<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                   FORM 10-Q


[X]  Quarterly report pursuant to section 13 or 15 (d) of the Securities
       Exchange Act of 1934.

     For the Quarterly period ended March 31, 1999.

[_]  Transition report pursuant to section 13 or 15 (d) of the Securities
       Exchange Act of 1934.

     For the transition period from_____________________ to ___________________.

                        Commission file number 0-17676
                                               -------

 
                        AMERINST INSURANCE GROUP, INC.
                        ------------------------------
            (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<CAPTION>
 
 
<S>                                                     <C>
DELAWARE                                                52-1534560
(State or other jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                          Identification No.)
 
128 Berlin State Highway-Berlin, Barre, Vermont         05602
Mailing address:  P.O. Box 1330, Montpelier, Vermont    05601
(Address of Principal Executive Offices)                (Zip Code)
 
Registrant's telephone number, including area code:     (802) 229-5042
</TABLE>

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.

                             [X] YES       [_] NO

Number of shares of common stock outstanding:

                                                     Number outstanding
        Class                                        as of May 7, 1999
        -----                                        ------------------

$0.01 par value common                                     332,181

<PAGE>
 
Part I, Item 1


                        AMERINST INSURANCE GROUP, INC.
                    CONDENSED CONSOLIDATED BALANCE  SHEETS


<TABLE>
<CAPTION>
                                                                                   (Unaudited)
                                                                                      As of          As of  
                                                                                    March 31,    December 31,
ASSETS                                                                                1999           1998
                                                                                   -----------   ------------
<S>                                                                                <C>            <C>
INVESTMENTS
  Fixed maturity investments, at market value....................................  $34,896,624    $34,577,261
  Equity securities, at market value.............................................    7,773,791      7,971,397
                                                                                   -----------    -----------
            TOTAL INVESTMENTS....................................................   42,670,415     42,548,658

  Cash and cash equivalents......................................................    2,269,829      1,450,795
  Assumed reinsurance premiums receivable........................................    1,123,023      2,357,147
  Reinsurance recoveries receivable..............................................      875,685        875,685
  Accrued investment income......................................................      442,395        596,862
  Deferred policy acquisition costs..............................................      901,190        973,461
  Deferred income tax asset......................................................      930,785        652,666
  Prepaid expenses and other assets..............................................       69,156        326,172
                                                                                   -----------    -----------

            TOTAL ASSETS.........................................................  $49,282,478    $49,781,446
                                                                                   ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Unpaid losses and loss adjustment expenses....................................   $22,920,782    $21,718,087
  Unearned premiums.............................................................     3,162,071      3,415,651
  Reinsurance balances payable..................................................     1,525,093      2,142,396
  Income taxes payable..........................................................        65,402        118,004
  Accrued expenses and other liabilities........................................       485,467        445,299
                                                                                   -----------    -----------

            TOTAL LIABILITIES...................................................    28,158,815     27,839,437
                                                                                   -----------    -----------

STOCKHOLDERS' EQUITY

  Common stock, $.01 par value, 2,000,000 shares authorized:
            1999: 332,251 issued and outstanding
            1998: 332,331 issued and outstanding.................................        3,323          3,323
  Additional paid-in capital.....................................................    7,139,368      7,144,818
  Retained earnings..............................................................   13,220,168     13,636,875
  Accumulated other comprehensive income, net of tax.............................      760,804      1,156,993
                                                                                   -----------    -----------

            TOTAL STOCKHOLDERS' EQUITY...........................................   21,123,663     21,942,009
                                                                                   -----------    -----------

            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...........................  $49,282,478    $49,781,446
                                                                                   ===========    ===========
</TABLE>


See the accompanying notes to the condensed consolidated financial statements.

                                       2


<PAGE>
 
                        AMERINST INSURANCE GROUP, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                               Three Months     Three Months
                                                                                                   Ended           Ended
                                                                                                  March 31,       March 31,
                                                                                                    1999            1998
                                                                                               -------------    ------------
<S>                                                                                            <C>              <C>
REVENUE
  Premiums earned.............................................................................   $ 1,827,838     $ 1,599,261
  Net investment income.......................................................................       541,050         545,466
  Net realized capital gain...................................................................       243,398          65,328
                                                                                                 -----------     -----------
      Total revenue...........................................................................     2,612,286       2,210,055

