SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended June 30, 1998

Commission File Number 0-6478

FOREMOST CORPORATION OF AMERICA
(Exact name of Registrant as specified in its charter)

Michigan 38-1863522
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

5600 Beech Tree Lane, Caledonia, Michigan 49316
(Address of principal executive offices) (Zip Code)

Mailing address: P.O. Box 2450, Grand Rapids, Michigan 49501

Registrant's telephone number, including area code: (616)942-3000

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

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.

Common Stock, $1.00 par value,
Outstanding at June 30, 1998: 27,243,940 shares

FOREMOST CORPORATION OF AMERICA
INDEX

Page No.

Part I. Financial Information:

Item 1. - Financial Statements:
Consolidated Balance Sheets -
June 30, 1998 and December 31, 1997 1

Consolidated Statements of Income -
Six Months Ended June 30, 1998 and 1997 2

Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 1998 and 1997 3

Condensed Notes to Consolidated Financial
Statements 4-6

Item 2. - Management's Discussion and Analysis 7-9

Part II. Other Information:

Item 1. - Legal Proceeding 10

Item 4. - Submission of Matters to a Vote of
Security Holders 11-12

Item 6. - Exhibits and Reports on Form 8-K 12

Signatures 12

3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FOREMOST CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS

June 30, December 31,
1998 1997
-------- --------
(In thousands, except share data)

Assets:
Investments-
Fixed maturities held to maturity ................. $ 1,017 $ 1,974
Securities available for sale:
Fixed maturities ................................. 376,858 376,868
Equity securities ................................ 84,719 83,677
Mortgage loans and land contracts on real estate .. 12,216 12,350
Investment real estate ............................ 12,247 11,920
Short-term investments ............................ 17,342 26,656
-------- --------
Total investments ................................ 504,399 513,445
Cash ............................................... 1,960 2,409
Accrued investment income .......................... 6,067 6,293
Premiums receivable ................................ 76,557 71,541
Due from reinsurance companies ..................... 22,730 20,645
Other receivables .................................. 2,229 2,568
Prepaid policy acquisition costs ................... 75,762 74,179
Prepaid reinsurance premiums ....................... 645 979
Real estate and equipment .......................... 47,477 38,341
Other assets ....................................... 15,453 14,380
-------- --------
Total assets ...................................... $753,279 $744,780
======== ========
Liabilities:
Unearned premium ................................... $255,977 $246,429
Insurance losses and loss adjustment expenses ...... 89,621 82,722
Accounts payable and accrued expenses .............. 30,656 33,022
Notes and other obligations payable ................ 97,944 92,201
Income taxes ....................................... 13,154 20,853
Other liabilities .................................. 13,372 14,102
-------- --------
Total liabilities ................................. 500,724 489,329
-------- --------
Stockholders' Equity:
Preferred stock - 10,000,000 shares authorized
and unissued ...................................... -- --
Common stock $1 par - shares authorized 70,000,000
and 35,000,000, issued and outstanding 27,243,940
and 27,700,872 .................................... 27,244 27,701
Other shareholders' equity ......................... 225,311 227,750
-------- --------
Total stockholders' equity ........................ 252,555 255,451
-------- --------
Total liabilities and stockholders' equity ........ $753,279 $744,780
======== ========
<FN>
See accompanying condensed notes to consolidated financial statements.
</FN>

-1-

4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FOREMOST CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(In thousands except per share data)

Income:
Property and casualty premium earned .. $ 108,503 $ 106,958 $ 216,810 $ 213,536
Net investment income ................. 5,814 6,324 12,154 12,603
Realized gains ........................ 2,426 5,411 4,043 6,950
Other ................................. 563 564 1,289 1,222
--------- --------- --------- ---------
Total income ........................ 117,306 119,257 234,296 234,311
--------- --------- --------- ---------
Expense:
Insurance losses and loss expenses .... 66,841 61,695 129,403 133,399
Amortization of prepaid policy
acquisition costs ................... 32,003 30,937 64,212 61,863
Operating ............................. 4,718 5,231 9,722 10,254
Interest .............................. 1,729 2,277 3,664 4,303
--------- --------- --------- ---------
Total expense ....................... 105,291 100,140 207,001 209,819
--------- --------- --------- ---------
Income before taxes ............... 12,015 19,117 27,295 24,492
Income tax provision .................... (2,901) (5,657) (6,620) (6,223)
--------- --------- --------- ---------
Net income - continuing operations .... 9,114 13,460 20,675 18,269
Net income - discontinued operations .... -- 90 -- 90
--------- --------- --------- ---------
Net income - before extraordinary item 9,114 13,550 20,675 18,359

