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UNITED STATES

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 September 30, 2010



| ̈ | 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 000-51954





DCP Holding Company

(Exact name of Registrant as specified in its Charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Ohio                                                           |  | 20-1291244                       
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (IRS Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|100 Crowne Point Place Sharonville, Ohio |  | 45241     
|(Address of Principal Executive Office)  |  | (Zip Code)

Registrants telephone number, including area code: (513) 554-1100





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 and 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   ̈

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated
filer, accelerated filer and smaller reporting company in rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                |  |                           |  |  
|----------------------- |  | ---------------------------------------------- |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                              |  | Accelerated filer         |  |  ̈
|                        |  |                                                | 
|Non-accelerated filer   |  | x  (Do not check if smaller reporting company) |  | Smaller reporting Company |  |  ̈

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

As of September 30, 2010 there were 609 and 7,474 of the Registrants Class A and Class B Redeemable Common Shares
outstanding, respectively.









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##### Table of Contents



TABLE
OF CONTENTS

PART I  FINANCIAL INFORMATION



|         |  |                                                                                       |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                       |  | PAGE |   
|Item 1.  |  | Financial Statements                                                                  |  |      | 1  | 
|Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |      | 13 | 
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  |      | 23 | 
|Item 4.  |  | Controls and Procedures                                                               |  |      | 23 | 
|         |  |                                                                                      
|         |  | PART II  OTHER INFORMATION                                                           |  |      |    | 
|         |  |                                                                                      
|Item 1.  |  | Legal Proceedings                                                                     |  |      | 24 | 
|Item 1A. |  | Risk Factors                                                                          |  |      | 24 | 
|Item 2.  |  | Unregistered Sales of Equity and Use of Proceeds                                      |  |      | 24 | 
|Item 3.  |  | Defaults Upon Senior Securities                                                       |  |      | 24 | 
|Item 4.  |  | (Removed and Reserved)                                                                |  |      | 24 | 
|Item 5.  |  | Other Information                                                                     |  |      | 24 | 
|Item 6.  |  | Exhibits                                                                              |  |      | 25 | 
|         |  | Signatures                                                                            |  |      | 25 | 



i



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Item 1. Financial Statements.

DCP HOLDING COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)





|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- |  | ---------------- | - | ---------- | 
|                                                                                                                                                                                                                 |  | September 30,2010 |            |  | December 31,2009 |  
|ASSETS                                                                                                                                                                                                           |  |                   |            |  |                  |   |            | 
|INVESTMENTS:                                                                                                                                                                                                     |  |                   |            |  |                  |   |            | 
|Fixed maturities                                                                                                                                                                                                 |  | $                 | 3,135,893  |  |                  | $ | 807,461    | 
|Short-term investments                                                                                                                                                                                           |  |                   | 728,527    |  |                  |   | 1,213,471  | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|Total investments                                                                                                                                                                                                |  |                   | 3,864,420  |  |                  |   | 2,020,932  | 
|CASH AND CASH EQUIVALENTS                                                                                                                                                                                        |  |                   | 3,764,744  |  |                  |   | 6,769,186  | 
|ACCRUED INVESTMENT INCOME                                                                                                                                                                                        |  |                   | 35,542     |  |                  |   | 4,980      | 
|ACCOUNTS RECEIVABLE, net of allowance of $13,974 and $10,863 at September 30, 2010 and December 31, 2009,
respectively                                                                                           |  |                   | 555,349    |  |                  |   | 411,676    | 
|UNBILLED ACCOUNTS RECEIVABLE                                                                                                                                                                                     |  |                   | 35,315,312 |  |                  |   | 19,985,267 | 
|DEFERRED ACQUISITION COSTS                                                                                                                                                                                       |  |                   | 2,665,125  |  |                  |   | 1,241,141  | 
|PROPERTY AND EQUIPMENT, net of depreciation and amortization of $2,599,575 and $2,254,131 at September 30, 2010 and
December 31, 2009, respectively                                                              |  |                   | 2,386,147  |  |                  |   | 2,626,033  | 
|OTHER ASSETS                                                                                                                                                                                                     |  |                   | 1,872,360  |  |                  |   | 1,477,693  | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|TOTAL ASSETS                                                                                                                                                                                                     |  | $                 | 50,458,999 |  |                  | $ | 34,536,908 | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|                                                                                                                                                                                                                 |  |                  
|LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS EQUITY                                                                                                                                                          |  |                   |            |  |                  |   |            | 
|CLAIMS PAYABLE                                                                                                                                                                                                   |  | $                 | 2,979,781  |  |                  | $ | 2,316,515  | 
|UNEARNED PREMIUM REVENUE                                                                                                                                                                                         |  |                   | 36,177,940 |  |                  |   | 20,959,114 | 
|OTHER PAYABLES AND ACCRUALS                                                                                                                                                                                      |  |                   | 3,981,515  |  |                  |   | 3,226,253  | 
|REVOLVING NOTE                                                                                                                                                                                                   |  |                   | 630,000    |  |                  |   | 630,000    | 
|MORTGAGE LOAN PAYABLE                                                                                                                                                                                            |  |                   | 930,000    |  |                  |   | 1,020,000  | 
|DEFERRED COMPENSATION                                                                                                                                                                                            |  |                   | 1,043,124  |  |                  |   | 959,720    | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|TOTAL LIABILITIES                                                                                                                                                                                                |  |                   | 45,742,360 |  |                  |   | 29,111,602 | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|REDEEMABLE PREFERRED AND COMMON SHARES:                                                                                                                                                                          |  |                   |            |  |                  |   |            | 
|Institutional Preferred Shares, no par value, cumulative 5% dividendauthorized, 300 shares; issued and outstanding, 300 and
zero at September 30, 2010 and December 31, 2009, respectively                      |  |                   | 297,265    |  |                  |   |            | 
|Provider Preferred-2009 Series Redeemable Preferred Shares, no par value, cumulative 5% dividendauthorized, 5,000 shares;
issued and outstanding, 330 at September 30, 2010 and December 31, 2009, respectively |  |                   | 162,487    |  |                  |   | 196,095    | 
|Class A, Redeemable Common Shares, no par valueauthorized, 7,500 shares; issued and outstanding, 609 and 621 at
September 30, 2010 and December 31, 2009, respectively                                          |  |                   | 320,728    |  |                  |   | 394,813    | 
|Class B Redeemable Common Shares, no par valueauthorized, 100,000 shares; issued and outstanding, 7,474 and 7,604 at
September 30, 2010 and December 31, 2009, respectively                                     |  |                   | 3,936,159  |  |                  |   | 4,834,398  | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|Total redeemable preferred and common shares                                                                                                                                                                     |  |                   | 4,716,639  |  |                  |   | 5,425,306  | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|                                                                                                                                                                                                                 |  |                  
|SHAREHOLDERS EQUITYPreferred Shares; no par valueauthorized, 94,700 shares; issued, none                                                                                                                      |  |                   |            |  |                  |   |            | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 
|                                                                                                                                                                                                                 |  |                  
|TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS EQUITY                                                                                                                                                    |  | $                 | 50,458,999 |  |                  | $ | 34,536,908 | 
|                                                                                                                                                                                                                 |  |                   |            |  |                  |   |            | 

See notes to unaudited condensed consolidated financial statements.



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DCP HOLDING COMPANY AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)





|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|-------------------------------------------------- |  | --------------------------------------- | ---------- | - | -------------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                   |  | For the Three Months EndedSeptember 30, |            |   | For the Nine Months EndedSeptember 30, |  
|                                                   |  | 2010                                    |            |   | 2009                                   |   |            | 2010 |  |   | 2009       |  
|                                                   |  |                                         |            |  
|REVENUES                                           |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Premium revenue                                    |  | $                                       | 19,446,048 |   |                                        | $ | 18,076,912 |      |  | $ | 56,889,830 |   |  | $ | 53,087,141 |  
|Investment income                                  |  |                                         | 27,158     |   |                                        |   | 17,004     |      |  |   | 83,613     |   |  |   | 80,219     |  
|Other income                                       |  |                                         | 15,845     |   |                                        |   | 16,378     |      |  |   | 48,652     |   |  |   | 54,779     |  
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Total revenues                                     |  |                                         | 19,489,051 |   |                                        |   | 18,110,294 |      |  |   | 57,022,095 |   |  |   | 53,222,139 |  
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|                                                   |  |                                         |            |  
|EXPENSES                                           |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Healthcare services expense                        |  |                                         | 16,751,400 |   |                                        |   | 15,561,170 |      |  |   | 48,684,449 |   |  |   | 44,584,263 |  
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Insurance expense:                                 |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Salaries and benefit expense                       |  |                                         | 1,197,062  |   |                                        |   | 1,198,287  |      |  |   | 3,867,277  |   |  |   | 3,503,293  |  
|Commission expense and other acquisition costs     |  |                                         | 799,401    |   |                                        |   | 799,015    |      |  |   | 2,347,549  |   |  |   | 2,337,045  |  
|Other insurance expense                            |  |                                         | 1,059,564  |   |                                        |   | 1,299,803  |      |  |   | 3,365,374  |   |  |   | 3,699,135  |  
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Total insurance expense                            |  |                                         | 3,056,027  |   |                                        |   | 3,297,105  |      |  |   | 9,580,200  |   |  |   | 9,539,473  |  
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Total expenses                                     |  |                                         | 19,807,427 |   |                                        |   | 18,858,275 |      |  |   | 58,264,649 |   |  |   | 54,123,736 |  
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|                                                   |  |                                         |            |  
|LOSS BEFORE INCOME TAX                             |  |                                         | (318,376   | ) |                                        |   | (747,981   | )    |  |   | (1,242,554 | ) |  |   | (901,597   | )
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|                                                   |  |                                         |            |  
|INCOME TAX EXPENSE (BENEFIT)                       |  |                                         | 2,528      |   |                                        |   | (265,940   | )    |  |   | (329,898   | ) |  |   | (320,447   | )
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|                                                   |  |                                         |            |  
|LOSS ON REDEEMABLE SHARES                          |  | $                                       | (320,904   | ) |                                        | $ | (482,041   | )    |  | $ | (912,656   | ) |  | $ | (581,150   | )
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|                                                   |  |                                         |            |  
|BASIC AND DILUTED LOSS PER REDEEMABLE COMMON SHARE |  | $                                       | (38.16     | ) |                                        | $ | (56.88     | )    |  | $ | (107.76    | ) |  | $ | (68.51     | )
|                                                   |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  

See notes to unaudited condensed consolidated financial statements.



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DCP HOLDING COMPANY AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND REDEEMABLE SHARES

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 (Unaudited)