LOSSES AND EXPENSES
  Losses and loss adjustment expense..........................................................     1,827,838       1,918,825
  Policy acquisition costs....................................................................       523,501         452,233
  Operating and management expenses...........................................................       261,124         196,325
                                                                                                 -----------     -----------

      Total losses and expenses...............................................................     2,612,463       2,567,383
                                                                                                 -----------     -----------

Income (loss) before income taxes.............................................................          (177)       (357,328)
  Provision for income taxes..................................................................        41,173        (180,910)
                                                                                                 -----------     -----------

Income (loss) before cumulative effect of a change in accounting principle....................       (41,350)       (176,418)
  Cumulative effect on prior years of retroactive
    application of new statement of position, net of tax......................................      (154,466) 
                                                                                                 -----------     -----------

NET INCOME (LOSS).............................................................................      (195,816)       (176,418)
                                                                                                 -----------     -----------

OTHER COMPREHENSIVE INCOME, NET OF TAX
  Net unrealized holding gains (losses) arising during the period                                   (235,546)        460,201
  Less:  reclassification adjustment for gains and losses included in net income                    (160,643)        (43,116)
                                                                                                 -----------     -----------

  OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX                                                     (396,189)        417,085
                                                                                                 -----------     -----------

  COMPREHENSIVE INCOME (LOSS)                                                                    $  (592,005)    $   240,667
                                                                                                 ===========     ===========

RETAINED EARNINGS, BEGINNING OF PERIOD........................................................   $13,636,875     $13,465,708
Net income (loss).............................................................................      (195,816)       (176,418)
Dividends paid................................................................................      (215,984)       (216,683)
Excess of purchase price on stock redemptions.................................................        (4,907)         (1,658)
                                                                                                 -----------     -----------
RETAINED EARNINGS, END OF PERIOD..............................................................   $13,220,168     $13,070,949
                                                                                                 ===========     ===========

Per share amounts
  Income (loss) before cumulative effect of a change
    in accounting principle...................................................................   $     (0.12)    $     (0.53)
  Cumulative effect on prior years of retroactive
    application of new statement of position..................................................         (0.47)          
                                                                                                 -----------     -----------
          Net income..........................................................................   $     (0.59)    $     (0.53)
                                                                                                 ===========     ===========

  Dividends paid..............................................................................   $      0.65     $      0.65
                                                                                                 ===========     ===========
  Weighted average number of shares
    outstanding for the entire period.........................................................       332,303         333,347
                                                                                                 ===========     ===========
</TABLE>

See the accompanying notes to the condensed consolidated financial statements.

                                       3

<PAGE>
 
                        AMERINST INSURANCE GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                          Three Months     Three Months
                                                                             Ended             Ended
                                                                           March 31,         March 31,
                                                                              1999             1998
                                                                          -----------      -----------
<S>                                                                       <C>              <C>
OPERATING ACTIVITIES
Net Cash Provided by Operating Activities..............................   $ 1,538,752      $   216,941
                                                                          -----------      -----------
INVESTING ACTIVITIES
  Purchases of investments.............................................    (2,848,520)      (1,547,870)
  Proceeds from sales and maturities of investments....................     2,355,143        1,273,953
                                                                          -----------      -----------
Net Cash Used by Investing Activities..................................      (493,378)        (273,917)
                                                                          -----------      -----------
FINANCING ACTIVITIES
  Redemption of shares.................................................       (10,357)          (3,685)
  Dividends paid.......................................................      (215,984)        (216,683)
                                                                          -----------      -----------
Net Cash Used by Financing Activities..................................      (226,341)        (220,368)
                                                                          -----------      -----------
INCREASE (DECREASE) IN CASH............................................   $   819,034      $  (277,344)
                                                                          ===========      =========== 
</TABLE>



See the accompanying notes to the condensed consolidated financial statements.



                                       4
<PAGE>
 
AMERINST INSURANCE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, 1999

Basis of Presentation

The condensed consolidated financial statements included herein have been
prepared by AmerInst Insurance Group, Inc. (AIIG) without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission and reflect all
adjustments consisting of normal recurring accruals, which are, in the opinion
of management, necessary for a fair presentation of the results of operations
for the periods shown.  These statements are condensed and do not include all
information required by generally accepted accounting principles to be included
in a full set of financial statements.  It is suggested that these condensed
statements be read in conjunction with the consolidated financial statements at
and for the year ended December 31, 1998 and notes thereto, included in the
Registrant's annual report as of that date.


