<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 June 30, 1997

  [_]  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)


DELAWARE                                                52-1534560
(State or other jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                          Identification No.)
 
R.R. No. 3, Airport Road, Berlin, 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

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 August 6, 1997
     -----                                      ----------------------
$0.01 par value common                                  333,822
<PAGE>
 
                        AMERINST INSURANCE GROUP, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                            As of             As of
                                                           June 30,        December 31,
                                                             1997             1996
                                                        ------------     --------------
                                                         (unaudited)
<S>                                                      <C>             <C>
ASSETS  
INVESTMENTS
 Fixed-maturity securities, at market..................  $31,726,607        $35,688,432
 Short-term investments at market......................                       1,687,461
 Equity securities, at market..........................    4,050,147          2,260,878
                                                         -----------        -----------

     TOTAL INVESTMENTS.................................   35,776,754         39,636,771

OTHER ASSETS

 Cash..................................................    5,558,848            347,404
 Assumed reinsurance premiums receivable...............      647,289            929,798
 Reinsurance recoveries receivable.....................    1,732,824          2,019,975
 Accrued investment income.............................      454,357            515,870
 Deferred policy acquisition costs.....................      620,135            611,048
 Deferred federal income taxes.........................    1,316,726          1,306,399
 Prepaid expenses and other assets.....................       92,033             90,008
 Income tax recoverable................................      110,018
                                                         -----------        -----------

     TOTAL OTHER ASSETS................................   10,532,230          5,820,502
                                                         -----------        -----------
     TOTAL ASSETS......................................  $46,308,984        $45,457,273
                                                         ===========        ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

 Losses and loss adjustment expenses...................  $21,548,891        $20,299,937
 Unearned premiums.....................................    2,175,913          2,144,027
 Reinsurance balances payable..........................    2,404,949          2,152,056
 Income taxes payable..................................                         316,199
 Accrued expenses and other liabilities................      454,576            453,529
                                                         -----------        -----------
     TOTAL LIABILITIES.................................   26,584,329         25,365,748

STOCKHOLDERS' EQUITY
 Common stock, $.01 par value, 2,000,000 shares
   authorized:   1997: 333,822 issued and outstanding
                 1996: 334,180 issued and outstanding..        3,338              3,342
 Additional paid-in capital............................    7,182,083          7,188,983
 Retained earnings.....................................   11,893,520         12,474,579
 Unrealized investment gains, net of taxes.............      645,714            424,621
                                                         -----------        -----------
     TOTAL STOCKHOLDERS' EQUITY........................   19,724,655         20,091,525

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........  $46,308,984        $45,457,273
                                                         ===========        ===========
</TABLE>


See the accompanying notes to the condensed consolidated financial statements.


                                       2
<PAGE>
 
                        AMERINST INSURANCE GROUP, INC.
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                                  (Unaudited)



<TABLE>
<CAPTION>


                                                  Six Months   Six Months    Three Months    Three Months
                                                    Ended         Ended          Ended          Ended
                                                   June 30,     June 30,       June 30,        June 30,
                                                     1997         1996           1997            1996
                                                 -----------   -----------    -----------    ------------
<S>                                              <C>           <C>           <C>             <C>
REVENUE
 Premiums earned...............................  $ 2,407,565   $ 2,457,001    $ 1,252,154    $ 1,279,972
 Net investment income.........................    1,195,868     1,252,236        590,267        617,450
 Net realized capital gain (loss)..............       69,612        39,265        (13,280)      (130,157)
                                                 -----------   -----------    -----------    -----------

     TOTAL REVENUE.............................    3,673,045     3,748,502      1,829,141      1,767,265

LOSSES AND EXPENSES
 Losses and loss adjustment expenses...........    2,873,596     2,248,717      1,498,709      1,161,896
 Commissions expense...........................      686,268       665,269        356,885        355,531
 Other operating and management expenses.......      380,610       457,310        194,288        237,016
                                                 -----------   -----------    -----------    -----------

     TOTAL LOSSES AND EXPENSES.................    3,940,474     3,371,296      2,049,882      1,754,443
                                                 -----------   -----------    -----------    -----------

Income (loss) before income taxes..............     (267,429)      377,206       (220,741)        12,822
 Provision for income tax expense (benefit)....     (125,440)       97,149        (84,267)        (6,672)
                                                 -----------   -----------    -----------    -----------