|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|-------------------------------------------------------------------------------- |  | ------------------------ | --- | - | --------------------------- | - | ------- | ----------------------- |  |  | ------------------ | - |  | ---------------- | --------- | - | -------------------------------------------- |  | --- | --------------- |  | - | -------------------------- | - |  |  | --- |  |  | - | ------- | - |  | - | -------- | - |  | - | ------ | - |  | - | -------- | - |  | - | -------- | -
|                                                                                 |  | Redeemable Common Shares |     |   | Redeemable Preferred Shares |   |         | Shareholders Equity    |  |  |                    |  
|                                                                                 |  | Class A                  |     |   | Class B                     |   |         | Institutional Preferred |  |  | Provider Preferred |   |  | RetainedEarnings |           |   | Other 
AccumulatedComprehensiveIncome (Loss) |  |     | Total           |  |   | ComprehensiveIncome (Loss) |  
|                                                                                 |  | Number ofShares          |     |   | Amount                      |   |         | Number ofShares         |  |  | Amount             |   |  | Number ofShares  |           |   | Amount                                       |  |     | Number ofShares |  |   | Amount                     |   |  |  |     | 
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |  
|BALANCEDECEMBER 31, 2009                                                        |  |                          | 621 |   |                             | $ | 394,813 |                         |  |  | 7,604              |   |  | $                | 4,834,398 |   |                                              |  |     |                 |  |   |                            |   |  |  | 330 |  |  | $ | 196,095 |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Net loss                                                                         |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  | $ | (912,656 | ) |  |   |        |   |  | $ | (912,656 | ) |  | $ | (912,656 | )
|Change in fair value of interest rate swap (net of income tax benefit of $3,446) |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  | $ | (6,689 | ) |  |   | (6,689   | ) |  |   | (6,689   | )
|Unrealized loss on investments (net of income tax benefit of $2,873)             |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   | (5,577 | ) |  |   | (5,577   | ) |  |   | (5,577   | )
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Total comprehensive loss                                                         |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  | $ | (924,922 | )
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Dividend payable                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   | (2,993   | ) |  |   |        |   |  |   | (2,993   | ) |  |   |          |  
|Redeemable Shares issued                                                         |  |                          |     |   |                             |   |         |                         |  |  | 28                 |   |  |                  | 17,753    |   |                                              |  | 300 |                 |  | $ | 300,000                    |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Class A Common Shares exchanged for Class B Common Shares                        |  |                          | (3  | ) |                             |   | (1,752  | )                       |  |  | 3                  |   |  |                  | 1,752     |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Redeemable Shares repurchased                                                    |  |                          | (9  | ) |                             |   | (5,297  | )                       |  |  | (161               | ) |  |                  | (93,208   | ) |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Dilution of shares to redemption value                                           |  |                          |     |   |                             |   | (67,036 | )                       |  |  |                    |   |  |                  | (824,536  | ) |                                              |  |     |                 |  |   | (2,735                     | ) |  |  |     |  |  |   | (33,608 | ) |  |   | 915,649  |   |  |   | 12,266 |   |  |   | 927,915  |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |  
|BALANCESEPTEMBER 30, 2010                                                       |  |                          | 609 |   |                             | $ | 320,728 |                         |  |  | 7,474              |   |  | $                | 3,936,159 |   |                                              |  | 300 |                 |  | $ | 297,265                    |   |  |  | 330 |  |  | $ | 162,487 |   |  | $ |          |   |  | $ |        |   |  | $ |          |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |  
|BALANCEDECEMBER 31, 2008                                                        |  |                          | 630 |   |                             | $ | 423,241 |                         |  |  | 7,775              |   |  | $                | 5,223,333 |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Net loss                                                                         |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  | $ | (581,150 | ) |  |   |        |   |  | $ | (581,150 | ) |  | $ | (581,150 | )
|Change in fair value of interest rate swap (net of income tax of $3,522)         |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  | $ | 6,837  |   |  |   | 6,837    |   |  |   | 6,837    |  
|Unrealized loss on investments (net of income tax benefit of $3,306)             |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   | (6,424 | ) |  |   | (6,424   | ) |  |   | (6,424   | )
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Total comprehensive loss                                                         |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  | $ | (580,737 | )
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Redeemable Shares issued, net of issuance cost                                   |  |                          |     |   |                             |   |         |                         |  |  | 30                 |   |  |                  | 18,066    |   |                                              |  |     |                 |  |   |                            |   |  |  | 330 |  |  | $ | 197,136 |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Class A Common Shares exchanged for Class B Commons Shares                       |  |                          | (3  | ) |                             |   | (2,012  | )                       |  |  | 3                  |   |  |                  | 2,012     |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Class B Common Shares exchanged for Class A Commons Shares                       |  |                          | 1   |   |                             |   | 590     |                         |  |  | (1                 | ) |  |                  | (590      | ) |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Redeemable Shares repurchased                                                    |  |                          | (6  | ) |                             |   | (3,964  | )                       |  |  | (178               | ) |  |                  | (116,234  | ) |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|Dilution of shares to redemption value                                           |  |                          |     |   |                             |   | (43,550 | )                       |  |  |                    |   |  |                  | (535,632  | ) |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   | (1,555  | ) |  |   | 581,150  |   |  |   | (413   | ) |  |   | 580,737  |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |  
|BALANCESEPTEMBER 30, 2009                                                       |  |                          | 622 |   |                             | $ | 374,305 |                         |  |  | 7,629              |   |  | $                | 4,590,955 |   |                                              |  |     |                 |  | $ |                            |   |  |  | 330 |  |  | $ | 195,581 |   |  | $ |          |   |  | $ |        |   |  | $ |          |   |  |   |          |  
|                                                                                 |  |                          |     |   |                             |   |         |                         |  |  |                    |   |  |                  |           |   |                                              |  |     |                 |  |   |                            |   |  |  |     |  |  |   |         |   |  |   |          |   |  |   |        |   |  |   |          |   |  |   |          |  

See notes to unaudited condensed consolidated financial statements.



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##### Table of Contents



DCP HOLDING COMPANY AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)





|                                                                         |  |                                        |             |   |      |   |             |  
|------------------------------------------------------------------------ |  | -------------------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                         |  | For the Nine Months EndedSeptember 30, |            
|                                                                         |  | 2010                                   |             |   | 2009 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    |  |                                        |             |   |      |   |             |  
|Net loss on redeemable shares                                            |  | $                                      | (912,656    | ) |      | $ | (581,150    | )
|Adjustments to reconcile net loss to net cash from operating activities: |  |                                        |             |   |      |   |             |  
|Depreciation and amortization                                            |  |                                        | 390,686     |   |      |   | 347,506     |  
|Deferred compensation                                                    |  |                                        | 83,404      |   |      |   | 225,537     |  
|Effects of changes in operating assets and liabilities:                  |  |                                        |             |   |      |   |             |  
|Accrued investment income                                                |  |                                        | (30,562     | ) |      |   | 10,654      |  
|Accounts receivable                                                      |  |                                        | (143,673    | ) |      |   | 119,310     |  
|Unbilled accounts receivable                                             |  |                                        | (15,330,045 | ) |      |   | (4,342,987  | )
|Deferred acquisition costs                                               |  |                                        | (1,423,984  | ) |      |   | (358,960    | )
|Other assets                                                             |  |                                        | (410,309    | ) |      |   | (610,517    | )
|Claims payable                                                           |  |                                        | 663,266     |   |      |   | (491,314    | )
|Unearned premium revenue                                                 |  |                                        | 15,218,826  |   |      |   | 4,782,542   |  
|Other payables and accruals                                              |  |                                        | 708,162     |   |      |   | 129,228     |  
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|Net cash used in operating activities                                    |  |                                        | (1,186,885  | ) |      |   | (770,151    | )
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    |  |                                        |             |   |      |   |             |  
|Purchases of investments                                                 |  |                                        | (6,979,977  | ) |      |   | (13,569,388 | )
|Sales and maturities of investments                                      |  |                                        | 5,109,431   |   |      |   | 14,139,758  |  
|Acquisition of property and equipment                                    |  |                                        | (110,231    | ) |      |   | (198,413    | )
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|Net cash (used in) provided by investing activities                      |  |                                        | (1,980,777  | ) |      |   | 371,957     |  
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    |  |                                        |             |   |      |   |             |  
|Mortgage loan repayments                                                 |  |                                        | (90,000     | ) |      |   | (90,000     | )
|Repayment of capital lease                                               |  |                                        |             |   |      |   | (19,253     | )
|Repurchase of redeemable shares                                          |  |                                        | (54,014     | ) |      |   | (132,642    | )
|Redeemable shares issued                                                 |  |                                        | 317,753     |   |      |   | 215,202     |  
|Dividends paid                                                           |  |                                        | (10,519     | ) |      |   |             |  
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|Net cash provided by (used in) financing activities                      |  |                                        | 163,220     |   |      |   | (26,693     | )
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|DECREASE IN CASH AND CASH EQUIVALENTS                                    |  |                                        | (3,004,442  | ) |      |   | (424,887    | )
|                                                                         |  |                                       
|CASH AND CASH EQUIVALENTSBeginning of period                            |  |                                        | 6,769,186   |   |      |   | 2,527,946   |  
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|CASH AND CASH EQUIVALENTSEnd of period                                  |  | $                                      | 3,764,744   |   |      | $ | 2,103,059   |  
|                                                                         |  |                                        |             |   |      |   |             |  
|                                                                         |  |                                       
|SUPPLEMENTAL CASH FLOW INFORMATION                                       |  |                                        |             |   |      |   |             |  
|Cash paid for interest                                                   |  | $                                      | 39,500      |   |      | $ | 47,000      |  
|Cash paid for income taxes                                               |  |                                        |             |   |      |   | 391,000     |  
|                                                                         |  |                                       
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                             |  |                                        |             |   |      |   |             |  
|Redeemed common shares (in other payables and accruals)                  |  | $                                      | 106,661     |   |      | $ | 47,572      |  

See
notes to unaudited condensed consolidated financial statements.



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##### Table of Contents



DCP HOLDING COMPANY AND
SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER, 30 2010 (UNAUDITED)





|1. | BASIS OF PRESENTATION
|-- | ---------------------

The condensed consolidated interim financial statements included in this report have been prepared by DCP Holding Company and subsidiaries (the Company) without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (the Commission). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial
statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited 2009 financial statements and notes thereto as included in the DCP Holding Company Form 10-K for the year ended December 31,
2009 filed with the Commission on March 16, 2010. These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial
statements. Certain financial information that is required in the annual financial statements may not be required for interim financial reporting purposes and has been condensed or omitted. Operating results for the three and nine months ended
September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

The interim condensed consolidated financial statements have been prepared in accordance with the accounting policies described in the notes to the Companys consolidated financial statements for the
year ended December 31, 2009. While management believes that the procedures followed in preparation of interim financial information are reasonable, the accompanying condensed consolidated financial statements include estimates for items such
as changes in claims payable, deferred tax accounts, deferred acquisition costs, deferred share-based compensation and accrued expenses, among others. Any adjustments related to such estimates during the reporting period were of a normal recurring
nature.

Use of EstimatesThe preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Premium Revenue

Fully-InsuredMembership contracts are written on an annual basis and are subject to cancellation by the
employer group upon thirty days written notice. The Companys unearned premium revenue was approximately $36,178,000 and $20,959,000 at September 30, 2010 and December 31, 2009, respectively, and relates to the estimated premium
revenue associated with the remaining contract periods. Related amounts recorded in unbilled accounts receivable were approximately $35,315,000 and $19,985,000 at September 30, 2010 and December 31, 2009, respectively. Premiums are due
monthly in advance and are recognized evenly as revenue during the period in which the Company is obligated to provide services to members. Any amounts not received by the end of a reporting period are recorded as accounts receivable by the Company.
Any premiums received prior to the beginning of a reporting period are recognized as premiums received in advance and are included in unearned premium revenue in the accompanying condensed consolidated balance sheets. Premiums received in advance
were approximately $863,000 and $974,000 at September 30, 2010 and December 31, 2009, respectively. Management has determined that as of September 30, 2010 and December 31, 2009, respectively, no premium deficiency reserve is
required. The Companys premium deficiency reserve analysis includes an allocation of investment income.

Self-InsuredThe Company provides administrative and claims processing services, benefit plan design, and
access to its provider networks for an administrative fee to self-insured groups. The Company has no underwriting risk arising from the provision or cost of any services provided to the self-insured groups. The Company recognizes and records
self-insured premiums on a gross basis because: (i) the Company is the primary obligor in its contractual relationships with self-insured employers and dental service providers, (ii) the Company establishes the pricing for the services
provided, (iii) the Company controls the selection of and the relationships with the dental service providers, and (iv) the



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##### Table of Contents

Company is involved in the determination of dental service specifications. Self-insured premium revenue is recognized upon the payment of claims for self-insured members in accordance with
agreements with self-insured employers and is included in premium revenue in the accompanying condensed consolidated statements of operations.

Third-party administration fee revenue (ASO fees) is recognized monthly when earned and is normally based on annual contracts with the self-insured groups. ASO fees are charged to self-insured
employer groups monthly on a per subscriber per month basis. ASO fees also include the administrative fees the Company earns relative to the dental PPO, dental indemnity and vision products that are underwritten by third-party insurance carriers.

Healthcare Services ExpenseThe Company compensates its providers based on contractual
reimbursement for various services. With respect to the dental HMO product, the Company generally retains 10% of this reimbursement (including payments on self-insured claims) in accordance with the Companys provider agreements. Healthcare
services expense is recorded net of any amounts withheld in the accompanying condensed consolidated statements of operations. Under the terms of the Companys provider agreements, the Company is not obligated to return to providers any amounts
withheld. Withheld amounts are retained by the Company but not reserved or retained in a separate fund. Participating providers have no interest in the amounts withheld unless the Companys Board authorizes any amount to be paid to the
providers.

The cost of fully-insured healthcare services to members is accrued in the period such services are
provided based on the accumulation of estimates of claims reported prior to the end of a reporting period and of estimates of dental services incurred but not reported to the Company, net of the amounts withheld in accordance with the provider
agreements.

Managements estimates of dental services provided are based on the Companys historical
experience and current trends, with assistance from the Companys consulting actuary. Estimated dental claims payable are reviewed monthly by management and are adjusted based on current information, actual paid claims data, dental utilization
statistics and other pertinent information. However, final claim payments may differ from the established reserves. Any resulting adjustments are reflected in current operations.

Each year the Board evaluates the performance of the Companys dental plans, capital and surplus requirements
prescribed by the Ohio Department of Insurance, factors affecting the Companys financial strength rating, funding needed to support strategic objectives for the coming years and any other factors deemed relevant by the Board and, based on that
evaluation, determines whether or not to authorize the payment to the providers of any portion of the provider withhold. Once authorized by the Board, such amounts are recorded as additional healthcare services expense in the period authorized and
shown as additional claims payable liability until paid.

InvestmentsThe Company invests in
certificates of deposit, investment grade corporate bonds and a money market mutual fund. The Company classifies all certificates of deposit investments and the money market mutual fund as available-for-sale. Such certificates of deposit investments
are recorded at fair value, with unrealized gains and losses recorded as a component of other comprehensive income. The Company classifies all investment grade corporate bonds as held-to-maturity based on the Companys positive intent and
ability to hold the securities to maturity. Held-to-maturity investments are recorded at amortized cost. The amortized cost of held-to-maturity investments is adjusted for amortization of premiums and accretion of discounts to maturity using the
effective-yield method of amortization. Such amortization is included in investment income. The Company recognizes gains and losses when these securities mature or are sold using the specific identification method. The Companys investment in
investment grade corporate bonds has added an element of market risk in 2010 that the Company did not have in 2009. The Companys management does not believe that this added market risk is material. There have been no material changes in
exposures to market risk for the three and nine months ended September 30, 2010.

