<PAGE>   1



===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)
    [X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

                       FOR THE QUARTER ENDED JUNE 30, 2001

    [ ]   Transition report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

For the Period From _________ to __________.

                        Commission File Number: 001-14593
                                                ---------

                          THE MIIX GROUP, INCORPORATED
             (Exact name of Registrant as specified in its charter)

<TABLE>
<CAPTION>
                    DELAWARE                                            22-3586492
<S>                                                      <C>
(State or other jurisdiction of incorporation or         (I.R.S. employer identification number)
                  organization)
</TABLE>


               TWO PRINCESS ROAD, LAWRENCEVILLE, NEW JERSEY 08648
              (Address of principal executive offices and zip code)

                                 (609) 896-2404
              (Registrant's telephone number, including area code)

 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par
                                                             -----------------
value $0.01 per share
---------------------

        Securities registered pursuant to Section 12(g) of the Act: None
                                                                    ----

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods as 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
                                        ---    ---

         As of August 10, 2001, the number of outstanding shares of the
Registrant's Common Stock was 13,469,329.

===============================================================================



<PAGE>   2


TABLE OF CONTENTS



<TABLE>
<S>        <C>                                                                                             <C>
PART I     FINANCIAL INFORMATION..............................................................................4

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS..................................................................4

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............12

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........................................18

PART II    OTHER INFORMATION.................................................................................19

ITEM 1.    LEGAL PROCEEDINGS.................................................................................19

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............................................20

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K..................................................................21

SIGNATURES ..................................................................................................23

SIGNATURES ..................................................................................................24
</TABLE>


                                                                               2
<PAGE>   3


The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. This Form 10-Q, the Company's Annual Report to
Stockholders, any Form 10-K or any Form 8-K of the Company or any other written
or oral statements made by or on behalf of the Company may include
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance. These forward-looking
statements are subject to uncertainties and other factors that could cause
actual results to differ materially from such statements. These uncertainties
and other factors include, but are not limited to: the Company having sufficient
liquidity and working capital; the Company's ability to achieve consistent
profitable growth; the Company's ability to diversify its product lines; the
continued adequacy of the Company's loss and loss adjustment expense reserves;
the Company's avoidance of any material loss on collection of reinsurance
recoverables; increased competitive pressure; the loss of significant customers;
general economic conditions, including changing interest rates; rates of
inflation and the performance of the financial markets; judicial decisions and
rulings; changes in domestic and foreign laws, regulations and taxes; geographic
concentration of the Company's business; effects of acquisitions and
divestitures; and various other factors. The words "believe," "expect,"
"anticipate," "project," and similar expressions identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.


                                                                               3
<PAGE>   4


PART I    FINANCIAL INFORMATION

ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS


                        REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
The MIIX Group, Incorporated

We have reviewed the accompanying consolidated balance sheet of The MIIX Group,
Incorporated and subsidiaries as of June 30, 2001, and the related consolidated
statements of income for the three and six month periods ended June 30, 2001 and
2000, and the consolidated statements of cash flows for the six month periods
ended June 30, 2001 and 2000 and the consolidated statement of stockholders'
equity for the six month period ended June 30, 2001. These financial statements
are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with accounting principles generally accepted in
the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheets of The MIIX
Group, Incorporated and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 2000, not presented
herein, and in our report dated February 21, 2001, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 2000, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.


                                                     ERNST & YOUNG LLP


New York, New York
August 1, 2001

                                                                               4

<PAGE>   5



                          THE MIIX GROUP, INCORPORATED
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                     JUNE 30,          DECEMBER 31,
                                                                                  --------------- -- -----------------
                                                                                       2001                2000
                                                                                  ---------------    -----------------
                                     ASSETS                                        (Unaudited)
<S>                                                                                 <C>               <C>
Securities available-for-sale:
   Fixed-maturity investments, at fair value (amortized cost: 2001 -
     $1,038,734; 2000 - $1,184,057)..........................................          $1,027,270        $ 1,171,184
   Equity investments, at fair value (cost: 2001 - $6,520; 2000 - $6,880)                   5,537              5,837
   Short-term investments, at cost which approximates fair value.............             219,980             82,291
                                                                                        ---------        -----------
         Total investments...................................................           1,252,787          1,259,312
                                                                                        ---------        -----------