NET INCOME (LOSS)..............................     (141,989)  $   280,057    $  (136,474)   $    19,494
                                                 ===========   ===========    ===========    ===========

RETAINED EARNINGS, BEGINNING OF PERIOD.........   12,474,579   $11,274,797    $12,248,425    $11,314,987
Net income (loss)..............................     (141,989)      280,057       (136,474)        19,494
Dividend paid..................................     (434,015)     (435,123)      (216,984)      (217,516)
Excess of purchase price on stock redemptions..       (5,055)       (7,162)        (1,447)        (4,396)
                                                 -----------   -----------    -----------    -----------

RETAINED EARNINGS, END OF PERIOD...............  $11,893,520   $11,112,569    $11,893,520    $11,112,569
                                                 ===========   ===========    ===========    ===========


Per common share data
Net income (loss)..............................  $      (.43)  $      0.84    $      (.41)   $      0.06
                                                 ===========   ===========    ===========    ===========

Dividend paid..................................  $      1.30   $      1.30    $       .65    $      0.65
                                                 ===========   ===========    ===========    ===========

 Weighted average number of shares
  outstanding for the entire period............      333,869       334,703        333,836        334,773
                                                 ===========   ===========    ===========    ===========

</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>

                                                      Six Months   Six Months
                                                        Ended        Ended
                                                       June 30,     June 30,
                                                         1997         1996
                                                      ----------   ---------- 
 
<S>                                                   <C>          <C>
OPERATING ACTIVITIES

Net Cash Provided by Operating Activities...........  $ 2,175,159  $ 1,083,018
                                                      -----------  -----------

INVESTING ACTIVITIES
 Proceeds from sales of investments.................    7,044,963   11,597,311
 Purchases of fixed-maturity securities.............   (4,484,420) (13,656,195)
 Net sales of short-term investments................      921,712      984,770
                                                      -----------  -----------
 
Net Cash Provided by (used in) Investing Activities.    3,482,255   (1,074,114)
 
FINANCING ACTIVITIES
 Redemption of shares...............................      (11,955)     (12,962)
 Shareholder dividend...............................     (434,015)    (435,123)
                                                      -----------  -----------
 
Net Cash Used by Financing Activities...............     (445,970)    (448,085)
                                                      -----------  -----------
 
INCREASE (DECREASE) IN CASH.........................  $ 5,211,444  $  (439,181)
                                                      ===========  ===========
</TABLE>



See the accompanying notes to the condensed consolidated financial statements.

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

June 30, 1997

Basis of Presentation

The condensed consolidated financial statements included herein have been
prepared by the Registrant 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, 1996 and notes thereto, included in the Registrant's annual report
as of that date.

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

OPERATIONS

Three months ended June 30, 1997 compared to three months ended June 30, 1996:

Net income decreased by $155,968 from $19,494 in the second quarter of 1996 to
$(136,474) in the second quarter of 1997. The change in earnings is primarily
attributable to an increase in the loss reserving ratio for the 1996-97 treaty
year along with slightly lower return on investments. Net investment income for
the second quarter of 1997 was $590,267, compared to $617,450 for the same
quarter of 1996. Sales of securities during the three months ended June 30, 1997
resulted in realized capital losses of $(13,280) as compared to losses of
$(130,157) in the same period in 1996. Investment yield for the three month
period remained consistent with recent experience at approximately 6.2%.

Earned premiums for the three month period ended June 30, 1997 amounted to
$1,252,154 representing a $27,818 decline, or approximately 2%, from the same
period of the prior year and is due to the continued competitive accountants
professional liability insurance market. The loss ratio for the three month
period ended June 30, 1997 was 120% as compared to 91% for the same period of
1996. The loss ratio of 120% represents management's current estimated effective
loss ratio selected in consultation with the Company's independent consulting
actuary to apply to current premiums assumed and earned. The Company's overall
loss ratio for the year ended December 31, 1996 was 50%. However, as reported as
of December 1996, excluding the effects of favorable development, the 1996-97
treaty year estimated loss ratio was established at 120%. The net underwriting
loss for the most recent quarter of $(797,728) exceeded the second quarter 1996
underwriting loss of $(474,471) primarily due to the increase in loss reserving
ratio for the 1996-97 treaty year.