Management follows a
consistent and systematic process for recognizing impairments on securities that sustain other-than-temporary declines in value. The decision to impair a security incorporates both quantitative criteria and qualitative information. The impairment
review process considers a number of factors including, but not limited to, the length of time and the extent to which the fair value has been less than cost, the Companys intent and ability to retain a security for a period adequate to
recover its cost, and general market conditions. The Companys impairment policy for fixed-maturity securities states that other-than-temporary impairment is considered to have occurred (1) if the Company intends to sell the impaired
fixed maturity security; (2) if it is more likely than not the Company will be required to sell the fixed maturity security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient
to recover the entire amortized cost basis.

State Guarantee Fund DepositsThe Company
maintains funds on deposit with state insurance departments in those states where the Company is licensed to do business. These funds amounted to approximately $282,000 and $291,000 at September 30, 2010 and December 31, 2009,
respectively. These funds are restricted and not available to the Company for normal operations and are included in other assets in the accompanying condensed consolidated balance sheets.



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Deferred Acquisition CostsDeferred acquisition costs are those costs that vary with and are primarily
related to the acquisition of new and renewal business. Such costs include commissions, costs of contract issuance and underwriting, premium taxes and other costs the Company incurs to acquire new business or renew existing business. The Company
defers policy acquisition costs and amortizes them over the estimated life of the contracts, which are short-duration in nature, in proportion to premiums earned. The Company capitalized deferred acquisition costs of approximately $1,106,000 and
$557,000 and amortized approximately $883,000 and $692,000 of these capitalized costs for the three months ended September 30, 2010 and 2009, respectively. The Company capitalized deferred acquisition costs of approximately $3,928,000 and
$2,390,000 and amortized approximately $2,504,000 and $2,031,000 of these capitalized costs for the nine months ended September 30, 2010 and 2009, respectively. These amounts are recorded in commission expense and other acquisition costs
included in the condensed consolidated statements of operations.

ReinsuranceIn the normal
course of business, the Company assumes premium revenue and related healthcare services expense from a third party insurance provider. Dental insurance premium assumed was approximately $74,500 for the three and nine months ended September 30,
2010. The healthcare services expense assumed was approximately $77,000 for the three and nine months ended September 30, 2010. The Company did not have any assumed dental insurance premium or healthcare services expense for the three and nine
months ended September 30, 2009. As of September 30, 2010, the Company has approximately $11,300 of reinsurance premium receivable and claims payable of approximately $30,500.



|3. | NEW ACCOUNTING PRONOUNCEMENTS
|-- | -----------------------------

In January 2010, the FASB issued guidance that provides additional disclosures about transfers into and out of Levels 1 and 2 fair value measurements and separate disclosures about purchases, sales,
issuances, and settlements relating to Level 3 fair value measurements. The guidance also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This guidance
is effective for interim and annual reporting periods beginning after December 15, 2009. This guidance did not have a material effect on the Companys financial statements or related disclosures.

In February 2010, the FASB issued guidance that amends the Subsequent Events topic by removing the requirement for a
Commission registered company to disclose a date, in both issued and revised financial statements, through which that company had evaluated subsequent events. Accordingly, the Company removed the related disclosure. The adoption did not have a
material impact on our financial statements.

In October 2010, the FASB issued guidance that amends Accounting
for Costs Associated with Acquiring or Renewing Insurance Contracts. The new guidance modifies the definitions of the type of costs incurred by insurance entities that can be capitalized in the successful acquisition of new and renewal contracts.
The guidance requires incremental direct costs of successful contract acquisition as well as certain costs related to underwriting, policy issuance and processing, medical and inspection and sales force contract selling for successful contract
acquisition to be capitalized. These incremental direct costs and other costs are those that are essential to the contract transaction and would not have been incurred had the contract transaction not occurred. The effective date is for reporting
periods beginning after December 15, 2011. The Company is evaluating the impact on our financial statements and related disclosures.



|4. | INVESTMENTS
|-- | -----------

The Company owned certificates of deposit insured by the Federal Deposit Insurance Corporation (FDIC) with a cost of $1,300,000 and $1,800,000 as of September 30, 2010 and
December 31, 2009, respectively. The certificates of deposit included in short-term and fixed maturities investments are classified as available-for-sale and are carried at fair value, which is based on broker-quoted market prices. The
unrealized gains and losses on available-for-sale investment activity are due to a change in the quoted market prices for these investments caused by any changes in prevailing interest rates since they were purchased. The Company also invests in a
money market fund with a cost and fair value of $224,599 and $204,111 as of September 30, 2010 and December 31, 2009, respectively. In 2010, the Company began to invest in investment grade corporate bonds, which are classified as
held-to-maturity and are recorded at amortized cost. The Company owned approximately $2,328,000 of investment grade corporate bonds at amortized cost as of September 30, 2010. There were no realized gains or losses for the three and nine months
ended September 30, 2010 and 2009.



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At
September 30, 2010 and December 31, 2009, maturity dates for fixed maturity and short-term investments (excluding the money market fund) were:



|                                                                    |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  
|------------------------------------------------------------------- |  | ------------------ | --------- |  | ---------------- | - | --------- | --------------- |  |  | ------------- | - |  | ---------- | --------- |  | --------------- | - | --------- |  |  |  | ----- | -
|                                                                    |  | Available for Sale |           |  | Held-to-Maturity |  
|September 30, 2010                                                  |  | Cost               |           |  | Fair Value       |   |           | % of TotalValue |  |  | AmortizedCost |   |  | Fair Value |           |  | % of TotalValue |  
|Maturity dates occurring:                                           |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  
|Less than 1 year (five certificates of deposit)                     |  | $                  | 500,000   |  |                  | $ | 503,928   |                 |  |  | 38.4          | % |  |            |           |  |                 |   |           |  |  |  |       |  
|Years 1-3 (five certificates of deposit and eleven corporate bonds) |  |                    | 800,000   |  |                  |   | 808,316   |                 |  |  | 61.6          | % |  | $          | 2,327,577 |  |                 | $ | 2,383,192 |  |  |  | 100.0 | %
|                                                                    |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  
|                                                                    |  |                    |           |  |                  |  
|Total investments                                                   |  | $                  | 1,300,000 |  |                  | $ | 1,312,244 |                 |  |  | 100.0         | % |  | $          | 2,327,577 |  |                 | $ | 2,383,192 |  |  |  | 100.0 | %
|                                                                    |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  
|                                                                    |  |                   
|                                                                    |  | Available for Sale |           |  | Held-to-Maturity |  
|December 31, 2009                                                   |  | Cost               |           |  | Fair Value       |   |           | % of TotalValue |  |  | AmortizedCost |   |  | Fair Value |           |  | % of TotalValue |  
|Maturity dates occurring:                                           |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  
|Less than 1 year (ten certificates of deposit)                      |  | $                  | 1,000,000 |  |                  | $ | 1,009,360 |                 |  |  | 55.6          | % |  | $          |           |  |                 | $ |           |  |  |  |       |  
|Years 1-2 (six certificates of deposit)                             |  |                    | 800,000   |  |                  |   | 807,461   |                 |  |  | 44.4          | % |  |            |           |  |                 |   |           |  |  |  |       |  
|                                                                    |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  
|                                                                    |  |                    |           |  |                  |  
|Total investments                                                   |  | $                  | 1,800,000 |  |                  | $ | 1,816,821 |                 |  |  | 100.0         | % |  | $          |           |  |                 | $ |           |  |  |  |       |  
|                                                                    |  |                    |           |  |                  |   |           |                 |  |  |               |   |  |            |           |  |                 |   |           |  |  |  |       |  

Investments classified at September 30, 2010 and December 31, 2009, as
fixed maturities and short-term investments were as follows:



|                                          |  |                    |           |  |                     |   |        |                     |  |   |            |  |  |               |           |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|----------------------------------------- |  | ------------------ | --------- |  | ------------------- | - | ------ | ------------------- |  | - | ---------- |  |  | ------------- | --------- |  | ------------------- | - | --------- | ------------------- |  | - | ---------- |  |  | - |  |  |  | - | --------- | 
|                                          |  | Available for Sale |           |  | Held-to-Maturity    |  
|September 30, 2010                        |  | Cost               |           |  | GrossUnrealizedGain |   |        | GrossUnrealizedLoss |  |   | Fair Value |  |  | AmortizedCost |           |  | GrossUnrealizedGain |   |           | GrossUnrealizedLoss |  |   | Fair Value | 
|                                          |  |                    |           |  |                     |   |        |                    
|Money market                              |  | $                  | 224,599   |  |                     |   |        |                     |  |   |            |  |  | $             | 224,599   |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Certificates of deposit, short term       |  |                    | 500,000   |  |                     | $ | 3,928  |                     |  |   |            |  |  |               | 503,928   |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Certificates of deposit, fixed maturities |  |                    | 800,000   |  |                     |   | 8,316  |                     |  |   |            |  |  |               | 808,316   |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Corporate Bonds, fixed maturities         |  |                    |           |  |                     |   |        |                     |  | $ |            |  |  |               |           |  |                     | $ | 2,327,577 |                     |  | $ | 55,615     |  |  | $ |  |  |  | $ | 2,383,192 | 
|                                          |  |                    |           |  |                     |   |        |                     |  |   |            |  |  |               |           |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Total investments                         |  | $                  | 1,524,599 |  |                     | $ | 12,244 |                     |  | $ |            |  |  | $             | 1,536,843 |  |                     | $ | 2,327,577 |                     |  | $ | 55,615     |  |  | $ |  |  |  | $ | 2,383,192 | 
|                                          |  |                    |           |  |                     |   |        |                     |  |   |            |  |  |               |           |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|                                          |  |                   
|                                          |  | Available for Sale |           |  | Held-to-Maturity    |  
|December 31, 2009                         |  | Cost               |           |  | GrossUnrealizedGain |   |        | GrossUnrealizedLoss |  |   | Fair Value |  |  | AmortizedCost |           |  | GrossUnrealizedGain |   |           | GrossUnrealizedLoss |  |   | Fair Value | 
|                                          |  |                    |           |  |                     |   |        |                    
|Money market                              |  | $                  | 204,111   |  |                     |   |        |                     |  |   |            |  |  | $             | 204,111   |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Certificates of deposit, short term       |  |                    | 1,000,000 |  |                     | $ | 9,360  |                     |  |   |            |  |  |               | 1,009,360 |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Certificates of deposit, fixed maturities |  |                    | 800,000   |  |                     |   | 7,461  |                     |  | $ |            |  |  |               | 807,461   |  |                     | $ |           |                     |  | $ |            |  |  | $ |  |  |  | $ |           | 
|                                          |  |                    |           |  |                     |   |        |                     |  |   |            |  |  |               |           |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 
|Total investments                         |  | $                  | 2,004,111 |  |                     | $ | 16,821 |                     |  | $ |            |  |  | $             | 2,020,932 |  |                     | $ |           |                     |  | $ |            |  |  | $ |  |  |  | $ |           | 
|                                          |  |                    |           |  |                     |   |        |                     |  |   |            |  |  |               |           |  |                     |   |           |                     |  |   |            |  |  |   |  |  |  |   |           | 

Unrealized losses on investments are generally due to higher current market yields relative
to the yields of the investments at their amortized cost. Unrealized losses due to credit risk associated with the underlying collateral of the investments, if any, are not material. All investments with unrealized losses are reviewed quarterly to
determine if any impairment is other than temporary, requiring a write-down to fair market value. The Company considers the percentage loss on a security, duration of loss, duration of the investment, credit rating of the security, as well as
payment performance and the Companys intent or requirement to sell the investment before recovery when determining whether any impairment is other than temporary. The Company had no other than temporary impairment charges for the three and
nine months ended September 30, 2010. The Company had no investments in a continuous unrealized loss position for greater than one year as of September 30, 2010.



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|5. | DEFERRED COMPENSATION PLAN
|-- | --------------------------

Share-based compensation cost is measured at the grant date based on the fair value of the liability awards and is recognized as expense ratably over the vesting periods and is included in other insurance
expense in the condensed consolidated statements of operations. The fair value of the liability awards are remeasured at the end of each reporting period through the remaining vesting period with the change in fair value recognized in earnings
currently.