Cash.........................................................................               1,034              2,191
Accrued investment income....................................................              14,409             16,074
Premium receivable, net......................................................              29,002              9,765
Reinsurance recoverable on unpaid losses.....................................             440,390            432,046
Prepaid reinsurance premiums ................................................               8,417             14,560
Reinsurance recoverable on paid losses, net..................................               6,353             13,820
Deferred policy acquisition costs............................................               4,643              3,026
Deferred income taxes........................................................              61,452             58,896
Net investment in direct financing leases....................................              29,994             26,997
Other assets.................................................................              53,688             60,666
                                                                                       ----------        -----------
         Total assets........................................................          $1,902,169        $ 1,897,353
                                                                                       ==========        ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unpaid losses and loss adjustment expenses...................................          $1,129,359        $ 1,142,530
Unearned premiums............................................................              94,476             71,033
Premium deposits.............................................................                   0             15,618
Funds held under reinsurance treaties........................................             307,686            306,693
Notes Payable and other borrowings...........................................              13,241             14,732
Other liabilities............................................................              60,125             57,306
                                                                                       ----------        -----------
         Total liabilities...................................................           1,604,887          1,607,912
                                                                                       ----------        -----------

STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares
   issued and outstanding....................................................                   0                  0
Common stock, $0.01 par value, 100,000,000 shares authorized, 16,538,005 shares
   issued (2001 - 13,563,938 shares outstanding; 2000 - 13,563,938 shares
   outstanding)..............................................................                 166                166
Additional paid-in capital...................................................              53,721             53,716
Retained earnings............................................................             296,627            289,655
Treasury stock, at cost (2001 - 2,974,067 shares; 2000 - 2,974,067 shares)...             (38,897)           (38,897)
Stock purchase loans and unearned stock compensation.........................              (6,034)            (5,929)

Accumulated other comprehensive income/(loss)................................              (8,301)            (9,270)
                                                                                       ----------        -----------
         Total stockholders' equity..........................................             297,282            289,441
                                                                                       ----------        -----------
         Total liabilities and stockholders' equity..........................          $1,902,169        $ 1,897,353
                                                                                       ==========        ===========
</TABLE>

See accompanying notes


                                                                               5
<PAGE>   6


                          THE MIIX GROUP, INCORPORATED

                        CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                                  JUNE 30,                           JUNE 30,
                                                     -------------------------------    ---------------------------------
                                                           2001             2000              2001              2000
                                                       -------------    ------------    --------------    ---------------
<S>                                                    <C>              <C>               <C>               <C>
REVENUES

Net premiums earned .............................        $  46,468         $  30,747         $  91,102         $  79,926
Net investment income ...........................           20,906            20,902            42,216            42,381
Realized investment gains/(losses) ..............            4,552              (568)            7,571              (597)
Other revenue ...................................            2,918             1,884             5,013             5,126
                                                         ---------         ---------         ---------         ---------
     Total revenues .............................           74,844            52,965           145,902           126,836
                                                         ---------         ---------         ---------         ---------

EXPENSES
Losses and loss adjustment expenses .............           46,438           118,153            92,042           165,923
Underwriting expenses ...........................           11,140             9,304            20,984            19,137
Funds held charges ..............................            6,019              (570)           11,705             3,762
Other expenses ..................................              829             1,214             1,806             3,571
                                                         ---------         ---------         ---------         ---------
     Total expenses .............................           64,426           128,101           126,537           192,393
                                                         ---------         ---------         ---------         ---------

Income/(loss) before income taxes ...............           10,418           (75,136)           19,365           (65,557)
Income tax provision/(benefit) ..................            3,308           (27,168)            5,754           (24,443)
                                                         ---------         ---------         ---------         ---------
     Net income/(loss) before cumulative effect
        of an accounting change .................            7,110           (47,968)           13,611           (41,114)
     Cumulative effect of an accounting change
        for certain debt securities, net of tax             (5,283)                0            (5,283)                0
                                                         ---------         ---------         ---------         ---------
     Net income/(loss) ..........................        $   1,827         $ (47,968)        $   8,328         $ (41,114)
                                                         =========         =========         =========         =========

Basic earnings/(loss) per share before                                                                                 `
   cumulative effect of an accounting change ....        $    0.52         $   (3.37)        $    1.00         $   (2.85)
Cumulative effect of an accounting change
   for certain debt securities ..................            (0.39)                0             (0.39)                0
                                                         ---------         ---------         ---------         ---------
Basic earnings/(loss) per share of common
   stock ........................................        $    0.13         $   (3.37)        $    0.61         $   (2.85)
                                                         =========         =========         =========         =========

Diluted earnings/(loss) per share before
  cumulative effect of an accounting change .....        $    0.52         $   (3.37)        $    1.00         $   (2.85)
Cumulative effect of an accounting change
   for certain debt securities ..................            (0.39)                0             (0.39)                0
                                                         ---------         ---------         ---------         ---------
Diluted earnings/(loss) per share of common .....        $    0.13         $   (3.37)        $    0.61         $   (2.85)
                                                         =========         =========         =========         =========