                                       5
<PAGE>

Six months ended June 30, 1997 compared to six months ended June 30, 1996:

Net income decreased by $422,046 from $280,057 for the six months ended June 30,
1996 to $(141,989) for the six months ended June 30, 1997. Again, this
difference is due primarily to the change in loss reserving ratio for the 1996-
97 treaty year as well as slightly lower return on investments. Investment yield
for the six month period was approximately 5.9% as compared to 6.5% for the
first six months of 1996. The lower yield is primarily attributable to an
increase in holdings of tax free municipal securities and an increase in equity
securities which generate less realized investment income. Sales of securities
during the first six months of 1997 resulted in realized capital gains of
$69,612 as compared to gains of $39,265 in the same period in 1996.

Earned premiums for the first six months of 1997 of $2,407,565 represents a
decline of $49,436, or approximately 2%, from the same period of the prior year
and is due to the continued competitive accountants professional liability
insurance market. The loss ratio through the first six months of 1997 was 119%
as compared to 92% for the same period of 1996. The loss ratio of 119%
represents management's current estimated effective loss ratio selected in
consultation with the Company's independent consulting actuary to apply to
current premiums assumed and earned. Losses incurred through June 30, 1997 do
not reflect any development of prior year reserves. Management expects to make a
determination in the fourth quarter whether an adjustment to reserves for prior
years is appropriate. The Company's overall loss ratio for the year ended
December 31, 1996 was 50%. However, as reported as of December 1996, excluding
the effects of favorable development, the 1996-97 treaty year estimated loss
ratio was established at 120%. The reported loss ratio through the first six
months of 1997 is slightly less than 120% due to the effect of a lower selected
loss ratio for treaty year 1995, for which a small amount of premium is still
being earned. These fluctuations combined to result in a net underwriting loss
of $(1,532,909) for the period as compared to $(914,295) for the same period in
1996.

FINANCIAL CONDITION AND LIQUIDITY

As of June 30, 1997, total invested assets amounted to $35,776,754 a decrease of
$3,860,017 or 9.7% from $39,636,771 at December 31, 1996. Cash balances
increased from $347,404 at December 31, 1996 to $5,558,848 at June 30, 1997, an
increase of 1,500% due to the sale of approximately $4,500,000 in bonds that
Virginia Surety Company released from the trust account to the Company near the
end of the second quarter. These funds were partially invested in fixed-maturity
securities with $1,000,000 invested in common stock early in the third quarter
of 1997. Short-term investments decreased from $1,687,461 at December 31, 1996
to $0 at June 30, 1997, due to the Company's decision to replace short-term bond
investments with investments in common stock. The ratio of cash and invested
assets to total liabilities and stockholders' equity at June 30, 1997 was .91 to
1, compared to a ratio of .87 to 1 at June 30, 1996.

The Registrant paid its eighth consecutive quarterly dividend of $0.65 per share
during the second quarter of 1997.

                                       6
<PAGE>

Assumed reinsurance premiums receivable represents current assumed premiums
receivable less commissions payable to the fronting carriers. This balance
decreased from $929,798 at December 31, 1996 to $647,289 at June 30, 1997 as a
result of a decrease in premiums written in the second quarter of 1997 as a
majority of premiums are written in the third quarter.


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

         (a) The Company's Annual Meeting of Stockholders was held on May 12,
             1997.

         (c) At said Annual Meeting, stockholders voted on the election of two
             directors. The stockholders elected the members of the management
             slate in an uncontested election.

             Director               Votes For    Votes Against or Withheld
             --------               ---------    -------------------------

             Bruce W. Breitweiser    134,981              10,573

             Ronald S. Katch         134,599              10,955

             No other matters were voted on at the Annual Meeting.


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 June 30,
             1997.

                                       7
<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)



August 11, 1997    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.)

                                       8
<PAGE>
 
AMERINST INSURANCE GROUP, INC.

INDEX TO EXHIBITS


Exhibit
Number         Description
------         -----------



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) and 1996
               placement slip (6)
10.5           Management Agreement between Vermont Insurance Management, Inc.
               and AIIC dated May 1, 1997 (filed herewith)
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)
27             Financial Data Schedule (filed herewith)

--------------

(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 end
      September 30, 1995 and incorporated herein by reference.

(6)  Filed with the Company's Quarterly Report on Form 10-Q for the quarter end
      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.

                                       9