Extraordinary loss on early
extingishment of debt (net of $1,782
of federal income tax) ................ (3,310) -- (3,310) --
--------- --------- --------- ---------
Consolidated net income .............. $ 5,804 $ 13,550 $ 17,365 $ 18,359
========= ========= ========= =========

Per share of common stock:
Net income - continuing operations .... $ 0.33 $ 0.49 $ 0.75 $ 0.65
Net income - discontinued operations .. -- -- -- --
Extraordinary loss - net of tax benefit (0.12) -- (0.12) --
--------- --------- --------- ---------
Net income .......................... $ 0.21 $ 0.49 $ 0.63 $ 0.65
========= ========= ========= =========
Average shares outstanding .............. 27,345 27,738 27,468 28,084
========= ========= ========= =========
Cash dividends per share ................ $ 0.09 $ 0.09 $ 0.09 $ 0.09
========= ========= ========= =========

Per share of common stock - diluted
Net income - continuing operations .... $ 0.33 $ 0.48 $ 0.74 $ 0.64
Net income - discontinued operations .. -- -- -- --
Extraordinary loss - net of tax benefit (0.12) -- (0.12) --
--------- --------- --------- ---------
Net income .......................... $ 0.21 $ 0.48 $ 0.62 $ 0.64
========= ========= ========= =========
Average shares outstanding .............. 27,961 28,386 28,085 27,702
========= ========= ========= =========

<FN>
See accompanying condensed notes to consolidated financial statements.
</FN>

-2-

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FOREMOST CORPORATION OF AMERICA
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Six Months Ended
June 30,
----------------------
1998 1997
(In thousands) -------- --------

Operating Activities:
Net cash from operating activities ............... $ 18,051 $ 7,616
-------- --------
Investing Activities:
Purchases of securities and loans made ............ (61,159) (61,207)
Purchases of real estate and equipment ............ (10,808) (729)
Sales of securities ............................... 48,493 46,470
Maturities of securities and receipts
from repayments of loans ......................... 12,029 20,096
Sales of real estate and equipment ................ 661 642
Decrease in short-term investments ................ 9,314 5,973
-------- --------
Net cash from (for) investing activities ......... (1,470) 11,245
-------- --------
Financing Activities:
Prepayment of mortgage ............................ (30,781) --
Extraordinary loss on early
extingishment of debt ........................... (3,310) --
Repayment of debt ................................. (976) (1,088)
Proceeds from borrowings .......................... 37,500 5,500
Reaquisition of common stock ...................... (11,898) (19,365)
Dividends paid .................................... (4,940) (5,077)
Exercise of stock options: Receipts .............. 1,842 2,115
Exercise of stock options: Repurchases ........... (4,467) (3,797)
-------- --------
Net cash for financing activities ................ (17,030) (21,712)
-------- --------
Cash increase (decrease) ................. (449) (2,851)
Cash at beginning of year .......................... 2,409 5,141
-------- --------
Cash at end of period .................... $ 1,960 $ 2,290
======== ========
<FN>
See accompanying condensed notes to consolidated financial statements.
</FN>

-3-

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
FOREMOST CORPORATION OF AMERICA
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The notes to the consolidated financial statements are condensed and do not
contain all information required by generally accepted accounting
principles to be included in a full set of financial statements.

2. All information is unaudited; however, in the opinion of management, all
adjustments (consisting only of normal recurring accruals) have been made
which are necessary to present fairly the results shown. All significant
intercompany balances and transactions have been eliminated in
consolidation. Interim results are not necessarily indicative of the
results to be expected in any other period.

3. During the first quarter of 1998, Foremost Corporation of America adopted
Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income", which requires that all components of comprehensive
income and total comprehensive income be reported on one of the following:
a statement of income and comprehensive income, a statement of
comprehensive income or a statement of stockholder's equity. Comprehensive
income is comprised of net income and all changes to stockholder's equity,
except those due to investments by owners (changes in paid in capital) and
distributions to owners (dividends). For interim reporting purposes, SFAS
130 requires disclosure of total comprehensive income.

