997.  The increase in the loss and loss
adjustment expenses can be attributed to nearly $3,400,000 of
losses from tornadoes and severe thunderstorms during the first
week of June 1998 and more losses being retained by the Group as
a result of the termination of the quota share reinsurance
treaty.

     Operating Expenses.  Operating expenses increased by
$2,028,000, or 33.0%, to $8,178,000 and $4,673,000, or 38.9% to
$16,680,000 for the three and six months ended June 30, 1998
compared to the three and six months ended June 30, 1997.  The
increases are primarily the result of the loss of commission
income because of the unwinding of the quota share reinsurance
agreement in 1998 and additional commission expense on the
assumed business from New Castle.

     Federal Income Tax Expense.  Federal income tax as a
percentage of pre-tax income was 34.0% and 37.8% for the six
months ended June 30, 1998 and 1997, respectively.  The decrease
in effective tax rate is primarily attributable to additional tax
exempt interest on the investment portfolio in 1998.

     Liquidity and Capital Resources

     The principal sources of the Group's cash flow are premiums,
investment income, maturing investments and proceeds from sales
of invested assets.  In addition to the need for cash flow to
meet operating expenses, the liquidity requirements of the Group
relate primarily to the payment of losses and loss adjustment 
<PAGE 14> expenses.  The short and long-term liquidity
requirements of the Group vary because of the uncertainties
regarding the settlement dates for liabilities for unpaid claims
and because of the potential for large losses, either
individually or in the aggregate.

     The Group and its subsidiaries have in place unsecured lines
of credit with a local financial institution under which they may
borrow up to an aggregate of $1.5 million.  As of June 30, 1998,
no amounts were borrowed against these lines of credit.

     Net cash provided (used) by operating activities was
$(1,504,000) and $536,000 during the first six months of 1998 and
1997, respectively.  The change in cash flow from operating
activities from 1997 to 1998 is primarily attributable to reduced
operating profitability as a result of the tornadoes and severe
thunderstorms in June of 1998, prepaid premium taxes and an
increase in reinsurance receivables from New Castle.

     In 1998, cash used by investing activities was minimal as
the Group utilized the net proceeds from activity in its
investment portfolio to finance its home office expansion. In
1997, cash used for investing activities was $26.7 million
because the Group invested the net proceeds from the subscription
offering and made continuing investments in computer systems.

     In 1998, cash used by financing activities was $1,848,000 as
the Group purchased treasury stock and paid cash dividends.  In
1997, cash provided by financing activities of $36.8 million
resulted primarily from the net proceeds from the subscription
offering less repayments of capital leases and other debt.

     The principal source of liquidity for Old Guard Group, Inc.
(OGGI) will be dividend payments and other fees received from its
subsidiaries.  OGGI's insurance subsidiaries are restricted by
the insurance laws of the state of domicile as to the amount of
dividends or other distributions they may pay to the OGGI without
the prior approval of the state regulatory authority.  Under
Pennsylvania law, the maximum amount that may generally be paid
by an insurance company during any twelve-month period after
notice to, but without prior approval of, the Pennsylvania
Insurance Department, cannot exceed the greater of 10% of the
insurance company's statutory surplus as reported on the most
recent annual statement filed with the Department, or the net
income of the insurance company for the period covered by such
annual statement.  However, the Insurance Companies are further
restricted as to the amount of dividends that may be paid to
OGGI. These restrictions do not allow the Insurance Companies to
pay a dividend to OGGI without prior approval of the Pennsylvania
Insurance Department for a 36 month period following the
conversion.

     OGGI's Employee Stock Ownership Plan (ESOP) borrowed
$4.1 million from an unaffiliated lender and $100,000 from OGGI
to purchase 10% of the common stock issued in the Conversion.  
<PAGE 15> The loans bear an 8.45% interest rate, and will require
the ESOP to make monthly payments of approximately $49,000 for a
term of 10 years.  The loans are secured by the shares of common
stock purchased and the earnings thereon.  Shares purchased with
such loan proceeds will be held in a suspense account for
allocation among participants as the loan is repaid.  OGGI
expects to contribute sufficient funds to the ESOP to repay such
loan, plus such other amounts as the OGGI's Board of Directors
may determine at its discretion.

     In February 1996, OGIHC and American Technologies, Inc., a
California based software lessor, entered into a lease financing
agreement in connection with the acquisition by the Group of a
new policy processing software system for approximately
$2.5 million.  The terms of the lease financing agreement provide
for an aggregate lease facility up to $1.5 million.  The implied
interest rate under the lease is 9.5%.  As of December 31, 1996,
the lease facility was fully utilized.  Under the terms of the
lease financing agreement, OGIHC is required to make payments of
approximately $57,000 per month for 24 months.

     In July 1998, the Group secured a $3,500,000 mortgage to
finance its home office expansion.  The terms of the mortgage
require principal payments over fifteen years and interest
floating monthly at LIBOR plus 1.5%.  $2,000,000 of the mortgage
was converted to a fixed rate of 7.70% over fifteen years through
the use of an interest rate swap.

Effects of Inflation

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

Year 2000 Issue

     The unprecedented advances in computer technology over the
past several decades have resulted in dramatic changes in the way
companies do business.  Most of these developments have been
beneficial, but some have proven costly, as businesses have
struggled to adapt to various features of the new technological
landscape.  One such well-publicized problem has arisen out of
the worldwide use of the so called "Year 2000" programming
convention, in which two digit numbers were generally used
instead of four digit numbers to identify the years used in
dates.  As a consequence, most computers require relatively
costly reprogramming to enable them to correctly perform data
operations involving years 2000 or later, a problem anticipated 
<PAGE 16> to have substantial repercussions on the business world
because computer operations involving date calculations are
pervasive.