Part I, Item 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OPERATIONS

A net loss of $(195,816) was recorded for the first quarter of 1999 in
comparison to a net loss of $(176,418) for the same period of 1998.

Earned premiums for the first quarter of 1999 amounted to $1,827,838 as compared
to $1,599,261 for the first quarter of 1998.  The change of $228,577 represents
a 14% increase. The increase in earned premiums is attributable to continued
growth of the AICPA Plan. This growth is primarily the result of an increase in
the number of insureds under the AICPA Plan and from certain rate increases
associated with a "step plan" which was initiated during 1995.  Under the step
plan, insureds are offered discounted premium rates for favorable loss
experience.  However, as these insureds experience losses their premiums are
"stepped up" accordingly.  Because of the use of claims-made policies, as the
number of years of coverage provided increases, CNA's (and AIIG's) exposure
increases.  This additional exposure results in an increase in premiums charged.

The loss ratio for the first quarter of 1999 was 100% as compared to 120% for
the same period of 1998. The loss ratio of 100% represents management's current
estimated effective loss rate selected in consultation with the Company's
independent consulting actuary to apply to current premiums assumed and earned.
Losses incurred in the first quarter of 1999 do not reflect any development of
prior year reserves.  The Company's overall loss ratio for the year ended
December 31, 1998 was 81%. The ratio calculated using only losses and loss
adjustment expenses incurred for 1998 (excluding the effects of favorable
development and excluding reductions to retrocession premiums) was 140% at
December 31, 1998.


                                       5
<PAGE>
 
AMERINST INSURANCE GROUP, INC.

OPERATIONS--(Continued)

Policy acquisition costs of $523,501 were expensed in the first quarter of 1999
as compared to $452,233 for the same period of 1998, an increase of 16%.  Such
costs as a percentage of premiums earned are 28.6% and 28.3% for the quarters
ended March 31, 1999 and 1998, respectively.  Policy acquisition costs result
from ceding commissions paid to ceding companies determined contractually
pursuant to reinsurance agreements.

AIIG implemented Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs 
of Start-Up Activities", in the first quarter of 1999. With the adoption of SOP 
98-5, AIIG expensed certain start-up costs associated with the proposed 
redomestication as incurred (see discussion detailing the proposed 
redomestication below). Previously, AIIG had capitalized these costs to be 
expensed over a period of 60 months. The adoption of SOP 98-5 has been applied 
retroactively to the costs of start-up activities that were previously 
capitalized in order to determine their cumulative effect. The effect of the 
change for the three months ended March 31, 1999 was to decrease income before 
cumulative effect of a change in accounting principle by $29,722 (or $0.09 per 
share.) The adjustment necessary for retroactive application of SOP 98-5, 
amounting to $154,466 (net of tax), is included in net income for the three 
months ended March 31, 1999.

These fluctuations in premiums, losses and expenses combined to result in a net
underwriting loss of $(1,018,664) for the first quarter of 1999 as compared to
$(968,122) for the same period of 1998.

Investment yield of 4.9%, consisting of interest and dividend income, represents
a slight decrease from the 5.1% return earned in the first quarter of 1998 and
the 5.0% return earned throughout 1998. The lower yield trend in recent periods
is attributable to an increase in holdings of tax free municipal securities and
an increase in equity securities which generate less current investment income.
Sales of securities during the first quarter of 1999 resulted in realized
capital gains of $243,398 as compared to gains of $65,328 in the first quarter
of 1998. Gains recorded in the first quarter of 1999 primarily relate to sales
of equities. Proceeds from these sales were subsequently reinvested in other
equity securities.

FINANCIAL CONDITION AND LIQUIDITY

As of March 31, 1999, total invested assets amounted to $42,670,415, an increase
of $121,757 or .3% from $42,548,658 at December 31, 1998.  Cash balances
increased from $1,450,795 at December 31, 1998 to $2,269,829 at March 31, 1999,
an increase of $819,034, or 56%.  The amount of cash on hand fluctuates based on
the timing of bond maturities.  As bonds mature, the proceeds are temporarily
placed in cash until they are reinvested.  The ratio of cash and invested assets
to total liabilities at March 31, 1999 was 1.63:1, compared to a ratio of 1.60:1
at March 31, 1998.