In accordance with the 2006 Dental Care Plus Management Equity Incentive Plan and the Dental Care
Plus, Inc. and DCP Holding Company Deferred Compensation Plan (the Plans), Company directors and certain key employees elected to defer portions of their director fees and employee compensation, as applicable. The Company recorded
expense of approximately $12,000 and $20,000 related to deferred director fees and deferred employee compensation for the three months ended September 30, 2010 and 2009, respectively. The Company recorded expense of approximately $51,000 and
$73,000 related to deferred director fees and deferred employee compensation for the nine months ended September 30, 2010 and 2009, respectively. Directors and key employees who elect to defer cash compensation may request that the Company
invest this compensation in a mutual fund investment or phantom shares of the Company. The Plans also provide for the directors and key employees to receive share awards based on the book value of the Redeemable Common Shares and to elect to defer
receiving such amounts until termination of board membership or employment and vesting requirements are met. If a director or key employee does not elect to defer receiving his or her share awards, the individual will receive Class B Redeemable
Common Shares upon vesting. If the share awards are deferred, these deferred amounts will be paid in cash at redemption. An individual directors award vests 100% at the end of each year if the director meets certain attendance requirements.
The key employee awards vest 10%, 20%, 30% and 40% at the end of each respective year in a four-year period following the grant date. There are no performance criteria associated with the vesting of the awards for key employees and the only
requirement for vesting is that the individual is an employee of the Company at the end of the vesting year in question. The deferred compensation expense related to these awards is recorded ratably during the applicable vesting period. The Company
recorded deferred compensation expense (benefit) of approximately $(5,000) and $29,000 related to deferred share awards and the change in the value of phantom shares for the three months ended September 30, 2010 and 2009, respectively. The
deferred compensation benefit is the result of the Companys reduced share price expectations. The Company recorded deferred compensation expense of approximately $15,000 and $155,000 related to deferred share awards and the change in the value
of phantom shares for the nine months ended September 30, 2010 and 2009, respectively. As of September 30, 2010 there is approximately $188,000 of total unrecognized compensation cost related to non-vested award compensation under the
Plans. That cost is expected to be recognized over a weighted average period of 2.25 years.

The expected fair
value of the awards is calculated by applying the three year historical average trend rate of the book value per redeemable common share over the respective vesting period. The weighted average grant date fair value of the awards granted in the nine
months ended September 30, 2010 and 2009 were $713 and $801, respectively. At September 30, 2010 and December 31, 2009, the deferred compensation liability was approximately $1,043,000 and $960,000, respectively. The increase of the
deferred compensation liability of approximately $83,000 is the result of deferred compensation expense and contributions to a deferred compensation mutual fund investment.

The following is a summary of activity of nonvested awards for the nine months ended September 30, 2010:



|                                        |  |                                  |       |  |                                     |   |     |                          |  |  |                                     |  |  |   |     | 
|--------------------------------------- |  | -------------------------------- | ----- |  | ----------------------------------- | - | --- | ------------------------ |  |  | ----------------------------------- |  |  | - | --- | 
|                                        |  | IndividualDirectorsShare Awards |       |  | WeightedAverage GrantDate FairValue |   |     | Key EmployeeShare Awards |  |  | WeightedAverage GrantDate FairValue | 
|                                        |  |                                  |       | 
|Non-vested awards at January 1, 2010    |  |                                  |       |  |                                     |   |     |                          |  |  | 163.5                               |  |  | $ | 894 | 
|Granted                                 |  |                                  | 216.0 |  |                                     | $ | 674 |                          |  |  | 84.0                                |  |  |   | 812 | 
|                                        |  |                                  |       |  |                                     |   |     |                          |  |  |                                     |  |  |   |     | 
|Non-vested awards at September 30, 2010 |  |                                  | 216.0 |  |                                     | $ | 674 |                          |  |  | 247.5                               |  |  | $ | 866 | 
|                                        |  |                                  |       |  |                                     |   |     |                          |  |  |                                     |  |  |   |     | 

There were no shares that vested for the three and nine months ended
September 30, 2010.



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|6. | LOSS PER REDEEMABLE COMMON SHARE
|-- | --------------------------------

The loss per redeemable common share is calculated as follows for the three and nine months ended September 30, 2010 and 2009, respectively:



|                                                                                                                         |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | -------- | - | ------------------------------ | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                                                                         |  | Three Months EndedSeptember 30, |          |   | Nine Months EndedSeptember 30, |  
|                                                                                                                         |  | 2010                            |          |   | 2009                           |   |          | 2010 |  |   | 2009     |  
|Net loss on redeemable shares                                                                                            |  | $                               | (320,904 | ) |                                | $ | (482,041 | )    |  | $ | (912,656 | ) |  | $ | (581,150 | )
|Less dividend payable to redeemable preferred shareholders                                                               |  |                                 | (2,993   | ) |                                |   |          |      |  |   | (2,993   | ) |  |   |          |  
|Less net loss allocated to redeemable preferred shareholders                                                             |  |                                 | (14,419  | ) |                                |   | (12,663  | )    |  |   | (36,118  | ) |  |   | (11,311  | )
|                                                                                                                         |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Net loss dilutive to redeemable common shareholders                                                                      |  | $                               | (309,478 | ) |                                | $ | (469,378 | )    |  | $ | (879,531 | ) |  | $ | (569,839 | )
|                                                                                                                         |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Weighted average outstanding redeemable common shares used to compute basic and diluted loss per redeemable common
share |  |                                 | 8,110    |   |                                |   | 8,252    |      |  |   | 8,162    |   |  |   | 8,318    |  
|                                                                                                                         |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  
|Basic and diluted loss per redeemable common share                                                                       |  | $                               | (38.16   | ) |                                | $ | (56.88   | )    |  | $ | (107.76  | ) |  | $ | (68.51   | )
|                                                                                                                         |  |                                 |          |   |                                |   |          |      |  |   |          |   |  |   |          |  

The Company Directors who are eligible to receive stock-based compensation for 2010 elected
in December 2009 to receive Class B Redeemable Common Shares at the end of 2010 in lieu of deferring this compensation. One key employee also elected to receive Class B Redeemable Common Shares in lieu of deferring this compensation. The 216
director and 10 management share awards that were not deferred are anti-dilutive for the periods presented due to the net loss for the three and nine months ended September 30, 2010 and therefore, are not included in the diluted loss per
redeemable common share calculation.



|7. | REDEEMABLE SHARES, SHAREHOLDERS EQUITY
|-- | ---------------------------------------

The Board of Directors authorized and approved the issuance of Redeemable Institutional Preferred Shares (the Shares) consisting of 300 preferred shares authorized of the 100,000 authorized.
On July 21, 2010, the Company entered into a Preferred Stock Purchase Agreement (the Stock Purchase Agreement) with an investor. Pursuant to the Stock Purchase Agreement, the investor agreed to purchase 300 Shares at a purchase
price of $1,000 per share, with an aggregate purchase price of $300,000. The annual dividend payable on each Share shall be 5% of the book value at the beginning of the dividend period. The proceeds of the sale of the Shares will be used to fund the
expansion of current dental insurance products into new markets, to fund corporate infrastructure improvements and to increase the capital and surplus of Dental Care Plus, Inc. (DCP) to support the growth of fully-insured dental
insurance premium revenue. The sale of the Shares under the Stock Purchase Agreement is pursuant to a private sale exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.



|8. | SEGMENT INFORMATION
|-- | -------------------

The Company manages its business with three reportable segments: fully-insured dental, self-insured dental and corporate, all other. Fully-insured dental consists of the fully-insured dental HMO,
fully-insured dental PPO and fully-insured dental indemnity products. Self-insured dental consists of the self-insured dental HMO, self-insured dental PPO and self-insured dental indemnity products. Corporate, all other consists of revenue
associated with the Companys dental indemnity, dental PPO, and vision products underwritten by third-party insurance carriers and certain other corporate activities. These segments are consistent with information used by the Chief Executive
Officer (the chief operating decision maker) in managing the business. The segment information aggregates products with similar economic characteristics. These characteristics include the nature of employer groups, pricing, benefits and underwriting
requirements.

The results of the fully-insured and self-insured dental segments are measured by gross profit.
The Company does not allocate insurance expense, investment and other income, assets or liabilities to these segments. These items are assigned to the remainder of the Companys business, which it identifies as corporate, all other. The
Companys gross profit, which is defined as premium revenue less healthcare services expense, was approximately $2,695,000 and $2,516,000 for the three months ended September 30, 2010 and 2009, respectively. The Companys gross profit
for the nine months ended September 30, 2010 and 2009 was approximately $8,206,000 and $8,503,000, respectively.

Listed below is financial information required for each reportable segment for the three and nine months ended September 30, 2010 and 2009 (amounts in thousands):



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|                       |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 
|---------------------- |  | ------------------------------------ | ------ |  | ------------------------------------ | - | ------ | ----- | - | - | -------------------------- |  |  | ------------------------- | ------ |  | ----- | - | ------ | ---- | - | - | ------ | 
|                       |  | Three Months EndedSeptember 30,
2010 |        |  | Three Months EndedSeptember 30,
2009 |  
|                       |  | Revenues-ExternalCustomers           |        |  | HealthcareServicesExpense            |   |        | Total |   |   | Revenues-ExternalCustomers |  |  | HealthcareServicesExpense |        |  | Total |  
|Reportable segments:   |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 
|Fully-insured dental   |  | $                                    | 13,160 |  |                                      | $ | 11,416 |       |   | $ | 1,744                      |  |  | $                         | 11,348 |  |       | $ | 9,845  |      |   | $ | 1,503  | 
|Self-insured dental    |  |                                      | 6,180  |  |                                      |   | 5,335  |       |   |   | 845                        |  |  |                           | 6,618  |  |       |   | 5,716  |      |   |   | 902    | 
|Corporate, all other   |  |                                      | 106    |  |                                      |   |        |       |   |   | 106                        |  |  |                           | 111    |  |       |   |        |      |   |   | 111    | 
|                       |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 
|Total                  |  | $                                    | 19,446 |  |                                      | $ | 16,751 |       |   |   | 2,695                      |  |  | $                         | 18,077 |  |       | $ | 15,561 |      |   |   | 2,516  | 
|                       |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 
|                       |  |                                      |        |  |                                      |  
|Investment income      |  |                                      |        |  |                                      |   |        |       |   |   | 27                         |  |  |                           |        |  |       |   |        |      |   |   | 17     | 
|Other income           |  |                                      |        |  |                                      |   |        |       |   |   | 16                         |  |  |                           |        |  |       |   |        |      |   |   | 16     | 
|                       |  |                                      |        |  |                                      |  
|Insurance expense      |  |                                      |        |  |                                      |   |        |       |   |   | 3,056                      |  |  |                           |        |  |       |   |        |      |   |   | 3,297  | 
|                       |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 
|                       |  |                                      |        |  |                                     
|Loss before income tax |  |                                      |        |  |                                      |   | $      | (318  | ) |   |                            |  |  |                           |        |  |       |   | $      | (748 | )
|                       |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 
|                       |  |                                      |        |  |                                      |  
|Total assets-corporate |  |                                      |        |  |                                      |   |        |       |   | $ | 50,459                     |  |  |                           |        |  |       |   |        |      |   | $ | 39,950 | 
|                       |  |                                      |        |  |                                      |   |        |       |   |   |                            |  |  |                           |        |  |       |   |        |      |   |   |        | 



|                       |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  
|---------------------- |  | ----------------------------------- | ------ |  | ----------------------------------- | - | ------ | ----- |  | - | -------------------------- | - |  | ------------------------- | ------ |  | ----- | - | ------ |  |  | - | ------ | -
|                       |  | Nine Months EndedSeptember 30,
2010 |        |  | Nine Months EndedSeptember 30,
2009 |  
|                       |  | Revenues-ExternalCustomers          |        |  | HealthcareServicesExpense           |   |        | Total |  |   | Revenues-ExternalCustomers |   |  | HealthcareServicesExpense |        |  | Total |  
|Reportable segments:   |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  
|Fully-insured dental   |  | $                                   | 38,841 |  |                                     | $ | 33,422 |       |  | $ | 5,419                      |   |  | $                         | 33,675 |  |       | $ | 28,090 |  |  | $ | 5,585  |  
|Self-insured dental    |  |                                     | 17,706 |  |                                     |   | 15,262 |       |  |   | 2,444                      |   |  |                           | 19,102 |  |       |   | 16,494 |  |  |   | 2,608  |  
|Corporate, all other   |  |                                     | 343    |  |                                     |   |        |       |  |   | 343                        |   |  |                           | 310    |  |       |   |        |  |  |   | 310    |  
|                       |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  
|Total                  |  | $                                   | 56,890 |  |                                     | $ | 48,684 |       |  |   | 8,206                      |   |  | $                         | 53,087 |  |       | $ | 44,584 |  |  |   | 8,503  |  
|                       |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  
|                       |  |                                     |        |  |                                     |  
|Investment income      |  |                                     |        |  |                                     |   |        |       |  |   | 84                         |   |  |                           |        |  |       |   |        |  |  |   | 80     |  
|Other income           |  |                                     |        |  |                                     |   |        |       |  |   | 49                         |   |  |                           |        |  |       |   |        |  |  |   | 55     |  
|                       |  |                                     |        |  |                                     |  
|Insurance expense      |  |                                     |        |  |                                     |   |        |       |  |   | 9,581                      |   |  |                           |        |  |       |   |        |  |  |   | 9,539  |  
|                       |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  
|                       |  |                                     |        |  |                                     |  
|Loss before income tax |  |                                     |        |  |                                     |   |        |       |  | $ | (1,242                     | ) |  |                           |        |  |       |   |        |  |  | $ | (901   | )
|                       |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  
|                       |  |                                     |        |  |                                     |  
|Total assets-corporate |  |                                     |        |  |                                     |   |        |       |  | $ | 50,459                     |   |  |                           |        |  |       |   |        |  |  | $ | 39,550 |  
|                       |  |                                     |        |  |                                     |   |        |       |  |   |                            |   |  |                           |        |  |       |   |        |  |  |   |        |  

Inter-segment revenues were not significant for the three and nine months ended
September 30, 2010 and 2009.



|9. | FEDERAL INCOME TAXES
|-- | --------------------

The Company calculates its year to date income tax provision or benefit by applying the estimated annual effective tax rate for the year to date pretax income or loss. Our estimated income tax expense for
the three months ended September 30, 2010 was approximately $3,000 due to the fact that we revised our 2010 effective tax rate from 35.6% to 26.5% as of September 30, 2010. Our estimated income tax benefit for the three months ended
September 30, 2009 was approximately $266,000 with an effective tax rate of approximately 35.6%. Our estimated income tax benefit for the nine months ended September 30, 2010 was approximately $330,000 with an effective tax rate of
26.5%. Our estimated income tax benefit for the nine months ended September 30, 2009 was approximately $320,000 with an effective tax rate of approximately 35.5%.



|10. | DEBT
|--- | ----

In
2003, the Company purchased land and an office building and in connection therewith, the Company executed a mortgage note with a bank, secured by the land and the office building, in the amount of $1,800,000. Interest is payable based on the 30-day
LIBOR rate plus 1.75% and was 2.01% and 1.98% at September 30, 2010 and December 31, 2009, respectively. At September 30, 2010, the carrying value of the mortgage note approximates fair value. The Company also entered into an interest
rate swap agreement that effectively changed the interest rate related to $1,500,000 of the



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Companys $1,800,000 mortgage note with a commercial bank from a variable rate based on the 30-day LIBOR rate plus 1.75% to a fixed rate of approximately 4.95% for the 10-year period through
June 12, 2013.

