<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 September 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:

<TABLE> 
<CAPTION> 
                                                  Number outstanding
       Class                                    as of October 29, 1997
       -----                                    ----------------------
<S>                                             <C>  
$0.01 par value common                                 333,789
</TABLE> 
<PAGE>
 
                        AMERINST INSURANCE GROUP, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE> 
<CAPTION> 
                                                                    As of         As of
                                                                September 30,  December 31,
                                                                     1997          1996
                                                                -------------  ------------
                                                                 (unaudited)
<S>                                                             <C>            <C>  
ASSETS
 
INVESTMENTS
  Fixed-maturity securities, at market.........................  $34,687,539   $35,688,432
  Short-term investments at market.............................      978,629     1,687,461
  Equity securities, at market.................................    6,227,677     2,260,878
                                                                 -----------   -----------

     TOTAL INVESTMENTS.........................................   41,893,845    39,636,771
 
OTHER ASSETS
  Cash.........................................................      474,687       347,404  
  Assumed reinsurance premiums receivable......................    1,022,559       929,798
  Reinsurance recoveries receivable............................    1,725,763     2,019,975
  Accrued investment income....................................      547,588       515,870
  Deferred policy acquisition costs............................      742,830       611,048
  Deferred federal income taxes................................    1,091,066     1,306,399
  Prepaid expenses and other assets............................       53,616        90,008
  Income tax recoverable.......................................      138,982
                                                                 -----------   -----------
 
     TOTAL OTHER ASSETS........................................    5,797,091     5,820,502
                                                                 -----------   -----------

     TOTAL ASSETS..............................................  $47,690,936   $45,457,273
                                                                 ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Losses and loss adjustment expenses..........................  $21,961,232   $20,299,937
  Unearned premiums............................................    2,606,422     2,144,027
  Reinsurance balances payable.................................    2,438,971     2,152,056
  Income taxes payable.........................................                    316,199
  Accrued expenses and other liabilities.......................      441,023       453,529
                                                                 -----------   -----------
 
     TOTAL LIABILITIES.........................................   27,447,648    25,365,748

STOCKHOLDERS' EQUITY
  Common stock, $.01 par value, 2,000,000 shares authorized:
       1997: 333,789 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............................................   11,931,356    12,474,579
  Unrealized investment gains, net of taxes....................    1,126,511       424,621
                                                                 -----------   -----------

     TOTAL STOCKHOLDERS' EQUITY................................   20,243,288    20,091,525
                                                                 -----------   -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................  $47,690,936   $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>
 
                                                  Nine Months     Nine Months     Three Months    Three Months
                                                     Ended           Ended           Ended           Ended
                                                 September 30,   September 30,   September 30,   September 30,
                                                      1997            1996            1997            1996
                                                 -------------   -------------   -------------   -------------
<S>                                              <C>             <C>             <C>             <C> 
REVENUE
  Premiums earned..............................    $ 3,407,213     $ 3,622,382     $   999,649     $ 1,165,381
  Net investment income........................      1,793,221       1,849,630         597,353         597,394
  Net realized capital gain (loss).............        180,503          12,750         110,891         (26,515)
                                                   -----------     -----------     -----------     -----------
 
          TOTAL REVENUE........................      5,380,937       5,484,762       1,707,893       1,736,260
 
LOSSES AND EXPENSES
  Losses and loss adjustment expenses..........      4,041,048       3,297,379       1,167,452       1,048,662
  Commissions expense..........................        971,172         997,544         284,903         332,275
  Other operating and management expenses......        548,267         629,465         167,657         172,155
                                                   -----------     -----------     -----------     -----------
 
          TOTAL LOSSES AND EXPENSES............      5,560,487       4,924,388       1,620,012       1,553,092
                                                   -----------     -----------     -----------     -----------
 