Assumed reinsurance premiums receivable represents current assumed premiums
receivable less commissions payable to the fronting carriers. This balance
decreased from $2,357,147 at December 31, 1998 to $1,123,023 at March 31, 1999,
a decrease of $1,234,124. Approximately $818,000 of the decrease in assumed
reinsurance premiums receivable is attributable to the first quarter collection
of an adjustment for prior year premiums due from CNA, as more fully described
in AIIG's December 31, 1998 10-K (Note H of the audited financial statements).
This balance also fluctuates due to timing of renewal premium written.


                                       6
<PAGE>
 
AMERINST INSURANCE GROUP, INC.

FINANCIAL CONDITION AND LIQUIDITY--(Continued)

The Registrant paid its fifteenth consecutive quarterly dividend of $0.65 per
share during the first quarter of 1999.


YEAR 2000 READINESS

AIIG is aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches.  The "Year 2000" problem is the
result of computer programs being written using two digits rather than four to
define the applicable year.  Programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.  Systems
that do not properly recognize such information could generate erroneous data or
fail.

The Company's operations are conducted through its management company, Vermont
Insurance Management, Inc. ("VIM").  VIM has informed the Company that it is
using both internal and external resources to identify, correct and test its
financial, information and operational systems for Year 2000 compliance.  VIM is
assessing its internal systems for Year 2000 compliance and has made inquiries
of third parties with whom the Company has material relationships to assess the
potential impact on the Company's operations if key third parties are not
successful in converting their systems in a timely manner.  VIM has completed
its assessment of its hardware systems and is still in the process of reviewing
its software systems, and anticipates that its review of its internal systems
will be complete by June 30, 1999.  VIM anticipates that any necessary
remediation will be completed by September 1999 and that any necessary testing
will be completed by September 30, 1999.  Based on its review efforts to date,
VIM does not anticipate any material disruption to the Company's business from
its internal systems.  The costs of remediation to its systems will be borne by
VIM or its affiliates.

VIM has not yet received responses to all of its third party inquiries, but the
Company believes that its primary focus regarding the Year 2000 problem is
appropriately with AIIC's primary insurance carrier, CNA. The majority of
insurance transactions affecting the Company are originated by CNA operating
systems, with quarterly reporting to the Company.  Representatives of CNA have
informed the Company that CNA has been Year 2000 compliant since December 1,
1998.  If CNA is not Year 2000 compliant, the Company believes that the impact
on its business is likely to be material. Presently, the Company's only business
is that of reinsurance, so the Company anticipates that Year 2000 noncompliance
by, particularly CNA, will be disruptive primarily from a reporting and
informational standpoint.


                                       7
<PAGE>
 
AMERINST INSURANCE GROUP, INC.

YEAR 2000 READINESS--(Continued)

The Company's expectations about the impact of the Year 2000 problem on its
business are subject to a number of uncertainties that could cause actual
results to differ materially.  Such factors include the following: (i) The
Company's service providers may not be successful in properly identifying all
systems and programs that contain two-digit year codes; (ii) The nature and
number of systems which require reprogramming, upgrading or replacement may
exceed the service providers' expectations in terms of complexity and scope;
(iii) The Company's service providers may not be able to complete all
remediation and testing necessary in a timely manner; (iv) The Company has no
control over the ability of third parties to achieve Year 2000 compliance; and
(v) The impact of the Year 2000 problem on CNA may be of such magnitude that it
may adversely affect the Company's business or eliminate its sole source of
insurance business.

PROPOSED REDOMESTICATION AND RESTRUCTURING

AIIG and AIG Ltd., have entered into an Exchange Agreement, pursuant to which
AIIG would transfer all of its assets and liabilities to AIG Ltd. in exchange
for newly issued shares of AIG Ltd.  AIG Ltd., is a Bermuda limited company.
AIIG would then be liquidated and AIIG shareholders would receive on a share-
for-share basis the newly issued shares of AIG Ltd.  AIIG's Board of Directors
has voted to submit the Exchange Agreement and the dissolution of AIIG to a vote
of AIIG's shareholders.

The transaction contemplates the restructuring of AIIG's business, including the
redomestication of the insurance operations of AIIC to AIG Ltd.

The transactions contemplated in the Exchange Agreement, the redomestication and
the restructuring will be consummated only if certain conditions are satisfied,
including certain regulatory approvals, the agreement of certain other third
parties, and the approval of specified matters by the holders of at least a
majority of the outstanding AIIG common stock.