     Beginning in 1991, the Group began evaluating and
reprogramming its own computer systems to address the Year 2000
problem.  By the end of 1992, all necessary programming work was
completed and implemented.  With the completion of these changes,
Year 2000 issues are not likely to result in any material adverse
disruption in the Group's computer systems or its internal
business operations.  The cost of this work through 1992 was
approximately $140,000.

     To ensure that all software applications are Year 2000
compliant, the Group is currently testing all applications in a
true Year 2000 environment.  This testing is being conducted on
hardware and system operating software that has the operating
system date beyond 1999.  This project is scheduled to be
completed by December 31, 1998.  It is estimated that the total
remaining cost to complete this phase and become Year 2000
compliant will be approximately $10,000. 

     Many experts now believe that the Year 2000 problem may have
a material adverse impact on the national and global economy
generally.  In addition, it seems likely that if businesses are
materially damaged as a result of Year 2000 problems, at least
some such businesses may attempt to recoup their losses by
claiming coverage under various types of insurance policies. 
And, although management has concluded that under a fair reading
of the various policies of insurance issued by it no coverage for
Year 2000 problems should be considered to exist, it is not
possible to predict whether or to what extent any such coverage
could ultimately be found to exist by courts in the various
jurisdictions.  Accordingly, important factors which could cause
actual results to differ materially from those expressed in the
forward looking statements include, but are not limited to, the
inability of the Group to accurately estimate the impact of the
Year 2000 problem on the insurance issued by, or other business
operations of the Group.

Forward-Looking Statements

     Certain statements contained in the Management's Discussion
and Analysis of Financial Condition and Results of Operations and
other statements made throughout this report constitute "forward-
looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995).  Such forward-looking
statements involve certain assumptions, risks and uncertainties
that could cause actual results to differ materially from those
included in or contemplated by the statements.  These
assumptions, risks and uncertainties include, but are not limited
to those associated with factors affecting the property-casualty
insurance industry generally, including price competition, size
and frequency of claims, escalating damage awards, natural
disasters, fluctuations in interest rates and general business 
<PAGE 17> conditions; the Group's dependence on investment
income; the geographic concentration of the Group's business in
the Northeast United States, the adequacy of the Group's
liability for losses and loss adjustment expenses; government
regulation of the insurance industry and the other risks and
uncertainties discussed or indicated in all documents filed by
the Group with the Securities and Exchange Commission. The Group
expressly disclaims any obligation to update any forward-looking
statements as a result of developments occurring after the
release of this report.
  PAGE 18
<PAGE>
                  PART II.   OTHER INFORMATION 

ITEM 1.   In February, 1997, four policyholders, purportedly on
behalf of all policyholders, filed an action against the Group,
the Insurance Companies, and their directors in the United States
District Court for the Eastern District of Pennsylvania. 
Plaintiffs seek damages for the loss of their alleged equity
interest in the Insurance Companies as a result of the
conversion, based on numerous theories including breach of
fiduciary duty and civil rights claims.  In April 1997,
defendants filed a motion to dismiss for failure to state a cause
of action.  The motion to dismiss was granted as to two counts
and denied as to the remaining nine counts.  In January 1998,
plaintiffs filed a motion for class certification and in July
1998, defendants filed a motion for summary judgment, which
motions are currently pending before the Court.

ITEM 2.   Change in Securities  -  None

ITEM 3.   Defaults Upon Senior Securities  -  None

ITEM 4.   Submission of Matters to a Vote of Security Holders  - 

     The 1998 Annual Meeting of Shareholders (the "Meeting") of
the Group was held on May 12, 1998.  Notice of the Meeting was
mailed to shareholders on or about April 15, 1998.

     The meeting was held for the following purposes:

     1.   To elect three Class II directors to hold office for
          three years from the date of election and until their
          successors are elected and qualified, and to elect two
          Class I directors to hold office for two years from the
          date of election and until their successors are elected
          and qualified (Matter No. 1);

     2.   To ratify the appointment by the Group's Board of
          Directors of PricewaterhouseCoopers L.L.P., as the
          Group's independent auditors for the fiscal year ending
          December 31, 1998 (Matter No. 2).

     There was no solicitation in opposition to the nominees of
the Board of Directors.  All nominees of the Board of Directors
were elected.  The number of votes cast for or against, as well 
<PAGE 19> as the number of abstentions for each of the nominees
for election to the Board of Directors were as follows:

                 ELECTION OF CLASS II DIRECTORS

                 Nominee             For      Withheld

           James W. Appel         3,394,100    12,000
           M. Scott Clemens       3,358,528    47,572
           G. Arthur Weaver       3,368,200    37,900

                  ELECTION OF CLASS I DIRECTORS

                 Nominee             For      Withheld

           Karen M. Balaban       3,351,600    54,500
           Noah W. Kreider, Jr.   3,370,887    35,213

     Matter No. 2 was approved by Shareholders at the Meeting. 
The votes cast for this Matter were as follows:

                                    Abstentions and
                For      Against   Broker Non-Votes

             3,384,089    11,656        10,355

ITEM 5.   Other Information  -  None

ITEM 6.   Exhibits and Reports on Form 8-K   

          (A)  Exhibit 27  -  Financial Data Schedule

          (B)  Reports on Form 8-K - None
  PAGE 20
<PAGE>
                            SIGNATURE

     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. 

                              OLD GUARD GROUP, INC. 

Date:  August 14, 1998        /s/ Henry J. Straub                
                              Henry J. Straub,
                              Chief Financial Officer and
                              Treasurer (principal financial
                              officer and principal accounting
                              officer)  <PAGE 21>