In 2009, the Company renewed a revolving note with a commercial bank in the amount of
$650,000 collateralized by a second mortgage on the office building that matures in December 2010. There was a principal balance outstanding of $630,000 at September 30, 2010 and December 31, 2009. Interest is payable based on the 30-day
LIBOR rate plus 1.75% and was 2.01% and 1.98% at September 30, 2010 and December 31, 2009, respectively. At September 30, 2010, the carrying value of the revolving note approximates fair value.



|11. | FAIR VALUE MEASUREMENTS
|--- | -----------------------

The Company classifies the assets and liabilities that require measurement of fair value on a recurring basis based on the priority of the observable and market-based sources of data into a three-level
fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value
hierarchy are as follows:



| |  |  | Level 1  Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  Valuations based on significant other observable inputs other than those included in Level 1 such as quoted prices for similar assets or
liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Valuations based on unobservable inputs such as when observable inputs are not available or inputs that are supported by little or no
market activity and that are significant to the fair value of the assets or liabilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents for each of the fair value levels, the Companys assets and liabilities that are
measured at fair value on a recurring basis as of September 30, 2010 and December 31, 2009 (amounts in thousands):



|                                           |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|------------------------------------------ |  | ------------------ | --- |  | ----------------- | - | ----- | ------------ |  | - | ------- |  |  | ------- | --- |  | ------------ | - | ----- |  |  | - | ----- | 
|                                           |  | September 30, 2010 |     |  | December 31, 2009 |  
|                                           |  | Level 1            |     |  | Level 2           |   |       | TotalBalance |  |   | Level 1 |  |  | Level 2 |     |  | TotalBalance |  
|Assets                                     |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Fixed maturities                           |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Federally-Insured certificates of deposits |  |                    |     |  |                   | $ | 808   |              |  | $ | 808     |  |  |         |     |  |              | $ | 807   |  |  | $ | 807   | 
|Short-term investments                     |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Money market funds                         |  | $                  | 225 |  |                   |   |       |              |  |   | 225     |  |  | $       | 204 |  |              |   |       |  |  |   | 204   | 
|Federally-Insured certificates of deposits |  |                    |     |  |                   |   | 504   |              |  |   | 504     |  |  |         |     |  |              |   | 1,009 |  |  |   | 1,009 | 
|Deferred compensation investments (a)      |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Equity mutual fund investments             |  |                    | 286 |  |                   |   |       |              |  |   | 286     |  |  |         | 226 |  |              |   |       |  |  |   | 226   | 
|State guarantee fund deposits (b)          |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Government securities                      |  |                    | 232 |  |                   |   |       |              |  |   | 232     |  |  |         | 241 |  |              |   |       |  |  |   | 241   | 
|Federally-Insured certificates of deposits |  |                    |     |  |                   |   | 50    |              |  |   | 50      |  |  |         |     |  |              |   | 50    |  |  |   | 50    | 
|                                           |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Total                                      |  |                    | 743 |  |                   |   | 1,362 |              |  |   | 2,105   |  |  |         | 671 |  |              |   | 1,866 |  |  |   | 2,537 | 
|                                           |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|                                           |  |                    |     |  |                   |  
|Liabilities                                |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Interest rate swap (c)                     |  |                    |     |  |                   |   | 34    |              |  |   | 34      |  |  |         |     |  |              |   | 24    |  |  |   | 24    | 
|                                           |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 
|Total                                      |  | $                  |     |  |                   | $ | 34    |              |  | $ | 34      |  |  | $       |     |  |              | $ | 24    |  |  | $ | 24    | 
|                                           |  |                    |     |  |                   |   |       |              |  |   |         |  |  |         |     |  |              |   |       |  |  |   |       | 



| | (a) | Included as a trading security in other assets
| | --- | ----------------------------------------------

| | (b) | Included in other assets
| | --- | ------------------------

| | (c) | Included in other payables and accruals
| | --- | ---------------------------------------

Certain assets and liabilities are measured at fair value on a non-recurring basis, and therefore, are not included in the table above. These include long-lived assets such as certain property and
equipment items, intangible assets and goodwill measured at cost that are written down to fair value during a period as a result of an impairment. For the three and nine months ended September 30, 2010 and 2009, there were no assets or
liabilities that were required to be measured at fair value on a non-recurring basis.



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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking statements

Portions of this report, including this discussion and the information contained in the notes to the condensed consolidated financial statements, contain forward-looking statements under the Private
Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as may, might, will, should, could, would, expect,
plan, anticipate, believe, estimate, project, predict, intend, potential, likely will result, or the negative of such terms or similar
expressions. These forward-looking statements reflect our current expectations and views about future events and speak only as of the date of this report. The forward-looking statements are subject to risks, uncertainties and other factors that
could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements,
include, among others: claims costs exceeding our estimates, a downgrade in our financial strength rating, competitive pressures, changes in demand for dental benefits and other economic conditions, the loss of a significant customer or broker, the
occurrence or non-occurrence of circumstances beyond our control and those items described in Item 1A  Risk Factors of the Companys Form 10-K for the fiscal year ended December 31, 2009. We do not undertake any obligation to
publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date this report is filed.

Overview

Headquartered in Cincinnati, Ohio, we offer
dental HMO, dental PPO, dental indemnity and vision PPO benefit plans and related services, primarily to employer groups of two or more employees. As of September 30, 2010, we had approximately 290,300 members in our dental and vision benefit
programs with approximately 2,834 dentists participating in our networks of providers.

We manage our business
with three reportable segments: fully-insured dental, self-insured dental, and corporate, all other. Corporate, all other consists of revenue associated with our dental indemnity, dental PPO, and vision products underwritten by third-party insurance
carriers and certain other corporate activities. Our dental HMO, PPO and indemnity products and our vision product line are primarily marketed to employer groups. The segment information aggregates products with similar economic characteristics.
These characteristics include the nature of employer groups and pricing, benefits and underwriting requirements. The results of our fully-insured and self-insured dental segments are measured by gross profit, which is defined as premium revenue less
healthcare services expense. We do not measure the results of our corporate, all other segment. We do not allocate investment and other income, insurance expenses, assets or liabilities to our fully-insured and self-insured segments. These items are
retained in our corporate, all other segment. Our segments do not share overhead costs and assets. We do, however, measure the contributions of each of our fully-insured and self-insured segments to costs retained in our corporate, all other
segment.

Many factors have an effect on our results, but most notably our results are influenced by our
ability to establish and maintain a competitive and efficient cost structure and to accurately and consistently establish competitive premiums, ASO fees, and plan benefit levels that are commensurate with our dental and administrative costs. Dental
costs are subject to a high rate of inflation due to many forces, including new higher priced technologies and dental procedures, new dental service techniques and therapies, an aging population and lifestyle choices.

Strategy

Our strategy focuses on providing solutions to employers to the rising cost of dental care by leveraging our growing networks of participating dentists and deploying a variety of products that give
employer groups and members more choices. Additionally, we have increased the diversification of our membership base, not only through our newer products, but also by entering new geographic territories. We expect our dental PPO and indemnity
products to be important components of growth in the years ahead.

In our original eight county service area,
our non-exclusive dental HMO provider network includes over 95% of the dental providers in the market. In that market, our dental HMO provides the broad provider access of a dental PPO along with effective utilization and cost control features.



13



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Highlights



| |  | We had a net loss of approximately $321,000 for the three months ended September 30, 2010 compared to a net loss of approximately $482,000 for the three months
ended September 30, 2009 and we had a net loss of approximately $913,000 for the nine months ended September 30, 2010 compared to a net loss of approximately $581,000 for the nine months ended September 30, 2009. The increase in the
net loss in 2010 is primarily due to higher than expected utilization of healthcare services and a higher than expected level of fully-insured out-of-network dental healthcare services expense.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | To date in 2010, our dental and vision product membership increased by approximately 13,100 members to approximately 290,300 members at September 30, 2010. This
membership increase from December 31, 2009 is due to an increase in fully-insured dental membership of approximately 20,200 members and an increase in corporate, all other membership of approximately 1,600 members, offset by a decrease in
self-insured membership of approximately 8,700 members. The decrease in self-insured membership is primarily due to one large self-insured employer group with approximately 7,500 members that shifted from self-insured to fully-insured effective
January 1, 2010 along with a decrease of approximately 1,200 members resulting from self-insured dental HMO groups that did not renew with the Company or reduced their employee counts in the first nine months of 2010.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our ratio of healthcare services expense to premium revenue (loss ratio) increased from 84.0% in the nine months ended September 30, 2009 to 85.6% in
the nine months ended September 30, 2010. This loss ratio increase is due to an increase in new fully-insured business in the first nine months of 2010 compared to the first nine months of 2009. New fully-insured business typically has a higher
loss ratio than fully-insured business that has been with us for more than one year. The fully-insured dental segment represents approximately 68% of our total dental business.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Comparison of Results of Operations

The following is a discussion of our results of operations for the three months ended September 30, 2010, or the 2010 quarter, the three months ended September 30, 2009, or the 2009 quarter, the
nine months ended September 30, 2010, or the 2010 period, and the nine months ended September 30, 2009, or the 2009 period.

The following table presents membership and financial data for our three reportable segments (dollar amounts in thousands):



|                     |  |                        |         |  |                        |  |         |        |  |  |      |   
|-------------------- |  | ---------------------- | ------- |  | ---------------------- |  | ------- | ------ |  |  | ---- | --
|                     |  | As ofSeptember 30,2010 |         |  | As ofSeptember 30,2009 |  |         | Change | 
|Membership:          |  |                        |         |  |                        |  |         |        |  |  |      |   
|Fully-insured dental |  |                        | 191,300 |  |                        |  | 165,000 |        |  |  | 15.9 | % 
|Self-insured dental  |  |                        | 78,900  |  |                        |  | 86,500  |        |  |  | (8.8 | %)
|Corporate, all other |  |                        | 20,100  |  |                        |  | 17,700  |        |  |  | 13.6 | % 
|                     |  |                        |         |  |                        |  |         |        |  |  |      |   
|Total membership     |  |                        | 290,300 |  |                        |  | 269,200 |        |  |  | 7.8  | % 
|                     |  |                        |         |  |                        |  |         |        |  |  |      |   