On September 2, 1998 a registration statement was filed with the Securities and
Exchange Commission by AIG Ltd.  The registration statement relates to the
registration of the shares to be issued by AIG Ltd., in the proposed transaction
and the solicitation of proxies from the Company's stockholders to approve the
transaction.  The Registration Statement has been amended but is not yet
effective.  It is currently expected that AIIG's shareholders will vote on the
transactions contemplated in the Exchange Agreement in summer, 1999.


                                       8
<PAGE>
 
AMERINST INSURANCE GROUP, INC.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

     (a)  Exhibits

     See Index to Exhibits immediately following the signature page.

     (b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter ended March 31, 1999.



                                       9
<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.


                                 AMERINST INSURANCE GROUP, INC.
                                 ------------------------------
                                           (Registrant)



May 17, 1999    /s/ Bruce W. Breitweiser
                -------------------------------
                Bruce W. Breitweiser
                (Vice President and Chief Financial Officer,
                duly authorized to sign this Report in such
                capacity and on behalf of the Registrant.)



                                      10
<PAGE>
 
AMERINST INSURANCE GROUP, INC.
INDEX TO EXHIBITS

<TABLE> 
<CAPTION> 
Exhibit
Number    Description
------    -----------
<S>       <C> 
3(i)      Certificate of Incorporation of the Company (1)
3(ii)     Bylaws of the Company (1)
4.1       Article Fourth of Certificate of Incorporation -- included in Exhibit
          3(i) above
4.2       Statement of Stock Ownership Policy, as amended (7)
10.1      Reinsurance Treaty between AIIC and Virginia Surety Company, Inc. (2)
10.2      Agreement between Country Club Bank and AIIC (2)
10.3      Agreement between Country Club Bank and AIIG (2)
10.4      Reinsurance Treaty between AIIC and CNA Insurance Companies (3), 1994
          placement slip (4), 1995 placement slip (5) 1996 placement slip (6)
          1997 placement slip (9) and 1998 placement slip (10)
10.5      Management Agreement between Vermont Insurance Management, Inc. and
          AIIC dated May 1, 1997 (8) Addenda to Management Agreement dated 
          July 1, 1997 (9) and Addenda to Management Agreement dated 
          July 1, 1998 (10)
10.6      Escrow Agreement among AIIC, United States Fire Insurance Company and
          Harris Trust and Savings Bank dated March 7, 1995 (5)
10.7      Security Trust Agreement among AIIC, Harris Trust and Savings Bank and
          Virginia Surety Company, Inc. dated March 9, 1995 (5)
10.8      Investment Advisory Agreement For Discretionary Accounts between
          Amerinst Insurance Company and Harris Associates L.P. dated as of
          January 22, 1996, as amended by the Amendment to Investment Advisory
          Agreement for Discretionary Accounts dated as of April 2, 1996 (10)
27        Financial Data Schedule (filed herewith)
--------------------------
</TABLE> 
(1) Filed with the Company's Registration Statement on Form S-1, Registration
    No. 33-17421 and incorporated herein by reference.

(2) Filed with the Company's Annual Report on Form 10-K for the year ended
    December 31, 1992 and incorporated herein by reference.

(3) Filed with the Company's Annual Report on Form 10-K for the year ended
    December 31, 1993 and incorporated herein by reference.

(4) Filed with the Company's Annual Report on Form 10-K for the year ended
    December 31, 1994 and incorporated herein by reference.

(5)  Filed with the Company's Quarterly Report on Form 10-Q for the quarter
     ended September 30, 1995 and incorporated herein by reference.

(6)  Filed with the Company's Quarterly Report on Form 10-Q for the quarter
     ended September 30, 1996 and incorporated herein by reference.

(7)  Filed with the Company's Annual Report on Form 10-K for the year ended
     December 31, 1996 and incorporated herein by reference.

(8)  Filed with the Company's Quarterly Report on Form 10-Q for the quarter
     ended June 30, 1997 and incorporated herein by reference.

                                       11
<PAGE>
 
AMERINST INSURANCE GROUP, INC.

INDEX TO EXHIBITS--Continued


(9)   Filed with the Company's Quarterly Report on Form 10-Q for the quarter
      ended September 30, 1997 and incorporated herein by reference.

(10)  Filed with the Company's Quarterly Report on Form 10-Q for the quarter
      ended September 30, 1998 and incorporated herein by reference.

                                       12