Comprehensive income and its components consist of the following:

For the Three
Months Ended
June 30,
----------------------
1998 1997
------- -------
(In thousands)

Net Income ........................................ $ 5,804 $13,550
Other Comprehensive Income:
Unrealized Gain (Loss) on Securities
Available for Sale, (Net of
Tax of($1,646) and $1,328) ...................... (3,054) 2,466
------- -------
Comprehensive Income .............................. $ 2,750 $16,016
======= =======

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For the Six Months Ended
June 30,
------------------------
1998 1997
-------- --------
(In thousands)

Net Income ..................................... $ 17,365 $ 18,359
Other Comprehensive Income:
Unrealized Gain (Loss) on Securities
Available for Sale, (Net of
Tax of($1,418) and $(404)) ................... $ (2,633) $ (749)
-------- --------
Comprehensive Income ........................... $ 14,732 $ 17,610
======== ========

4. Earnings per share amounts are computed based on the weighted average
number of common shares outstanding during each quarter. The reconciliation
of basic to diluted earnings per share amounts is as follows:

For the Three Months Ended
June 30, 1998
------------------------------------
Net Outstanding Per Share
Income Shares Amount
-------- ----------- ---------
(In thousands, except per share amounts)

Basic EPS ............................... $5,804 27,345 $ .21
O/S Stock Options ....................... 616
------ ------ --------
Diluted EPS ........................... $5,804 27,961 $ .21
====== ====== ========

For the Three Months Ended
June 30, 1997
------------------------------------
Net Outstanding Per Share
Income Shares Amount
-------- ----------- ---------
(In thousands, except per share amounts)

Basic EPS ............................... $13,550 27,738 $ .49
O/S Stock Options ....................... 648
------- ------ --------
Diluted EPS ........................... $13,550 28,386 $ .48
======= ====== ========

-5-

For the Six Months Ended
June 30, 1998
------------------------------------
Net Outstanding Per Share
Income Shares Amount
-------- ----------- ---------
(In thousands, except per share amounts)

Basic EPS ............................... $17,365 27,468 $ .63
O/S Stock Options ....................... 617
------- ------ --------
Diluted EPS ........................... $17,365 28,085 $ .62
======= ====== ========

For the Six Months Ended
June 30, 1997
------------------------------------
Net Outstanding Per Share
Income Shares Amount
-------- ----------- ---------
(In thousands, except per share amounts)

Basic EPS ............................... $18,359 28,084 $ .65
O/S Stock Options ....................... 618
------- ------ --------
Diluted EPS ........................... $18,359 28,702 $ .64
======= ====== ========

5. At the Company's Annual Meeting of Stockholders held on April 30, 1998, the
stockholders approved the Company's Stock Option Plan of 1998, which
granted the Company's Chairman and CEO, an option to purchase 750,000
shares of the Company's common stock at a purchase price of $24 per share.
Except in the case of a change in control or certain events of termination,
the options only vest if the closing per share sales price of the Company's
common stock on the New York Stock Exchange is equal to or greater than $48
per share on at least 10 trading days on or before February 23, 2003.

6. On June 29, 1998, the Company entered into an unsecured credit agreement
with a group of banks. This replaced a prior unsecured credit agreement and
the building mortgage loan that was paid off on May 5, 1998. The new
agreement provides for a five year revolving credit facility not to exceed
$40 million and a seven year term loan of $80 million, of which $30 million
of the term loan will be paid off over six years at $1.25 million per
quarter. Borrowing rates are based on eurodollar and negotiated rates. The
existing interest rate swap agreement covering $58 million of the facility
is still in effect. As of June 30, 1998, the Company had $25 million
available under the revolving credit facility. The Company also renewed for
another year the $20 million uncommitted line of credit facility, which
expired on June 30, 1998.

-6-

PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

FOREMOST CORPORATION OF AMERICA
OPERATING RESULTS AND FINANCIAL POSITION

Results of Operations

Foremost Corporation of America's combined loss and expense ratio for the
first six months of 1998 was 94.4% compared to 96.0% for the same period last
year, in spite of industry catastrophe losses of $4.4 billion for the first six
months of 1998 compared with $2.6 billion for all of 1997. As a result,
operating earnings for the first half of 1998, are up by 31% over the same
period last year. Return on equity for the first six months of 1998 is an
annualized 16.2%.