14



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|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|--------------------------------- |  | ---------------------------------- | ------ | - | ---------------------------------- | - | ------ | ------ |  |  | ---- | --
|                                  |  | Three monthsendedSeptember 30,2010 |        |   | Three monthsendedSeptember 30,2009 |   |        | Change | 
|Premium revenue:                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Fully-insured dental              |  | $                                  | 13,160 |   |                                    | $ | 11,348 |        |  |  | 16.0 | % 
|Self-insured dental               |  |                                    | 6,180  |   |                                    |   | 6,618  |        |  |  | (6.6 | %)
|Corporate, all other              |  |                                    | 106    |   |                                    |   | 111    |        |  |  | (4.5 | %)
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Total premium revenue             |  |                                    | 19,446 |   |                                    |   | 18,077 |        |  |  | 7.6  | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Investment income                 |  |                                    | 27     |   |                                    |   | 17     |        |  |  | 58.8 | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Other income                      |  |                                    | 16     |   |                                    |   | 16     |        |  |  | 0.0  | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Total revenue                     |  |                                    | 19,489 |   |                                    |   | 18,110 |        |  |  | 7.6  | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Healthcare services expense:      |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Fully-insured dental              |  |                                    | 11,416 |   |                                    |   | 9,845  |        |  |  | 16.0 | % 
|Self-insured dental               |  |                                    | 5,335  |   |                                    |   | 5,716  |        |  |  | (6.7 | %)
|Corporate, all other              |  |                                    |        |   |                                    |   |        |        |  |  | 0.0  | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Total healthcare services expense |  |                                    | 16,751 |   |                                    |   | 15,561 |        |  |  | 7.6  | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Insurance expense                 |  |                                    | 3,056  |   |                                    |   | 3,297  |        |  |  | (7.3 | %)
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Income tax expense (benefit)      |  |                                    | 3      |   |                                    |   | (266   | )      |  |  | *    |   
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   
|Net Loss                          |  | $                                  | (321   | ) |                                    | $ | (482   | )      |  |  | 33.4 | % 
|                                  |  |                                    |        |   |                                    |   |        |        |  |  |      |   



| | * | Not meaningful
| | - | --------------



|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|--------------------------------- |  | --------------------------------- | ------ | - | --------------------------------- | - | ------ | ------ |  |  | ----- | --
|                                  |  | Nine monthsendedSeptember 30,2010 |        |   | Nine monthsendedSeptember 30,2009 |   |        | Change | 
|Premium revenue:                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Fully-insured dental              |  | $                                 | 38,841 |   |                                   | $ | 33,675 |        |  |  | 15.3  | % 
|Self-insured dental               |  |                                   | 17,706 |   |                                   |   | 19,102 |        |  |  | (7.3  | %)
|Corporate, all other              |  |                                   | 343    |   |                                   |   | 310    |        |  |  | 10.6  | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Total premium revenue             |  |                                   | 56,890 |   |                                   |   | 53,087 |        |  |  | 7.2   | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Investment income                 |  |                                   | 84     |   |                                   |   | 80     |        |  |  | 5.0   | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Other income                      |  |                                   | 49     |   |                                   |   | 55     |        |  |  | (10.9 | %)
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Total revenue                     |  |                                   | 57,023 |   |                                   |   | 53,222 |        |  |  | 7.1   | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Healthcare services expense:      |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Fully-insured dental              |  |                                   | 33,422 |   |                                   |   | 28,090 |        |  |  | 19.0  | % 
|Self-insured dental               |  |                                   | 15,262 |   |                                   |   | 16,494 |        |  |  | (7.5  | %)
|Corporate, all other              |  |                                   |        |   |                                   |   |        |        |  |  | 0.0   | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Total healthcare services expense |  |                                   | 48,684 |   |                                   |   | 44,584 |        |  |  | 9.2   | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Insurance expense                 |  |                                   | 9,581  |   |                                   |   | 9,539  |        |  |  | 0.4   | % 
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Income tax benefit                |  |                                   | (330   | ) |                                   |   | (320   | )      |  |  | (3.1  | %)
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   
|Net Loss                          |  | $                                 | (913   | ) |                                   | $ | (581   | )      |  |  | (57.1 | %)
|                                  |  |                                   |        |   |                                   |   |        |        |  |  |       |   

Summary

Loss per Redeemable Common Share was $38.16 in the 2010 quarter compared to loss per Redeemable Common Share of $56.88 in the 2009 quarter. Loss per Redeemable Common Share was $107.76 in the 2010 period
compared to loss per Redeemable Common Share of $68.51 in the 2009 period. The increase in the net loss for the 2010 period was primarily due to a decrease in total revenue less healthcare services expense of approximately $300,000. Total healthcare
services expense in the 2010 period increased by approximately $4,100,000 compared to the 2009 period primarily due to the high level of out-of-network dental healthcare services expense for our fully-insured dental PPO



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product on a per member per month basis. Fully-insured healthcare services expense increased by $5,332,000. Approximately $3,076,000 of this increase is the result of our fully-insured group
sales and $1,300,000 resulted from the shift of a large employer group with higher dental healthcare services expense on a per member per month basis from our self-insured dental HMO product to our fully-insured dental HMO product effective
January 1, 2010. In addition, approximately $956,000 of increase in fully-insured healthcare services expense was the result of a high level of dental healthcare services expense on a per member per month basis for our fully-insured products.
This increase stems from a higher utilization of healthcare services and a higher level of out-of-network healthcare services expense than expected. These increases in fully-insured healthcare services were offset by a decrease in self-insured
healthcare services expense of approximately $1,232,000. Insurance expense increased by $42,000 in the 2010 period compared to the 2009 period. This insurance expense increase is primarily attributable to higher salary and benefit costs, higher
broker commission expense, and higher premium taxes associated with increased fully-insured premiums.

Membership

Our fully-insured dental membership increased by approximately 26,300 members as of September 30,
2010 from September 30, 2009. This membership increase is primarily attributable to an increase of approximately 12,400 fully-insured dental HMO members, an increase of approximately 13,500 fully-insured dental PPO members, and an increase of
approximately 400 fully-insured dental indemnity members underwritten by Dental Care Plus, Inc. (DCP). The increase in fully-insured dental HMO membership of 12,400 members is due to new sales in the Cincinnati and Northern Kentucky
markets of approximately 12,100 members, offset by the loss of approximately 7,200 members due to employer groups that did not renew with the Company or reduced employee counts of retained employer groups. In addition, fully-insured DHMO membership
increased due to the shift of one large employer group with approximately 7,500 members from the self-insured DHMO to the fully-insured DHMO effective January 1, 2010. The increase in fully-insured dental PPO membership is primarily due to new
sales in the new geographic areas in Ohio and Kentucky.

Our self-insured dental membership decreased by
approximately 7,600 members as of September 30, 2010 from September 30, 2009. This decrease is primarily due to one large self-insured employer group with approximately 7,500 members that shifted from self-insured DHMO to fully-insured
DHMO effective January 1, 2010. In addition, reduced employee counts of retained employer groups resulted in a decrease of approximately 100 members.

Our corporate, all other membership increased by approximately 2,400 members as of September 30, 2010 from September 30, 2009. The increase is primarily due to an increase of approximately 4,100
members in our vision plan, offset by a decrease of approximately 1,400 dental PPO members that shifted into the fully-insured segment with the commencement of the Companys reinsurance agreement with a third party insurance carrier effective
July 1, 2010 and a decrease of approximately 300 dental PPO members related to employer groups that did not renew their dental benefit contracts.

Revenue

Fully-insured dental premium revenue for the 2010
quarter increased by approximately $1,812,000 compared to the 2009 quarter. An increase in fully-insured membership in the 2010 quarter resulted in an increase in fully-insured dental premiums of approximately $1,829,000. Approximately $518,000 of
this related fully-insured premium increase was the result of a large employer group shifting from our self-insured dental HMO product to our fully-insured dental HMO product effective January 1, 2010. Approximately $1,311,000 of this related
increase in fully-insured premium revenue is the result of new fully-insured group sales. Fully-insured dental premium rates negotiated with employer groups at their renewals resulted in a decrease of approximately $17,000 in fully-insured dental
premium revenue. This decrease is primarily due to the mix of fully-insured products, where we experienced an increase in our fully-insured dental PPO product membership relative to our total fully-insured membership in the 2010 quarter compared to
the 2009 quarter. The fully-insured dental PPO product has slightly lower premium rates than the fully-insured dental HMO and indemnity products.

Fully-insured dental premium revenue for the 2010 period increased by approximately $5,166,000 compared to the 2009 period. An increase in fully-insured membership in the 2010 period resulted in an
increase in fully-insured dental premiums of approximately $5,246,000. Approximately $1,559,000 of this related fully-insured premium increase was the result of a large employer group shifting from our self-insured dental HMO product to our
fully-insured dental HMO product effective January 1, 2010. Approximately $3,687,000 of this related increase in fully-insured premium revenue is the result of new fully-insured group sales. Fully-insured dental premium rates negotiated with
employer groups at their renewals resulted in a decrease of approximately $80,000 in fully-insured dental premium revenue. This decrease is primarily due to the mix of fully-insured products, where we experienced an increase in our fully-insured
dental PPO product membership relative to our total fully-insured membership in the 2010 quarter compared to the 2009 quarter. The fully-insured dental PPO product has slightly lower premium rates than the fully-insured dental HMO and indemnity
products.



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##### Table of Contents



Total
self-insured dental revenue for the 2010 quarter decreased approximately $438,000 compared to the 2009 quarter. Self-insured revenue decreased by approximately $577,000 due to the shift of the large employer group to the fully-insured dental HMO
product discussed above. This was partially offset an increase in self-insured dental revenue by approximately $127,000 related to an increase in dental service utilization by our self-insured members in the 2010 quarter compared to the 2009
quarter. There was also an increase in self-insured revenue of approximately $12,000 related to new self-insured sales.

Total self-insured dental revenue for the 2010 period decreased approximately $1,396,000 compared to the 2009 period. Self-insured revenue decreased by approximately $1,708,000 due to the shift of the
large employer group to the fully-insured dental HMO product discussed above. Self-insured dental revenue also decreased by approximately $88,000 related to a decrease in dental service utilization by our self-insured members in the 2010 period
compared to the 2009 period. This decrease in self-insured revenue was offset by an increase of approximately $400,000 related to new self-insured sales. The self-insured segment revenue has two components:

Self-Insured Claim Revenue - Self-insured claim revenue for the 2010 quarter decreased approximately $425,000, or
6.7%, to approximately $5,876,000 in the 2010 quarter from approximately $6,301,000 in the 2009 quarter. Self-insured claim revenue decreased by approximately $549,000 due to the shift of the member month volume associated with the large employer
group discussed above. Self-insured claim revenue increased by approximately $113,000 due to an increase in dental service utilization by our self-insured members in the 2010 quarter compared to the 2009 quarter. There was also an increase of
approximately $11,000 related to new self-insured sales.

Self-insured claim revenue for the 2010 period
decreased approximately $1,346,000, or 7.4%, to approximately $16,824,000 in the 2010 period from approximately $18,170,000 in the 2009 period. Self-insured claim revenue decreased by approximately $1,625,000 due to the shift of the member month
volume associated with the large employer group discussed above. Self-insured claim revenue also decreased by approximately $102,000 due to a decrease in dental service utilization by our self-insured members in the 2010 period compared to the 2009
period. This decrease in self-insured claim revenue was offset by an increase of approximately $381,000 related to new self-insured sales.

Self-Insured ASO Fees - Self-insured ASO fees for the 2010 quarter decreased approximately $13,000, or 4.1%, to approximately $304,000 in the 2010 quarter from approximately $317,000 in the 2009
quarter. This decrease is primarily attributable to the decrease of approximately $28,000 related to the loss of the member month volume associated with the large employer group discussed above. Self-insured ASO fees increased by approximately
$14,000 due to a small increase in average self-insured ASO fee rates. There was also an increase of approximately $1,000 related to new self-insured sales.

Self-insured ASO fees for the 2010 period decreased approximately $50,000, or 5.4%, to approximately $881,000 in the 2010 period from approximately $931,000 in the 2009 period. This decrease is primarily
attributable to the decrease of approximately $83,000 related to the loss of the member month volume associated with the large employer group discussed above. This decrease in self-insured ASO fees was offset by an increase of approximately $19,000
related to new self-insured sales and an increase of approximately $14,000 to a small increase in average self-insured ASO fee rates.

Corporate, all other premium revenue is primarily derived from the dental indemnity product and the vision product underwritten by third-party insurance carriers. In aggregate, corporate, all other
premium revenue decreased by approximately $5,000 in the 2010 quarter compared to the 2009 quarter primarily due to a shift of approximately 1,400 fully-insured dental PPO members from the corporate, all other segment to the fully-insured segment
when the Company assumed the risk on this membership through a reinsurance agreement with a third-party insurance carrier that became effective July 1, 2010. Corporate, all other premium revenue increased by approximately $33,000 in the 2010
period compared to the 2009 period primarily due to an increase in the administrative fees we earned from our vision product underwritten by a third party insurance carrier.

Investment Income

Investment income for the 2010 quarter
increased approximately $10,000 compared to the 2009 quarter. This increase is attributable to the higher yields earned from our investment grade corporate bond investments that we purchased in 2010. This increase in investment income was offset by
a decrease in the prevailing interest rates on our certificates of deposit and a money market fund in the 2010 quarter as compared to the 2009 quarter. Investment income for the 2010 period increased approximately $4,000 compared to the 2009 period.
This increase is attributable to the higher yields earned from our investment grade corporate bond investments that we purchased in 2010. This increase in investment income was offset by a decrease in the prevailing interest rates on our
certificates of deposit and a money market fund in the 2010 period as compared to the 2009 period.



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Healthcare Services
Expense

Fully-insured dental healthcare services expense for the 2010 quarter increased approximately
$1,572,000 compared to the 2009 quarter. An increase in fully-insured membership in the 2010 quarter resulted in an increase in fully-insured dental healthcare services expense of approximately $1,587,000. Approximately $449,000 of the related
fully-insured healthcare services expense increase was the result of a large employer group shifting from our self-insured dental HMO product to our fully-insured dental HMO product effective January 1, 2010. Approximately $1,138,000 of this
related increase in fully-insured healthcare services expense was the result of new fully-insured group sales.