Income (loss) before income taxes..............       (179,550)        560,374          87,881         183,168
 Provision for income tax expense (benefit)....       (292,379)        127,217        (166,939)         30,068
                                                   -----------     -----------     -----------     -----------
 
NET INCOME (LOSS)..............................        112,829     $   433,157     $   254,820     $   153,100
                                                   ===========     ===========     ===========     ===========
 
 
RETAINED EARNINGS, BEGINNING OF PERIOD.........     12,474,579     $11,274,797     $11,893,520     $11,112,569
Net income (loss)..............................        112,829         433,157         254,820         153,100
Dividend paid..................................       (651,000)       (652,497)       (216,984)       (217,374)
Excess of purchase price on stock redemptions..         (5,052)        (11,362)              0          (4,200)
                                                   -----------     -----------     -----------     -----------
 
RETAINED EARNINGS, END OF PERIOD...............    $11,931,356     $11,044,095     $11,931,356     $11,044,095
                                                   ===========     ===========     ===========     ===========
 
Per common share data
Net income (loss)                                  $       .34     $      1.29     $       .76     $       .46
                                                   ===========     ===========     ===========     ===========

Dividend paid                                      $      1.95     $      1.95     $       .65     $       .65
                                                   ===========     ===========     ===========     ===========

  Weighted average number of shares
   outstanding for the entire period                   333,864         334,618         333,821         334,449
                                                   ===========     ===========     ===========     ===========
</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>
                                                         Nine Months         Nine Months
                                                            Ended               Ended
                                                         September 30,       September 30,
                                                             1997                1996
                                                        ---------------     ---------------
<S>                                                     <C>                 <C>
OPERATING ACTIVITIES
Net Cash Provided by Operating Activities.............   $ 3,239,679          $   808,639
                                                         -----------          -----------
INVESTING ACTIVITIES
  Proceeds from sales of investments..................     8,142,786           15,974,386
  Purchases of fixed-maturity securities..............    (9,887,047)         (16,629,258)
  Net sales of short-term investments.................      (705,180)            (188,051)
                                                         -----------          -----------
 
Net Cash Provided by (used in) Investing Activities...    (2,449,441)            (842,923)
 
FINANCING ACTIVITIES
  Redemption of shares................................       (11,955)             (20,566)
  Shareholder dividend................................      (651,000)            (652,497)
                                                         -----------          -----------
 
Net Cash Used by Financing Activities.................      (662,955)            (673,063)
                                                         -----------          -----------
 
INCREASE (DECREASE) IN CASH...........................   $   127,283          $  (707,347)
                                                         ===========          ===========
</TABLE>


See the accompanying notes to the condensed consolidated financial statements.


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

September 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 September 30, 1997 compared to three months ended September
30, 1996:

Net income increased by $101,720 from $153,100 in the third quarter of 1996 to
$254,820 in the third quarter of 1997.  The increase is due to a decrease in the
pretax income of $95,287 as discussed below, offset by a decrease in the
provision for income tax expense of $197,007.  The decrease in the provision for
income tax expense is primarily the result of a federal income tax refund of
$138,982 received in 1997 for the 1992 and 1993 tax years.

Pretax income decreased by $95,287 from $183,168 in the third quarter of 1996 to
$87,881 in the third quarter of 1997.  The change in earnings is primarily
attributable to an increase in the loss reserving ratio for the 1996-97 treaty
year, which took effect in the fourth quarter of 1996, along with a decrease in
premium earned. Net investment income for the third quarter of 1997 was
$597,353, compared to $597,394 for the same quarter of 1996; however, the
investment yield for the third quarter of 1997 was approximately 5.7% compared
to 6.0% for the same period in 1996.  The lower yield is 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 three months ended September 30, 1997 resulted in net realized
capital gains of $110,891 as compared to net realized losses of $(26,515) in the
same period in 1996.

