8-K

                     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:  January 26, 1999
      (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 jurisdiction of     (Commission        (I.R.S. Employer
 incorporation or organization)       File No.)       Identification No.)




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



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



Item 5.     Other Events.

On January 26, 1999 North East Insurance Company announced that it had 
reached a non-binding agreement in principle for Motor Club of America to 
acquire North East Insurance Company through a Merger.  A copy of the North 
East Insurance Company's press release announcing the agreement in principle 
is filed as an exhibit to this report.


Item 6.     Financial Statements and Exhibits.

      (c)   Exhibits.

            99.1  Press release dated January 26, 1999 of North East 
                  Insurance Company, announcing agreement in principle to be 
                  acquired by Motor Club of America.


                                  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


Date: January 27, 1999                 By: /s/ Robert G. Schatz
                                           --------------------
                                           President and Chief
                                           Executive Officer


                              INDEX TO EXHIBITS

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

99.1        Press release dated January 26, 1999 of North East Insurance 
            Company, announcing agreement to be acquired by Motor Club of 
            America.

EX-99.1

FOR IMMEDIATE RELEASE

CONTACTS:
  Robert G. Schatz                  Patrick J. Haveron, CPA
  President/CEO                     Executive Vice President/CFO
  North East Insurance Company      Motor Club of America
  P.O. Box 1418                     95 Route 17 South
  Scarborough, Maine 04070-1418     Paramus, New Jersey 07653
  Tel - 207/883-2232                Tel - 201/291-2112
                                    E-Mail - phaveron@motr.com  



                      MOTOR CLUB OF AMERICA TO ACQUIRE
                        NORTH EAST INSURANCE COMPANY

PARAMUS, NEW JERSEY AND SCARBOROUGH, MAINE, January 26, 1999 -- MOTOR CLUB 
OF AMERICA, a property and casualty insurance holding company (NASDAQ: 
MOTR), and NORTH EAST INSURANCE COMPANY, a property and casualty insurer 
(NASDAQ: NEIC), today announced that the respective companies have reached a 
non-binding agreement in principle for MOTR to acquire NEIC through a 
merger.

The agreement provides that NEIC shareholders will receive, at their 
individual election, (a) $3.30 per share in cash per common share of NEIC, 
(b) one common share of MOTR for each 5.25 shares of NEIC common, or (c) a 
combination thereof.  If shareholders in the aggregate elect to exchange 
more than 50% of their shares for MOTR stock, there will be a proration 
mechanism to reduce the aggregate percentage to 50%.

The agreement in principle is subject to customary conditions, including 
negotiation, execution and delivery of a definitive merger agreement, and 
mutually satisfactory due diligence and documentation.  Among other 
conditions, the transaction would also require state regulatory approvals, 
final approval by the Boards of Directors of both companies, and approval by 
the vote of the MOTR shareholders and of the NEIC shareholders.

Stephen A. Gilbert, President and CEO of Motor Club of America, said, "We 
believe the transaction with North East offers our Company an excellent 
opportunity to begin the successful execution of our strategy to diversify 
outside the State of New Jersey.  It also provides North East shareholders 
with the opportunity to share in the future success of the combined 
Companies going forward.  We feel this transaction will enhance North East's 
results while enabling it to retain its unique identity.  We look forward to 
working with the employees and agents of North East in building a prosperous 
future for both Companies."

North East President Robert G. Schatz said, "This transaction offers our 
shareholders a significant premium for their shares  and offers our 
policyholders and agents the advantages of affiliation by North East with a 
larger and stronger insurer."

The companies anticipate entering into a definitive merger agreement in the 
near future.  Under that agreement, North East would become a wholly-owned 
subsidiary of Motor Club of America, thereby joining the ranks of Motor Club 
of America Insurance Company and Preserver Insurance Company.  Although 
controlled by new owners, North East's operations will continue to be 
managed locally.  Gilbert said, "We have been very impressed with the 
quality of North East's management team and employees.  We expect job loss 
to be minimal and hope that North East employees will choose to remain with 
us after the acquisition.  In particular, as part of this transaction, we 
are pleased to confirm that Ronald A. Libby would stay on as Chief Operating 
Officer of North East.  From the standpoint of policyholders and agents, 
this merger should assure a stronger and better-rated North East."

In connection with this transaction, North East announced that it has 
terminated the rights offering to its shareholders for common stock of the 
company. 

Cochran, Caronia & Co. is serving as financial advisor to Motor Club of 
America.  Sandler, O'Neill & Partners, L.P. is serving as financial advisor 
to North East.

Motor Club of America is a property and casualty insurance holding company 
for Motor Club of America Insurance Company, which writes personal 
automobile insurance, and Preserver Insurance Company, which writes small 
commercial and homeowners insurance.  Both subsidiaries are rated B+ (Very 
Good) by A.M. Best, a widely recognized insurance rating and information 
service. 

North East Insurance Company is a property and casualty insurer located in 
Scarborough, Maine.  North East is rated B- (Fair) by A.M. Best.  Its common 
stock has been publicly traded since 1981.