Fully-insured dental healthcare services expense for the 2010 period increased approximately $5,332,000 compared to the
2009 period. An increase in fully-insured membership in the 2010 period resulted in an increase in fully-insured dental healthcare services expense of approximately $4,376,000. Approximately $1,300,000 of the related fully-insured healthcare
services expense increase was the result of a large employer group shifting from our self-insured dental HMO product to our fully-insured dental HMO product effective January 1, 2010. Approximately $3,076,000 of this related increase in
fully-insured healthcare services expense was the result of new fully-insured group sales. An increase in fully-insured dental healthcare services expense of approximately $956,000 is the result of an increase in fully-insured dental healthcare
services expense on a per member per month basis for the 2010 period compared to the 2009 period for both our new and existing fully-insured membership. The shift of a large employer group with higher than average dental healthcare services expense
on a per member per month basis from our self-insured dental HMO product to our fully-insured dental HMO product effective January 1, 2010 resulted in an increase of approximately $322,000 in fully-insured dental healthcare services expense for
the 2010 period. The remaining increase in fully-insured dental healthcare services expense on a per member per month basis is attributable to higher utilization of dental healthcare services and higher out-of-network dental healthcare services
expense for the dental PPO product. The fully-insured segment represents approximately 68% of our total dental business.

Self-insured dental healthcare services expense for the 2010 quarter decreased approximately $382,000 compared to the 2009 quarter. The shift of the large employer group to the fully-insured dental HMO
product effective January 1, 2010 resulted in a decrease in self-insured dental healthcare services expense of approximately $498,000. Offsetting the quarterly decrease was an increase by approximately $106,000 due to an increase in dental
service utilization by our self-insured members in the 2010 quarter compared to the 2009 quarter.

Self-insured
dental healthcare services expense for the 2010 period decreased approximately $1,232,000 compared to the 2009 period. The shift of the large employer group to the fully-insured dental HMO product effective January 1, 2010 resulted in a
decrease in self-insured dental healthcare services expense of approximately $1,475,000. This decrease is offset by an increase of approximately $346,000 related to new self-insured membership. Self-insured dental healthcare services expense also
decreased by approximately $103,000 due to a decrease in dental service utilization by our self-insured members in the 2010 period compared to the 2009 period.

Corporate, all other healthcare services expense is not recognized by the Company due to the fact that our other dental indemnity, dental PPO and vision PPO products are underwritten by third-party
insurance carriers.

Insurance Expense

Consolidated insurance expense for the 2010 quarter decreased approximately $241,000 compared to the 2009 quarter. The
lower consolidated insurance expense for the 2010 quarter was primarily due to lower advertising expense and lower compensation expense. Consolidated insurance expense for the 2010 period increased approximately $42,000 compared to the 2009 period.
The higher consolidated insurance expense for the 2010 period was primarily due to higher commission expense and other contract acquisition costs and higher premium taxes associated with a higher level of fully-insured business. Insurance expense as
a percentage of total revenue, or the insurance expense ratio, was 15.7% for the 2010 quarter compared to 18.2% for the 2009 quarter. The insurance expense ratio was 16.8% for the 2010 period compared to 17.9% for the 2009 period.

Income Taxes

The Company calculates its year to date income tax provision or benefit by applying the estimated annual effective tax rate for the year to date pretax income or loss. Our estimated income tax expense for
the three months ended September 30, 2010 was approximately $3,000 due to the fact that we revised our 2010 effective tax rate from 35.6% to 26.5% as of September 30, 2010. Our estimated income tax benefit for the three months ended
September 30, 2009 was approximately $266,000 with an effective tax rate of approximately 35.6%. Our estimated income tax benefit for the nine months ended September 30, 2010 was approximately $330,000 with an effective tax rate of
26.5%. Our estimated income tax benefit for the nine months ended September 30, 2009 was approximately $320,000 with an effective tax rate of approximately 35.5%.



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Liquidity and
Capital Resources and Changes in Financial Condition

Our primary sources of cash include receipts of
premiums, ASO fees, investment and other income, as well as the proceeds from the sale or maturity of our investment securities and from borrowings. Our primary uses of cash include disbursements for claims payments, insurance expense, taxes,
purchases of investment securities, capital expenditures, and payments on borrowings. Cash decreased approximately $3,004,000, or 44.4%, during the 2010 period to approximately $3,765,000 as of September 30, 2010 from approximately $6,769,000
as of December 31, 2009. The change in cash for the 2010 and 2009 periods is summarized as follows (in thousands):



|                                                    |  |                                     |        |   |                                     |   |      |  
|--------------------------------------------------- |  | ----------------------------------- | ------ | - | ----------------------------------- | - | ---- | -
|                                                    |  | Nine months endedSeptember 30, 2010 |        |   | Nine months endedSeptember 30, 2009 |  
|Net cash used in operating activities               |  | $                                   | (1,187 | ) |                                     | $ | (770 | )
|Net cash provided by (used in) investing activities |  |                                     | (1,980 | ) |                                     |   | 372  |  
|Net cash provided by (used in) financing activities |  |                                     | 163    |   |                                     |   | (27  | )
|                                                    |  |                                     |        |   |                                     |   |      |  
|Decrease in cash and cash equivalents               |  | $                                   | (3,004 | ) |                                     | $ | (425 | )
|                                                    |  |                                     |        |   |                                     |   |      |  

Cash Flow from Operating Activities

In the 2010 period, approximately $1,187,000 was used in operating activities. We had a net loss of approximately
$913,000. Non-cash depreciation and amortization expense was approximately $391,000 in the 2010 period compared to approximately $348,000 in the 2009 period. In addition, no cash was paid related to income taxes in the 2010 period compared to
approximately $391,000 in the 2009 period.

In the 2010 period, our claims payable liability increased by
approximately $663,000 to approximately $2,980,000 at September 30, 2010 from approximately $2,317,000 at December 31, 2009. This increase is primarily the result of an increase in the number of fully-insured dental members and higher
healthcare services expense on a per member per month basis at September 30, 2010 compared to December 31, 2009. The increase in our unearned premium revenue liability of approximately $15.2 million, to approximately $36.2 million at
September 30, 2010 from approximately $21.0 million at December 31, 2009 and the increase in unbilled accounts receivable of approximately $15.3 million to approximately $35.3 million at September 30, 2010 from $20.0 million
December 31, 2009 are primarily attributable to the renewal of a large portion of our fully-insured dental HMO, PPO and indemnity employer groups on January 1, 2010 that are non-cancelable by DCP. Deferred acquisition costs increased by
approximately $1,424,000 and other payables and accruals expenses increased by approximately $708,000 in the 2010 period primarily due to the contract renewals discussed above. Other assets increased by approximately $410,000 primarily due to an
increase in the federal income tax receivable of approximately $330,000 as of September 30, 2010 and an increase in deferred compensation investments of approximately $60,000. The remaining effects of changes in operating assets and liabilities
that represent fluctuations in these assets and liabilities are not significant and are consistent with the 2009 period.

Cash Flow from Investing Activities

In the 2010 period, we invested approximately $110,000 in building improvements, furniture and fixtures and computer equipment. During the 2010 period, we made purchases totaling approximately $7.0
million of investment grade corporate bonds, certificates of deposit and an institutional money market fund in order to improve investment income. Also during the 2010 period, we had certificate of deposit maturities and institutional money market
sales that together totaled approximately $5.1 million. The institutional money market sales occur in the normal course of business to pay current obligations.

Cash Flow from Financing Activities

In the 2010 period, we
made the scheduled principal payments of approximately $90,000 related to our office building mortgage. During the 2010 period, we repurchased Redeemable Common Shares with a value of approximately $54,000 and issued Redeemable Common Shares with a
value of approximately $18,000. In addition we issued Institutional Preferred Shares with a value of approximately $300,000 in July of 2010. We also paid dividends to holders of our Redeemable Provider Preferred Shares of approximately $11,000 in
the 2010 period.

Provider Withhold Funds

In most cases, our reimbursement to our participating providers for covered dental services under the dental HMO are
generally subject to a 10% withhold by us. The amounts withheld are not retained in a separate fund and we have no obligation to pay any portion of the amounts withheld to the providers. The dental providers have no vested rights in the amounts
withheld unless our Board of Directors authorizes that any amounts withheld shall be paid to the providers, and then vesting is only to the extent of such amounts authorized to be paid by the Board. Once authorized for payment by the Board, such
amounts are recorded as claims payable liabilities until paid.



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In the
2010 period, we paid no withhold return to participating providers because a withhold return was not authorized by the Board in December of 2009. In the 2009 period, we paid $464,000 to participating providers that was authorized by the Board and
accrued in December of 2008.

Contractual Obligations, other Commitments and Off-balance Sheet Arrangements

Refer to the Companys 2009 Form 10-K filed with the SEC for a description of contractual obligations, other
commitments and off-balance sheet arrangements. We have had no significant changes in these items in the 2010 quarter or 2010 period.

Financial Condition

Our consolidated cash and short-term
investments were approximately $4.5 million as of September 30, 2010 and approximately $8.0 million as of December 31, 2009. Based on total expenses for the nine months ended September 30, 2010, we estimate that we had approximately
21 days of cash and short-term investments on hand at September 30, 2010. In addition, the Company has access to approximately $808,000 of fixed maturity certificates of deposits that are classified as available-for-sale investments.

Our cash and short-term investments totaled approximately $4.5 million at September 30, 2010 due to the
decrease in cash of approximately $3.0 million during the 2010 period and the decrease in short-term investments of approximately $485,000 during the 2010 period. These decreases in cash and short-term investments were primarily due to the increase
in longer term fixed maturities investments of $2,328,000 in the 2010 period. We expect to generate positive cash flow from operations during the balance of 2010.

In August 2010, we renewed an annually renewable agreement with a commercial bank for a $500,000 working capital line of
credit. Interest was payable at a variable rate of LIBOR plus 2.50% and was 2.76% at September 30, 2010. The Company did not have any interest expense for the line of credit in the 2010 period or the 2009 period. As of September 30, 2010
and December 31, 2009, there was no amount outstanding on this line of credit. The $500,000 working capital line of credit renewal expires in July 2011.

In 2009 we renewed an annually renewable agreement with a commercial bank for a $1,000,000 working capital line of credit. In August 2010, we renewed the working capital line of credit for $915,000 with
interest payable at a variable rate of LIBOR plus 2.50%. The $915,000 working capital line of credit renewal expires in August 2011. Interest was payable at a variable rate of LIBOR plus 2.50% and was 2.76% at September 30, 2010. The Company
did not have any interest expense for the line of credit in the 2010 period or the 2009 period. As of September 30, 2010 and December 31, 2009, there was no amount outstanding on this line of credit. In addition, we obtained a standby
letter of credit for $85,000 with interest payable on all outstanding amounts at a variable rate of the prime rate of borrowing plus 6.00%. The $85,000 standby letter of credit will also have an annual fixed rate of 2.10% for access to the standby
letter of credit obligation. The $85,000 standby letter of credit expires in December 2011.

On
December 15, 2009, we renewed a revolving note with a commercial bank in the amount of $650,000 collateralized by a second mortgage on our office building. As of September 30, 2010, there was a principal balance outstanding of $630,000
related to this revolving note. This revolving note matures on December 15, 2010, is annually renewable and requires us to make monthly interest payments at a variable rate of 30-day LIBOR plus 1.75%, or 2.01% at September 30, 2010. As of
September 30, 2010, we expect to renew the revolving note in December 2010.

We believe our premium
revenues, cash, short-term investments and working capital lines of credit are sufficient to meet our short-term and long-term liquidity needs. In the short-term, we are obligated to make payments related to our contractual obligations such as our
healthcare services expense, building mortgage, and our operating leases and other commitments, including future payment of key employee and director deferred compensation obligations. In the long-term, we will continue to be obligated to make
payments related to our contractual obligations delineated above. We will also be obligated in certain circumstances to repurchase the Redeemable Common Shares and Redeemable Provider Preferred Shares of our provider shareholders who die, become
permanently disabled, retire, leave our networks or request redemption. We will also be obligated in certain circumstances to repurchase the Redeemable Institutional Preferred Shares upon request redemption. Our Board of Directors establishes
limitations on the amount of share redemptions each year. While we are not able to estimate future redemptions of our Redeemable Common Shares, Redeemable Provider Preferred Shares and Redeemable Institutional Preferred Shares, we believe our cash
balances, investment securities, operating cash flows, and borrowing capacity, taken together, provide adequate resources to fund ongoing operating and regulatory requirements and fund future expansion opportunities and capital expenditures in the
foreseeable future.

Our largest subsidiary, DCP, operates in states that regulate its payment of dividends and
debt service on inter-company loans, as well as other inter-company cash transfers and require minimum levels of equity as well as limit



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investments to
approved securities. The amount of dividends that may be paid by DCP, without prior approval by state regulatory authorities, is limited based on statutory income and statutory capital and surplus. Even if prior approval is not required, prior
notification must be provided to state agencies in Ohio, Kentucky and Indiana before paying a dividend.

We
attempt to reduce overall risk by maintaining a well-diversified fixed-maturity portfolio. We invest in certificates of deposits, investment grade corporate bonds and a money market mutual fund, targeting what we believe to be optimal risk-adjusted
after-tax yields. Risk, in this context, includes interest rate, call, reinvestment rate, credit and liquidity risk. We do not make a concerted effort to alter duration on a portfolio basis in response to anticipated movements in interest rates. By
continually investing in certificates of deposits and investment grade corporate bonds, we believe the portfolio mitigates the impact of adverse economic factors. As of September 30, 2010, we had approximately $1,722,000 or 72% of the total
fair value of investment grade corporate bonds with a Standard & Poors rating of A or better. The remaining investment grade corporate bonds had a fair value approximately $661,000 with a Standard & Poors rating of BBB
or better. The weighted average yield-to-book value of our investment grade corporate bonds was approximately 5.55% at September 30, 2010. The weighted average maturity of our investment grade corporate bonds was 2.75 years at
September 30, 2010.