Dividend per share of common stock ..............        $    0.05         $    0.05         $    0.10         $    0.10
                                                         =========         =========         =========         =========
</TABLE>

See accompanying notes


                                                                               6
<PAGE>   7




                          THE MIIX GROUP, INCORPORATED

                        CONSOLIDATED STATEMENT OF EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 2001
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)




<TABLE>
<CAPTION>
                                                                                                 STOCK
                                                                                                PURCHASE
                                                                                               LOANS AND     ACCUMULATED   TOTAL
                                   NUMBER OF     COMMON  ADDITIONAL                             UNEARNED        OTHER      STOCK-
                                    SHARES       STOCK    PAID-IN      RETAINED    TREASURY      STOCK      COMPREHENSIVE   HOLDERS'
                                  OUTSTANDING    ISSUED   CAPITAL      EARNINGS     STOCK     COMPENSATION  INCOME/(LOSS)  EQUITY
                                  ------------ --------  ----------   --------- ----------- --------------- ------------- --------
<S>                                <C>         <C>      <C>         <C>         <C>          <C>              <C>         <C>
 Balance at January 1, 2001 ....    13,563,938  $   166 $   53,716  $  289,655  $  (38,897)  $   (5,929)      $   (9,270) $ 289,441
         Net income ............                                         8,328                                                8,328

   Other comprehensive
        income/(loss), net of
        tax:

      Net unrealized appreciation
        on securities available-
        for-sale, net of
        deferred taxes .........                                                                                     969        969

      Stock purchase and loan
        agreement activities ...                                                                   (105)                       (105)

      Stock compensation .......                                 5                                                                5

      Cash dividends to
        stockholders ...........                                        (1,356)                                              (1,356)
                                    ----------  ------- ----------  ----------  -----------  ----------       ----------  ---------

 Balance at June 30, 2001 ......    13,563,938  $   166 $   53,721  $  296,627  $  (38,897)  $   (6,034)      $   (8,301) $ 297,282
                                    ==========  ======= ==========  ==========   ==========  ==========       ==========  =========
</TABLE>



See accompanying notes


                                                                           7

<PAGE>   8




                          THE MIIX GROUP, INCORPORATED

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                    SIX MONTHS ENDED
                                                                                         JUNE 30,
                                                                              ----------------------------
                                                                                 2001              2000
                                                                              ------------     -----------
<S>                                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) ...................................................        $   8,328         $ (41,114)
Adjustments to reconcile net income to net cash provided by operating
  activities (net of balances acquired):
Cumulative effect of an accounting change, net of tax ...............            5,283                 0
Unpaid losses and loss adjustment expenses ..........................          (13,171)           75,835
Unearned premiums ...................................................           23,443            27,252
Premium deposits ....................................................          (15,618)          (27,913)
Premium receivable, net .............................................          (19,237)            3,638
Reinsurance balances, net ...........................................            6,259            16,080
Deferred policy acquisition costs ...................................           (1,617)           (1,716)
Realized (gains)/losses .............................................           (7,571)              597
Depreciation, accretion and amortization ............................           (1,752)           (1,781)
Deferred income tax benefit .........................................             (211)           (3,988)
Accrued investment income ...........................................            1,665              (693)
Net investment in direct financing leases ...........................           (2,997)             (463)
Other assets ........................................................            6,978            40,780
Other liabilities ...................................................            2,870           (37,650)
                                                                             ---------         ---------
Net cash provided by/(used in) operating activities .................           (7,348)           48,864
                                                                             ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from fixed-maturity investment sales .......................          279,467            49,700
Proceeds from fixed-maturity investments matured, called, or prepaid            62,679            44,972
Proceeds from equity investment sales ...............................                0             5,608
Cost of investments acquired ........................................         (195,268)         (111,086)
Change in short-term investments, net ...............................         (137,689)          (20,430)
Net (payable) for securities ........................................                0            (1,281)
                                                                             ---------         ---------
Net cash provided by/(used in) investing activities .................            9,189           (32,517)
                                                                             ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable and other borrowings ....................            1,041             4,000
Repayment of notes payable and other borrowings .....................           (2,532)           (4,794)
Purchase of treasury stock ..........................................                0           (16,076)
Cash dividends to stockholders ......................................           (1,356)           (1,417)
Subordinated loan certificates redeemed .............................             (151)               (3)
                                                                             ---------         ---------
Net cash used in financing activities ...............................           (2,998)          (18,290)
                                                                             ---------         ---------