Net income from continuing operations, before an extraordinary item for the
first six months was $.74 per share compared to $.64 per share in 1997. Realized
gains of $.09 per share in 1998 and $.16 per share in 1997 are included in the
six months results. Net income from continuing operations, before an
extraordinary item, for the second quarter of 1998 was $.33 per share, including
$.05 per share in realized gains, compared to $.48 per share in 1997, including
$.13 per share in realized gains. All per share amounts are stated on a diluted
basis.

On May 5, 1998, the Company pre-paid the $30.8 million mortgage on its
corporate headquarters and incurred a $3.3 million after-tax prepayment penalty
to extinguish this debt. This cost is classified as an extraordinary item in the
financial statements for the second quarter of 1998 and reduced earnings by $.12
per share. The reason for prepaying the mortgage was to eliminate the
restrictive operating covenants attached to this debt, which hindered our
ability to manage the Company's capital base and leverage ratios through stock
repurchases. The cost of this prepayment penalty will be recouped over time by
the Company's present ability to borrow funds from its line of credit at lower
interest rates. The interest savings equal approximately $.03 per share annually
to the Company's operating results.

The combined loss and expense ratio for the property and casualty group was
96.1% for the second quarter of 1998 compared to 91.3% for the same period last
year. The increase in the combined ratio can be attributed to higher catastrophe
losses, which doubled from last year's second quarter and resulted in an
additional 7 points to the combined ratio. The Property Claims Services of the
Insurance Services Office, Inc. estimates record industry-wide catastrophe
losses for the second quarter approximating $3.4 billion, which is more than
triple the amount of such losses in the second quarter of 1997.

-7-

Written premium by major product line is as follows:

2nd Quarter
---------------------------- Increase
1998 1997 (Decrease)
--------- --------- ----------
(In thousands)

Mobile Home .......... $ 94,487 $ 95,708 (1.3%)
RV ................... 15,294 14,526 5.3%
Automobile ........... 4,750 2,751 72.6%
Basics ............... 2,228 1,981 12.5%
Homeowners ........... 461 765 (39.7%)
Other ................ 557 1,451 (61.6%)
-------- -------- -------
Total .............. $117,777 $117,182 0.5%
======== ======== =======

Six Months
------------------------------ Increase
1998 1997 (Decrease)
----------- --------- ----------
(In thousands)

Mobile Home .......... $182,292 $182,404 (0.1%)
RV ................... 28,692 28,651 0.1%
Automobile ........... 8,876 7,132 24.4%
Basics ............... 4,128 3,599 14.7 %
Homeowners ........... 1,023 1,675 (39.0%)
Other ................ 1,770 2,980 (40.6%)
-------- -------- -------
Total .............. $226,781 $226,441 0.1%
======== ======== =======

Mobile home written premium for the first six months of 1998 was flat on a
comparable basis due to the effect of our on-going catastrophe management
program of not accepting new business in Florida and in certain portions of
California. Direct response automobile premium increased to $3.5 million in the
first half of 1998 compared with $0.9 million in the same period of 1997. Our
dwelling fire insurance, called BASICS, continues its strong growth with a 14.7%
increase in written premium in the first six months.

After-tax investment income contributed $.181 per share in the second
quarter of 1998 compared to $.186 per share in 1997. For the first six months of
the year, after-tax investment income contributed $.372 per share in 1998
compared to $.366 per share for the same period last year.

At the Company's Annual Meeting of Stockholders held on April 30, 1998, the
stockholders approved several proposals, including those having the following
results:

1) Adoption of an Agreement and Plan of Merger which changed the Company's
state of incorporation from Delaware to Michigan effective June 30, 1998;

-8-

2) Amendment to the Company's Articles of Incorporation increasing the
Company's authorized common stock from 35,000,000 to 70,000,000 shares;

3) Amendment to the Company's Articles of Incorporation to authorize a class
of up to 10,000,000 shares of preferred stock; and

4) Approval of the Company's Stock Option Plan of 1998, which granted the
Company's Chairman and CEO, an option to purchase 750,000 shares of the
Company's common stock at a purchase price of $24 per share. Except in the
case of a change in control or certain events of termination, the options
only vest if the closing per share sales price of the Company's common
stock on the New York Stock Exchange is equal to or greater than $48 per
share on at least 10 trading days on or before February 23, 2003.