Critical Accounting Policies

Claims Payable Liability

We estimate liabilities for both incurred but not reported (IBNR) and reported claims in process by employing actuarial methods that are commonly used by health insurance actuaries and meet
actuarial standards of practice. These actuarial standards of practice require that claim liabilities estimates be adequate under moderately adverse circumstances. The Companys consulting actuary assists us in making these estimates. Since our
liability for claims payable is based on actuarial estimates, the amount of claims eventually paid for services provided prior to the balance sheet date could differ from the estimated liability. Any such differences are recognized in the condensed
consolidated statements of operations for the period in which the differences are identified.

We develop our
estimate for claims payable liability using actuarial methodologies and assumptions, primarily based on historical claim payments and claim receipt patterns, as well as historical dental cost trends. Depending on the period for which incurred claims
are estimated, we apply a different method in determining our estimate. For periods prior to the most recent month, we calculate a completion factor which indicates the percentage of claims payable estimated for a prior period that have
been paid as of the end of the current reporting period. We use the completion factor to determine historical patterns over a rolling 12-month period, made consistent by making adjustments for known changes in claims in process levels and known
changes in claim payment processes. For the most recent month, we calculate a claims trend factor that estimates incurred claims primarily from a trend analysis based upon per member per month claims trends developed from our historical
experience in the preceding months, adjusted for known provider contracting changes, changes in benefit levels and seasonality.

We have not changed the key actuarial methodologies used by management to estimate the IBNR and reported claims in process components of our claims payable liability during the periods presented, and
management has not adjusted any of the key methodologies used in calculating the most recent estimate of the IBNR and reported claims in process components of our claims payable liability. Our assumptions in the 2010 period for the claims trend
factor used to estimate incurred claims for September 30, 2010 are consistent with the higher dental services utilization we experienced in 2009 and 2010 and our expectation that this higher level of utilization may continue in the future.

The table set forth below illustrates how our operating results are affected when there is a variance between
estimated claims expense and actual claims expense. The table shows the sensitivity of the estimated fully-insured incurred claims payable liability to fluctuations in the expected completion factors and claims trend factors that were used to
estimate the claims payable liability as of September 30, 2010 within variance ranges historically experienced.



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|                              |  |                         |  |                                                   |  |                               |  |                 |  |                                                  
|----------------------------- |  | ----------------------- |  | ------------------------------------------------- |  | ----------------------------- |  | --------------- |  | -------------------------------------------------
|Completion Factor (a)         |  | Claims Trend Factor (b)
|(Decrease)
Increase
In Factor |  |                         |  | Estimated claimspayable liability
as of
9/30/2010 |  | (Decrease)
Increase
In Factor |  |                 |  | Estimated claimspayable liability
as of
9/30/2010
|(0.5)%                        |  |                         |  | 3,218,163                                         |  | (5)%                          |  |                 |  | 2,789,075                                        
|0%                            |  | (estimate used)         |  | 2,979,781                                         |  | 0%                            |  | (estimate used) |  | 2,979,781                                        
|0.5%                          |  |                         |  | 2,818,873                                         |  | 5%                            |  |                 |  | 3,179,426                                        



| | (a) | Reflects estimated potential changes in incurred claims payable liability caused by changes in completion factors for months prior to the most recent month.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | Reflects estimated potential changes in incurred claims payable liability caused by annualized claims trend used for the estimation of the per member per month incurred
claims for the most recent month.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Based on historical experience, we believe the completion
factors we use to estimate outstanding IBNR and reported claims in process are reliable for predicting actual claims paid at future times, with a variance range of approximately one-half of one percent, plus or minus. The claims trend factors we use
to estimate outstanding IBNR and reported claims in process for the most recent month are somewhat less reliable based on historical experience, with a variance range of approximately five percent, plus or minus. We have found that the estimated
claims trend factor can be higher or lower than what the paid claims data indicates with the passage of time primarily because of factors beyond our control, such as the level of utilization of services by dental members and the expected and actual
mix of the types of services received by dental members.

Seasonality of Dental Service Utilization

Based on our healthcare services expense on a per member per month (PMPM) basis that adjusts the quarterly
healthcare services expense for membership volume changes, our dental plan members have historically used their dental plan benefits according to a seasonal pattern. In 2009, our quarterly healthcare services expense was slightly above average in
the first quarter, above average in the second quarter, significantly higher than average in the third quarter and lowest in the fourth quarter. In 2010, our first quarter healthcare services expense was consistent with the first quarter of 2009.
However, healthcare services expense for the second quarter of 2010 was higher than the second quarter of 2009 and higher than expected. This increase was primarily due to the higher level of out-of-network dental healthcare services expense on a
per member per month basis for our fully-insured dental PPO product. Healthcare services expenses for the third quarter of 2010 were also high, consistent with the third quarter of 2009. Claims are high in the first and second quarter because almost
all of our employer-sponsored benefits reset on January 1. The third quarter claim level is primarily due to the high level of dental services used in July and August by student members prior to returning to school. Use of dental services is
lowest in the fourth quarter due to the holiday season and the fact that a portion of our members have already reached their maximum annual benefit level for the year. The following shows these trends in tabular form:



|               |  |                            |        |  |       |  |       |        |  |  |        |  |  |  |       | 
|-------------- |  | -------------------------- | ------ |  | ----- |  | ----- | ------ |  |  | ------ |  |  |  | ----- | 
|               |  | Healthcare Service Expense |       
|               |  | 2010                       |        |  | 2009  | 
|               |  | $000s                     |        |  | $PMPM |  |       | $000s |  |  | $PMPM  | 
|First Quarter  |  |                            | 15,542 |  |       |  | 19.58 |        |  |  | 14,326 |  |  |  | 19.43 | 
|Second Quarter |  |                            | 16,239 |  |       |  | 20.25 |        |  |  | 14,437 |  |  |  | 19.54 | 
|Third Quarter  |  |                            | 16,751 |  |       |  | 20.81 |        |  |  | 15,557 |  |  |  | 20.69 | 
|Fourth Quarter |  |                            |        |  |       |  |       |        |  |  | 13,721 |  |  |  | 17.77 | 

Risk-Based
Capital

Our regulated subsidiarys state of domicile has statutory risk-based capital, or RBC,
requirements for health and other insurance companies largely based on the NAICs RBC Model Act. These RBC requirements are intended to measure capital adequacy, taking into account the risk characteristics of an insurers investments and
products. The



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NAIC sets forth the
formula for calculating the RBC requirements, which are designed to take into account asset risks, insurance risks, interest rate risks and other relevant risks with respect to an individual insurance companys business. In general, an
insurance company must submit a report of its RBC level to the state insurance department or insurance commissioner, as appropriate, at the end of each calendar year. Our subsidiarys risk-based capital as of December 31, 2009, which was
the most recent date for which reporting was required, was in excess of all mandatory RBC thresholds.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market risk is the risk that we
will incur investment losses or increased interest expense due to adverse changes in market rates and prices. Our market risk exposures are substantially related to our investment portfolio and the impact of interest rate changes on these
securities. In addition, interest rate changes can affect future interest expense for debt obligations that have a variable rate of interest associated with them.

At September 30, 2010 and December 31, 2009, respectively, our investment portfolio consisted of approximately
$225,000 and $204,000 of an institutional money market fund. Our portfolio also included approximately $2,328,000 and $0 of investment grade corporate bonds and approximately $1,312,000 and $1,817,000 of investments in FDIC-insured bank certificates
of deposits at September 30, 2010 and December 31, 2009, respectively. We have evaluated the impact on the invested portfolios fair value considering an immediate 100 basis point change in interest rates. A 100 basis point increase
in interest rates would result in an approximate $67,000 decrease in fair value, whereas a 100 basis point decrease in interest rates would result in an approximate $34,000 increase in fair value. The investment grade corporate bonds with an
amortized cost of $2,328,000 at September 30, 2010 are all classified as held to maturity. The certificates of deposit with a cost of $1,300,000 at September 30, 2010 and $1,800,000 at December 31, 2009 are all classified as
available-for-sale.

At September 30, 2010 and December 31, 2009, we had a mortgage note with a bank
with an outstanding principal balance of $930,000 and $1,020,000, respectively, with a variable rate based on LIBOR plus 1.75%. However, in June of 2003, we entered into a variable to fixed interest rate swap contract that effectively eliminated the
interest rate risk exposure on all but $300,000 of the outstanding loan principal. Management estimates that a 100 basis point increase in interest rates would decrease our annual pre-tax earnings by $3,000.

At September 30, 2010 and December 31, 2009, we had a revolving note with a commercial bank with an outstanding
principal balance of $630,000 with a variable rate based on LIBOR plus 1.75%. Management estimates that a 100 basis point increase in interest rates would decrease our annual pre-tax earnings by $6,300.

Our investment in investment grade corporate bonds has added an element of market risk in the 2010 quarter that the
Company did not have in 2009. We do not believe that this added market risk is material. There have been no material changes in our exposures to market risk for the period ended September 30, 2010.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Companys management, including
the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the design and effectiveness of the Companys disclosure controls and procedures (as defined in Securities
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2010. Based on the evaluation the Principal Executive Officer and Principal Financial Officer concluded that the Companys disclosure controls and procedures were
effective as of September 30, 2010.

Changes in Internal Control over Financial Reporting

There were no changes in the Companys internal control over financial reporting (as defined in Securities Exchange
Act Rules 13a-15(f) and 15(d)-15(f)) during the three and nine months ended September 30, 2010 that materially affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting.



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PART II. OTHER
INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings that we believe would, individually or in the aggregate, have a
material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS

Certain factors may have a material adverse effect on our business, financial condition and results of operations and you
should carefully consider them. It is not possible to predict or identify all such factors. For discussion of our potential risks or uncertainties, refer to Part I, Item 1A, Risk Factors, included in our 2009 Annual Report on Form 10-K. There
have been no material changes to the risk factors disclosed in our 2009 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We repurchased and retired 1 Class A Redeemable Common Share and 61 Class B Redeemable Common Shares during the three
months ended September 30, 2010 as follows:



|                                 |  |                              |   |     |                              |  |    |                             |  |   |                                                                                 |  |  |                                                                            |   |  |  |  |     | 
|-------------------------------- |  | ---------------------------- | - | --- | ---------------------------- |  | -- | --------------------------- |  | - | ------------------------------------------------------------------------------- |  |  | -------------------------------------------------------------------------- | - |  |  |  | --- | 
|Period                           |  | TotalClass 
Asharespurchased |   |     | TotalClass 
Bsharespurchased |  |    | Average pricepaid per share |  |   | Total Number ofShares 
Purchasedas Part of a PubliclyAnnounced Plansor Programs |  |  | Maximum Number ofShares that May YetBe Purchased Underthe Plans
orPrograms |  
|July 1  July 31, 2010           |  |                              | 0 |     |                              |  | 24 | (a)                         |  | $ | 564.95                                                                          |  |  |                                                                            | 0 |  |  |  | N/A | 
|August 1  August 31, 2010       |  |                              | 1 | (a) |                              |  | 25 | (a)                         |  | $ | 536.83                                                                          |  |  |                                                                            | 0 |  |  |  | N/A | 
|September 1  September 30, 2010 |  |                              | 0 |     |                              |  | 12 | (a)                         |  | $ | 511.96                                                                          |  |  |                                                                            | 0 |  |  |  | N/A | 



| | (a) | Repurchased from shareholder in accordance with the Companys obligations under its Amended and Restated Code of Regulations.
| | --- | -----------------------------------------------------------------------------------------------------------------------------

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

None.

ITEM 5. OTHER INFORMATION

None.



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ITEM 6. EXHIBITS



|         |  |                                                                                                                                     
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |  |                                                                                                                                     
|         | 
|31.1     |  | CEO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                           
|         | 
|31.2     |  | CFO certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002.                                                           
|         | 
|32       |  | CEO and CFO certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                  |  |  |  |                     |  |                                                
|----------------- |  |  |  | ------------------- |  | -----------------------------------------------
|                  |  |  |  | DCP HOLDING COMPANY
|                  |  |  | 
|November 12, 2010 |  |  |  | By:                 |  | /s/ Anthony A. Cook                            
|                  |  |  |  |                     |  | Anthony A. Cook.                               
|                  |  |  |  |                     |  | President, Chief Executive Officer and Director
|                  |  |  |  |                     |  | Principal Executive Officer                    
|                  |  |  | 
|November 12, 2010 |  |  |  | By:                 |  | /s/ Robert C. Hodgkins, Jr.                    
|                  |  |  |  |                     |  | Robert C. Hodgkins, Jr.                        
|                  |  |  |  |                     |  | Vice President and Chief Financial Officer     
|                  |  |  |  |                     |  | Principal Executive Officer                    



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INDEX TO EXHIBITS



|            |  |                                                                                                                        
|----------- |  | -----------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Item                                                                                                                   
|            | 
|31.1        |  | Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002                                                   
|            | 
|31.2        |  | Certifications pursuant to Section 302 of Sarbanes-Oxley Act of 2002                                                   
|            | 
|32          |  | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002