Earned premiums for the three month period ended September 30, 1997 amounted to
$999,649 representing a $165,732 decline, or approximately 14%, from the same
period of the prior year. All of the Company's premium revenue represents
accountants professional liability insurance premium from CNA. As a result of
the competitive market, CNA has been offering discounts based on favorable loss
experience in order to maintain and increase their market share. These discounts
are the primary reason for the decline in earned premiums.

                                       5
<PAGE>
 
The loss ratio for the three month period ended September 30, 1997 was 117% as
compared to 90% for the same period of 1996.  The loss ratio of 117% 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 $(620,363) exceeded the third quarter 1996 underwriting loss of
$(387,711) primarily due to the increase in loss reserving ratio for the 1996-97
treaty year coupled with a decrease in premiums earned.

Nine months ended September 30, 1997 compared to nine months ended September 30,
1996:

Net income decreased by $320,328 from $433,157 for the nine months ended
September 30, 1996 to  $112,829 for the nine months ended September 30, 1997.
The decrease is due to a decrease in pretax income of $739,924 as discussed
below, partially offset by the effect of a federal income tax refund of $138,982
received in 1997 for the 1992 and 1993 tax years.

Pretax income decreased by $739,924 from $560,374 for the nine months ended
September 30, 1996 to $(179,550) for the nine months ended September 30, 1997.
The change in earnings is primarily attributable to an increase in the loss
reserving ratio for the 1996-97 treaty year along with a decrease in premium
earned.  Net investment income for the nine month period ended September 30,
1997 was $1,793,221, compared to $1,849,630 for the same period in 1996. The
investment yield for the nine month period ended September 30, 1997 was
approximately 5.7% compared to 6.0% for the same period in 1996.  The lower net
investment income and lower yield are 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 nine
month period ended September 30, 1997 resulted in net realized capital gains of
$180,503 as compared to net realized gains of $12,750 in the same period in
1996.

Earned premiums for the first nine months of 1997 of $3,407,213 represents a
decline of $215,169, or approximately 6%, from the same period of the prior
year. All of the Company's premium revenue represents accountants professional
liability insurance premium from CNA.  As a result of the competitive market,
CNA has been offering discounts based on favorable loss experience in order to
maintain and increase their market share.  These discounts are the primary
reason for the decline in earned premiums.

The loss ratio through the first nine months of 1997 was 119% as compared to 91%
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 September 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 nine 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.

                                       6
<PAGE>
 
These fluctuations in the loss ratio and the decrease in premiums earned result
in a net underwriting loss of $(2,153,274) for the nine month period ended
September 30, 1997 as compared to $(1,302,006) for the same period in 1996.

FINANCIAL CONDITION AND LIQUIDITY

As of September 30, 1997, total invested assets amounted to $41,893,845, an
increase of $2,257,074 or 5.7% from $39,636,771 at December 31, 1996. Cash
balances increased from $347,404 at December 31, 1996 to $474,687 at September
30, 1997, an increase of 37%. Short-term investments decreased from $1,687,461
at December 31, 1996 to $978,629 at September 30, 1997. The amount of short-term
investments will fluctuate based on the timing of bond maturities. As bonds
mature, the proceeds are temporarily placed in short-term investments until they
are reinvested. The ratio of cash and invested assets to total liabilities and
stockholders' equity at September 30, 1997 was .89 to 1, compared to a ratio of
 .88 to 1 at September 30, 1996.

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

Assumed reinsurance premiums receivable represents current assumed premiums
receivable less commissions payable to the fronting carriers. This balance
increased from $929,798 at December 31, 1996 to $1,022,559 at September 30,
1997. The increase is due to the timing of renewal premium written. Premium
renewals generally peak during the third quarter.

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 September
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)



November 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) 1996 placement slip (6)
          and 1997 placement slip (filed herewith)
10.5      Management Agreement between Vermont Insurance Management, Inc. and
          AIIC dated May 1, 1997 (8) and Addenda to Management Agreement dated 
          July 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 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.

                                       9