Financial Position

The principle sources of cash for the first six months of 1998 were
$69.8 million from sales and maturities of investments and $18.1 million from
operations. The Company also borrowed an additional $37.5 million. The primary
uses of cash were $72.0 million for the purchases of securities, real estate and
equipment, $30.8 million to prepay the building mortgage, $16.4 million to
repurchase common stock and $4.9 million to pay dividends to shareholders. The
Company had $19.3 million in cash and other liquid assets at June 30, 1998.

Total invested assets on a cost basis decreased 1.0%, or $5.0 million
during the first six months of 1998. Market values of securities available for
sale decreased $2.6 million net of tax in the first six months of 1998.

On June 29, 1998, the Company entered into an unsecured credit
agreement with a group of banks. This replaced a prior unsecured credit
agreement and the building mortgage loan that was paid off on May 5, 1998. The
new agreement provides for a five year revolving credit facility not to exceed
$40 million and a seven year term loan of $80 million, of which $30 million of
the term loan will be paid off over six years at $1.25 million per quarter.
Borrowing rates are based on eurodollar and negotiated rates, The existing
interest rate swap agreement covering $58 million of the facility is still in
effect. As of June 30, 1998, the Company had $25 million available under the
revolving credit facility. The Company also renewed the $20 million uncommitted
line of credit facility, which expired on June 30, 1998, for another year.

The Company continued to manage its capital base and leverage ratios by
repurchasing 338,225 shares of its common stock during the second quarter of
1998, under a previously announced repurchase plan. Since the inception of this
repurchase plan in February 1994, the Company has purchased 5,966,197 shares,
adjusted for the January, 1998 three-for-one stock split.

-9-

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries routinely are engaged in litigation as
plaintiff and defendant in the normal course of business. In the opinion of
management all of these proceedings, as well as the proceedings described in the
Company's Annual Report on Form 10-K for the year ending December 31, 1997, are
not expected to have a material adverse effect on the Company's consolidated
financial position, cash flows or operating results. The aggregate ultimate
liability, if any, of the Company and its subsidiaries for said proceedings is
not determinable at June 30, 1998. However, two of the proceedings that were
pending at December 31, 1997 have been terminated without liability to the
Company as follows:

In April 1996, national class actions were filed by the same group of
plaintiffs' attorneys in Wisconsin, Illinois and Florida state courts against
the Company and certain other defendants alleging misrepresentations in
connection with the sale of force-placed collateral protection insurance. The
complaints seek unspecified compensatory and punitive damages. The Wisconsin
case was conditionally class certified by the Wisconsin state court, before
service of the complaint. On June 22, 1998, the Circuit Court of Waupaca County,
Wisconsin, issued an Order vacating the class certification dismissing all
claims against the Company in the Wisconsin action, without prejudice. The case
filed in the Circuit Court of the Sixth Judicial Circuit, Champaign County,
Illinois, initially was dismissed by the trial court on the Company's motion.
Plaintiffs then filed amended pleadings, and the Company renewed its motion to
dismiss, which motion is pending before the trial court. The action filed in the
Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida,
has been stayed. The Company is vigorously defending all of these cases and
believes that none has merit. The Company has not established a specific reserve
for these related actions, because the amount of the Company's liability
exposure, if any, cannot be reasonably estimated.

In September 1997, a plaintiff brought a state class action in the United States
District Court the Southern District of Mississippi, Hattiesburg Division,
alleging the failure to disclose information about insurance coverages and
premium structure under policies sold in Mississippi. On May 8, 1998, the Court
issued an Order dismissing all claims against the Company without prejudice.

-10-

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

Pursuant to a Proxy Statement dated March 25, 1998, the Company submitted
several matters to a vote and solicited proxies of holders of its Common Stock
in connection with its Annual Meeting of Stockholders held on April 30, 1998. A
brief description of each matter voted upon the results of the vote are as
follows:

a) Election of four (4) Class I Directors with terms expiring in 2001:

Number of Number of
Nominees Votes For Votes Withheld
-------- ---------- --------------

Michael de Havenon 25,462,240 75,202
Robert M. Raives 24,547,241 990,201
Michael B. Targoff 25,463,140 74,302
F. Robert Woudstra 25,463,440 74,002

b) Approval of an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock: