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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

Date of report:  May 14,1996
        (Date of earliest event reported)

                          NORTH EAST INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)

      Maine                      0-11184                 01-0278387
 (State or other               (commission            (I.R.S. Employer
 jurisdiction of                 File No.)           Identification No.)
incorporation or
  organization)

                    482 Payne Road, Scarborough, Maine 04074
               (Address of principal executive offices)(Zip Code)

Registrant's telephone number:  (207) 883-2232

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Item 5. Other Events.

The Registrant has been informed that Bernard D. Gershuny has entered into an
agreement to sell his shares to Ballabtrae Partners, LLC, a Delaware limited
partnership.

Mr. Gershuny owns 810,000 shares of North East Insurance Company common stock,
which represents 27.1% of the total outstanding shares. Since 1987 these shares
have been held in a non-voting trust, the trustee of which is Stephen F. Dubord,
an attorney in Waterville, Maine. Mr. Gershuny's shares were placed in trust
pending approval of his acquisition of control of the Registrant by the Maine
Bureau of Insurance and the New York Insurance Department. Such approval was
never obtained. Under the terms of the non-voting trust and a related order by
the Maine Superintendent of Insurance, the 810,000 shares held by the trustee
cannot be voted, and Mr. Gershuny is prohibited from exercising control over the
affairs of the Registrant.

Under a Purchase Agreement dated as of May 14, 1996, Ballantrae Partners LLC
("Ballantrae") has agreed to purchase Mr. Gershuny's shares, subject however to
satisfaction of various conditions on or before December 31, 1996, including
receipt of an order by the Maine Bureau of Insurance and the New York Insurance
Department as described below. Under the Maine Insurance Code, any person or
group that proposes, directly or indirectly, to acquire 10% or more of the
voting stock of a Maine insurer must first file an application on Form A seeking
approval of the Superintendent of Insurance. The New York Insurance Law contains
similar requirements, which are applicable to the Registrant due to its
ownership of a New York insurance subsidiary (American Colonial Insurance
Company). Ballantrae's purchase is also subject to the condition that the
transaction be approved by the U.S. Bankruptcy Court for the Eastern District of
New York, before which is pending a bankruptcy proceeding against Mr. Gershuny
and others.

Under the Purchase Agreement, the stated purchase price for Mr. Gershuny's
shares is approximately $860,500, subject to deduction of reasonable expenses
(including legal and accounting fees) of Ballantrae.

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                                    SIGNATURE

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

                             NORTH EAST INSURANCE COMPANY

May 23, 1996                 By:  /s/Graham S. Payne
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                                  Treasurer and Chief
                                  Financial Officer