Net change in cash ..................................................           (1,157)           (1,943)
Cash at beginning of period .........................................            2,191             2,574
                                                                             ---------         ---------
Cash at end of period ...............................................        $   1,034         $     631
                                                                             =========         =========
</TABLE>


See accompanying notes

                                                                               8

<PAGE>   9


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts and
operations of The MIIX Group, Incorporated (the "MIIX Group") and its
wholly-owned subsidiaries, MIIX Insurance Company ("MIIX"), Lawrenceville
Holdings, Inc. ("LHI"), Lawrenceville Property and Casualty Company ("LP&C"),
MIIX Insurance Company of New York ("MIIX New York") and New Jersey State
Medical Underwriters, Inc. and its wholly-owned subsidiaries (the
"Underwriter"), collectively (the "Company"). The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and in the
opinion of management, reflect all adjustments considered necessary for a fair
presentation. Such adjustments are of a normal recurring nature. Operating
results for the interim period are not necessarily indicative of the results to
be expected for the full year.

These consolidated financial statements and notes should be read in conjunction
with the audited consolidated financial statements and notes of the Company for
the year ended December 31, 2000 which were filed with the Securities and
Exchange Commission on Form 10-K.

2.   BORROWING ARRANGEMENTS

On May 24, 2000, the Company obtained a $20.0 million revolving credit facility
with Amboy National Bank to meet certain non-operating cash needs as they may
arise. The credit facility terminates April 7, 2002 and bears a fixed interest
rate of 8.0% per annum. The Company has pledged 100% of The MIIX Insurance
Company stock as collateral under the credit facility. As of June 30, 2001, the
Company had borrowed approximately $9.1 million against the credit facility.
During the six month period ended June 30, 2001, the company incurred interest
expense on the loan of approximately $0.3 million. At June 30, 2001, the Company
had fixed maturity investments in Amboy National Bank of approximately $9.1
million earning a fixed interest rate of 6% per annum. The Company's former CEO
is a brother of the Senior Vice President and CFO of Amboy National Bank. The
Company believes that the related party transaction described above was on terms
as fair to the company as could have been obtained from an unaffiliated third
party.

3.   STOCK BASED COMPENSATION

The Company accounts for its stock-based compensation in accordance with APB
Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations. The Company's policy regarding stock options is to issue
options with an exercise price equal to the market price on the date of grant.
Under APB 25 no compensation expense is recognized given the Company's policy.
During the six months ended June 30, 2001, certain directors, executive officers
and employees were granted a total of 562,800 options to purchase shares of The
MIIX Group common stock with exercise prices ranging from $7.4500 to $7.5500, of
which 84,083 options were immediately exercisable and 90,000 were subsequently
cancelled. During the six months ended June 30, 2001, 214,850 options were
cancelled, and no options were exercised. Two hundred ten thousand of the
options cancelled were as a result of the former CEO separation agreement. As
part of the separation agreement, during the three months ended June 30, 2001
the Company also issued 221,591 phantom stock options, which are stock
appreciation rights, with prices ranging from $7.40 to $13.50, all of which were
immediately exercisable and expiring April 13, 2006.


                                                                               9
<PAGE>   10



4.   EARNINGS/(LOSS) PER SHARE

Earnings/(loss) per share are computed using the weighted-average number of
common shares outstanding for the three and six month periods ended June 30,
2001 of 13,555,378, and for the three and six month periods ended June 30, 2000
of 14,252,255 and 14,450,326, respectively.

The following table sets forth the computation of basic and diluted
earnings/(loss) per share:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                   JUNE 30,                    JUNE 30,
                                                        --------------------------    --------------------------
                                                             2001          2000          2001           2000
                                                        -----------    -----------    ----------   -------------
                                                              (in thousands)                (in thousands)
<S>                                                     <C>            <C>            <C>            <C>
Numerator for basic and diluted earnings/(loss)
per share of common stock:
     Net income/(loss) before cumulative effect of
        an accounting change .......................    $    7,110     $  (47,968)    $   13,611     $  (41,114)
     Cumulative effect of an accounting change for
        certain debt securities, net of tax ........        (5,283)             0         (5,283)             0
                                                        ----------     ----------     ----------     ----------
     Net income/(loss) .............................    $    1,827     $  (47,968)    $    8,328     $  (41,114)

Denominator:
     Denominator for basic earnings/(loss) per share
     of common stock - weighted-average shares
     outstanding ...................................        13,555         14,252         13,555         14,450
Effect of dilutive securities:
     Stock options and nonvested restricted stock ..            30             20             22             20
                                                        ----------     ----------     ----------     ----------

     Denominator for basic earnings/(loss) per share
     of common stock - adjusted weighted-average
     shares outstanding ............................        13,585         14,272         13,577         14,470

Basic earnings/(loss) per share of common stock
   before cumulative effect of an accounting change     $     0.52     $    (3.37)    $     1.00     $    (2.85)
Cumulative effect of an accounting change for
   certain debt securities .........................         (0.39)          0.00          (0.39)          0.00
                                                        ----------     ----------     ----------     ----------
Basic earnings/(loss) per share of common stock ....    $     0.13     $    (3.37)    $     0.61     $    (2.85)
                                                        ==========     ==========     ==========     ==========

Diluted earnings per share of common stock before
   cumulative effect of an accounting change .......    $     0.52     $    (3.37)    $     1.00     $    (2.85)
Cumulative effect of an accounting change for
   certain debt securities .........................         (0.39)          0.00          (0.39)          0.00
                                                        ----------     ----------     ----------     ----------
Diluted earnings/(loss) per share of common stock ..    $     0.13     $    (3.37)    $     0.61     $    (2.85)
                                                        ==========     ==========     ==========     ==========
</TABLE>

                                                                              10

<PAGE>   11



5.   COMPREHENSIVE INCOME/(LOSS)

The Company has classified its entire investment portfolio as available-for-sale
and had unrealized gains at June 30, 2001 and December 31, 2000 that are
reflected as accumulated other comprehensive income in the Consolidated
Statement of Equity and Consolidated Balance Sheets.

The components of comprehensive income/(loss), net of related tax, for the
periods ended June 30, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED         SIX MONTHS ENDED
                                                                 JUNE 30,                  JUNE 30,
                                                        -------------------------  ----------------------
                                                           2001           2000        2001        2000
                                                        ----------     ----------  ---------   ----------
                                                             (in thousands)           (in thousands)
<S>                                                      <C>          <C>          <C>         <C>
Net income/(loss) ...................................    $  1,827     $(47,968)    $  8,328    $(41,114)

Other comprehensive income/(loss):
  Unrealized holding appreciation/(depreciation)
     arising during period (net of tax of $(4,290),
     $(1,254), $309 and $(956), respectively) .......      (8,426)      (2,328)         607      (1,775)

  Reclassification adjustment for (gains)/losses
     realized in net income/(loss) (net of tax of
     $1,252, $199, $195 and $209, respectively) .....       2,324          369          362         388
                                                         --------     --------     --------    --------

Net unrealized appreciation/(depreciation) arising
  during the period ended June 30 (net of tax of                                                      .
  $(3,039), $(1,055), $504 and $(747), respectively)       (6,102)      (1,959)         969      (1,387)
                                                         --------     --------     --------    --------

Comprehensive income/(loss) .........................    $ (4,275)    $(49,927)    $  9,297    $(42,501)
                                                         ========     ========     ========    ========
</TABLE>

6.       DEFERRED POLICY ACQUISITION COSTS

The following represents the components of deferred policy acquisition costs and
the amounts that were charged to expense for the six months ended June 30, 2001
and 2000.

<TABLE>
<CAPTION>
                                  SIX MONTHS ENDED JUNE 30,
                                  ------------------------
                                     2001           2000
                                  ---------      ---------
                                       (in thousands)
<S>                                <C>           <C>
Balance at beginning of period     $ 3,026       $ 3,165
Cost deferred during the period      7,102         7,412
Amortization expense ..........     (5,485)       (5,696)
                                   -------       -------
Balance at end of period ......    $ 4,643       $ 4,881
                                   =======       =======
</TABLE>

                                                                              11

<PAGE>   12
7.      INCOME TAXES

A reconciliation of income tax computed based on the expected annual effective
federal statutory tax rate to total income tax expense/(benefit) for the periods
ended June 30, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                  SIX MONTHS ENDED JUNE 30,
                                ---------------------------------------------------------------
                                            2001                             2000
                                ------------------------------  -------------------------------
                                                 % OF INCOME                     % OF INCOME
                                                    BEFORE                      BEFORE INCOME
                                 INCOME TAXES    INCOME TAXES    INCOME TAXES       TAXES
                                ---------------- -------------  --------------- ---------------
                                (in thousands)                  (in thousands)
<S>                             <C>              <C>            <C>             <C>
Expected annual effective
  federal income tax
  expense/(benefit) at 35%...        $ 6,778           35.0%       $ (22,945)        (35.0)%
  Decrease in taxes resulting
  from:
  Tax-exempt interest........           (892)          (4.6)%         (1,224)         (1.9)%
  Other......................           (132)          (0.7)%           (274)         (0.4)%
                                ---------------- -------------  --------------- ---------------
Total income tax
  expense/(benefit)..........         $5,754           29.7%        $(24,443)        (37.3)%
                                ================ =============  =============== ===============
</TABLE>

8.     RECENT ACCOUNTING PRONOUNCEMENT

On April 1, 2001, the Company adopted the provisions of EITF No. 99-20,
"Recognition of Interest Income and Impairment of Purchased and Retained
Beneficial Interests in Securitized Financial Assets." This standard established
new guidelines for recognition of income and other-than-temporary decline for
interests in securitized assets. EITF 99-20 requires the Company to recognize an
other-than-temporary decline if the fair value of the security is less than its
book value and the net present value of expected future cash flows is less than
the net present value of expected future cash flows at the most recent, prior,
estimation date. The difference between the book value of the security and its
fair value must be recognized as an other-than-temporary decline and the
security's yield is adjusted to market yield. This new guidance also adopts the
prospective method for adjusting the yield used to recognize interest income for
changes in estimated future cash flows since the last quarterly evaluation date.
On April 1, 2001, the Company recognized $5.3 million of other-than-temporary
declines, net of tax ($0.39 per diluted share) as the cumulative effect of a
change in accounting principle.

9.     RECLASSIFICATION

Certain amounts have been reclassified for the prior years to be comparable to
the 2001 presentation.


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

The following discussion should be read in conjunction with the financial
statements and the related notes thereto appearing in Item 1 in this Form 10-Q.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2000

Net premiums earned. Net premiums earned were $46.5 million for the three months
ended June 30, 2001, an increase of approximately $15.8 million, or 51.1%, from
$30.7 million for the three months ended June 30, 2000. This net increase
consists of decreased direct, assumed and ceded premiums earned of $3.6 million,
$3.5 million and $22.9 million, respectively, in the three months ended June 30,
2001. Direct premiums earned declined as the result of a decrease in written
premiums over the past 12 months associated with the strong underwriting actions
taken by the Company during 2000 and continuing into 2001. Assumed premiums
earned



                                                                              12
<PAGE>   13

declined as the result of the non-renewal of a large excess of loss reinsurance
contract effective January 1, 2001. The decrease in ceded premiums earned was
primarily the result of ceded premiums of $19.9 million associated with
significant loss reserve adjustments made at June 30, 2000. Ceded premiums were
increased during the second quarter 2001 by $0.9 million as a result of
adjustments made to loss and loss adjustment expense reserves in second quarter
2001.

Total premiums written were $23.6 million for the three months ended June 30,
2001, an increase of $7.9 million, or 50.2%, from total premiums written of
$15.7 million for the three months ended June 30, 2000. The net increase in
direct premiums written was composed of net increases in New Jersey,
Pennsylvania, Texas and Arizona of $3.3 million, $2.4 million, $1.3 million and
$0.8 million respectively, and a net increase in other states of $0.1 million.
The increase in New Jersey was largely the result of renewals to move policies
off of a common January 1 renewal date. The increases in Pennsylvania, Texas and
other states were largely the result of rate increases taken; the increase in
Arizona was primarily associated with new business.

Net investment income. Net investment income for the three months ended June 30,
2001 and June 30, 2000 was $20.9 million. Average invested assets at amortized
cost decreased to approximately $1.27 billion for the three months ended June
30, 2001 compared to approximately $1.29 billion for the same period last year.
Net investment income and the decrease to average invested assets were impacted
by the Company's premium financing program initiated in November 2000. The
average annualized pre-tax yield on the investment portfolio increased to 6.58%
for the three months ended June 30, 2001 from 6.48% for the same period in 2000
primarily as a result of changes in asset allocation in a changing market yield
environment and the effects of recognition of other-than-temporary declines in
investment values pertaining to certain investment securities.

Realized investment gains/(losses). Net realized investment gains increased
approximately $5.2 million to $4.6 million for the three months ended June 30,
2001 compared to net realized investment losses of $0.6 million for the same
period in 2000. Realized gains of approximately $8.0 million were taken during
the three months ended June 30, 2001 to reposition the fixed income portfolio in
response to the changing yield curve, somewhat offset by the recognition of $3.4
million of loss related to other-than-temporary declines in investment values of
which $1.6 million is attributable to activity following the adoption of EITF
99-20, "Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets" effective April 1, 2001.
EITF 99-20 establishes new guidelines for recognition of income and
other-than-temporary declines for interests in securitized assets. In 2000, the
losses were generally due to sales of fixed maturity investments in response to
a generally increasing market yield environment.

Other revenue. Other revenue increased approximately $1.0 million to $2.9
million for the three months ended June 30, 2001 from $1.9 million for the same
period last year. This net increase is composed of finance charge income of
approximately $1.2 million resulting from the Company's premium financing
program which began in November 2000, a $0.4 million deferred gain recognition
offset by a $1.0 million decrease in reinsurance brokerage activity, due to the
sale of substantially all of the assets of the Company's reinsurance
intermediary subsidiary on July 1, 2000, and an increase of $0.4 million from
other non-insurance operations.

Loss and loss adjustment expense (LAE). The provision for losses and LAE
decreased $71.8 million, or 60.7%, to $46.4 million for the three months ended
June 30, 2001 from $118.2 million for the three months ended June 30, 2000. The
provision for losses and LAE is net of ceded losses and LAE of $12.3 million and
$12.8 million for the three months ended June 30, 2001 and 2000, respectively.
The significant decrease in net loss and loss adjustment expenses for the three
months ended June 30, 2001, was principally due to the reserve strengthening
actions taken by the Company at June 30, 2000 which resulted from a loss and LAE
reserve study conducted as of June 30, 2000. Following from the reserve study,
gross loss and LAE reserves were increased by $92.4 million, including $78.4
million for 1999 and prior accident years and $14.0 million for accident year
2000. Ceded loss and LAE reserves were increased by $22.3 million, including
$20.3 million for 1999 and prior accident years and $2.0 million for accident
year 2000. Net loss and LAE reserves were increased by $70.1 million, including
$58.1 million for 1999 and prior accident years and $12.0 million for accident
year 2000. The increase in loss and loss adjustment expense reserves in 2000
resulted from three primary factors: increased loss severity combined with a
lengthened loss development period on the New Jersey physician book; higher than
anticipated loss frequency and, particularly, severity in certain of the
Company's expansion states; and greater than expected loss frequency and
severity on the Pennsylvania physician and institution book. For the three



                                                                              13
<PAGE>   14

months ended June 30, 2001, gross and ceded loss and LAE reserves held on prior
accident years were adjusted by approximately $3.2 million. The ratio of net
losses and LAE to net premiums earned decreased to 99.9% for the three months
ended June 30, 2001 from 384.3% for the same period in 2000.

Underwriting expenses. Underwriting expenses increased $1.8 million or 19.7% to
$11.1 million for the three months ended June 30, 2001, from $9.3 million for
the three months ended June 30, 2000. The increase was the result of $0.9
million of severance costs associated with termination of the Company's prior
CEO and $0.9 million largely related to underwriting and marketing initiatives
such as the development of improved policy form language and the development of
an advertising campaign designed to favorably position the Company in improving
market conditions. The ratio of underwriting expenses to net premiums earned
improved to 24.0% for the three months ended June 30, 2001 from 30.3% for the
same period in 2000 primarily due to higher net earned premiums in 2001.
Excluding the impact of severance charges, the ratio of underwriting expenses to
net premiums earned was 22.0% for the three months ended June 30, 2001.

Funds held charges. Funds held charges related to the Company's aggregate
reinsurance contracts, increased $6.6 million to $6.0 million for the three
months ended June 30, 2001 from $(0.6) million for the three months ended June
30, 2000. This increase primarily resulted from a $5.7 million reduction in
funds held charges which arose out of changes to ceded loss and loss adjustment
expense reserves associated with the loss reserve strengthening at June 30,
2000. Funds held charges for the three months ended June 30, 2001 were increased
approximately $0.4 million due to adjustments made to loss and loss adjustment
expense reserves held on prior years. Funds held charges are calculated based
upon beginning of quarter funds held balances and are adjusted based upon
changes to ceded premiums associated with changes in ceded losses.

Other expenses. Other expenses decreased $0.4 million or 31.7% to $0.8 million
for the three months ended June 30, 2001, from $1.2 million for the three months
ended June 30, 2000, and primarily consist of the costs associated with the
leasing and other businesses owned by the Company. The decrease is primarily
related to the sale of substantially all of the assets of the Company's
reinsurance intermediary subsidiary on July 1, 2000.

Income tax provision/(benefit). Income taxes increased approximately $30.5
million to a tax provision of $3.3 million for the three months ended June 30,
2001, resulting in an effective tax rate of 31.8%, compared to income tax
benefit of $27.2 million and an effective tax rate of 36.2% for the same period
in 2000. The increase in taxes was primarily attributable to pre-tax income for
the quarter ended June 30, 2001 compared to a pre-tax loss for the same period
in 2000. The decrease in the effective tax rate relates to tax exempt
investment income which has the effect of reducing the effective rate when
pre-tax income is present and increasing the effective rate when a pre-tax loss
is present.


Cumulative effect of an accounting change for certain debt securities, net of
tax. On April 1, 2001, the Company adopted EITF 99-20, "Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets," which establishes new guidelines for recognition
of income and other-than-temporary declines for interests in securitized assets.
The cumulative effect of adopting EITF 99-20 was a $5.3 million loss, net of
$2.8 million tax, on April 1, 2001.

Net income/(loss). Net income was $1.8 million for the three months ended June
30, 2001, an increase of $49.8 million from a net loss of $48.0 million for the
three months ended June 30, 2000 for the reasons discussed above. Excluding the
cumulative effect of the accounting change associated with adoption of EITF
99-20, net income was $7.1 million.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000

Net premiums earned. Net premiums earned were $91.1 million for the six months
ended June 30, 2001, an increase of approximately $11.2 million, or 14.0% from
$79.9 million for the six months ended June 30, 2000. This net increase consists
of decreased direct, assumed and ceded premiums earned of $9.6 million, $6.7
million and $27.5 million, respectively. These decreases primarily resulted from
decreases in direct premiums written in the last six months of 2000 and first
quarter 2001 reflecting the strong underwriting actions taken by the Company.
The decrease in assumed premiums earned primarily relates to the non-renewal of
a large excess of loss reinsurance contract effective January 1, 2001. The
decrease in ceded premiums earned largely resulted from ceded activity under the
Company's aggregate reinsurance contracts of $19.9 million associated with
significant loss reserve adjustments made at June 30, 2000. Ceded premiums were
increased by $0.9 million



                                                                              14
<PAGE>   15

during the six months ended June 30, 2001 due to adjustments made to prior year
loss and loss adjustments expense reserves.

Total premiums written were $124.3 million for the six months ended June 30,
2001, a decrease of $20.1 million, or 13.9%, from total premiums written of
$144.4 million for the six months ended June 30, 2000. This decrease consisted
of a net decrease in direct premiums written of $6.4 million, and a decrease in
assumed premiums written of $13.7 million associated with the non-renewal of a
large excess of loss reinsurance contract, effective January 1, 2001. The net
decrease in direct premiums written was composed of net increases in
Pennsylvania, Texas and other states of $2.0 million, $1.8 million and $1.7
million, respectively, and net decreases in New Jersey and Maryland of $9.5
million and $2.4 million, respectively. The net decline in direct written
premiums followed significant selected rate increases and disciplined
underwriting actions.

Net investment income. Net investment income decreased approximately $0.2
million, or 0.4%, to $42.2 million for the six months ended June 30, 2001 from
$42.4 million for the same period in 2000. The decrease was mainly attributable
to a generally decreasing market yield environment and the impact of the
Company's premium financing program initiated in November 2000. Average invested
assets at amortized cost were approximately $1.27 billion during the six months
ended June 30, 2001 and 2000. The average annualized pre-tax yield on the
investment portfolio decreased to 6.64% for the six months ended June 30, 2001
from 6.66% for the same period in 2000 primarily as the result of declining
market yields.

Realized investment gains/(losses). Net realized investment gains increased
approximately $8.2 million to $7.6 million for the six months ended June 30,
2001 compared to net realized investment losses of $0.6 million for the same
period in 2000. During the six months ended June 30, 2001 realized gains of
$12.2 million were taken to reposition the portfolio to the changing yield
curve, somewhat offset by $4.6 million of loss related to other-than-temporary
declines in investment values, of which $1.6 million is attributable to activity
following the adoption of EITF 99-20, "Recognition of Interest Income and
Impairment on Purchased and Retained Beneficial Interests in Securitized
Financial Assets" effective April 1, 2001. EITF 99-20 establishes new guidelines
for recognition of income and other-than-temporary declines for interests in
securitized assets. In 2000, the losses were principally due to sales of fixed
maturity investments to reposition the portfolio in an increasing market yield
environment.

Other revenue. Other revenue decreased approximately $0.1 million to $5.0
million for the six months ended June 30, 2001 from $5.1 million for the same
period last year. This net decrease is composed of an increase in finance charge
income of $1.9 million resulting from the Company's premium financing program
which began in November 2000, a $0.4 million deferred gain recognition offset by
a $2.7 million decrease in reinsurance brokerage activity, due to the sale of
substantially all of the assets of the Company's reinsurance intermediary
subsidiary on July 1, 2000, and a $0.5 million increase from other non-insurance
operations.

Losses and loss adjustment expenses (LAE). The provision for losses and LAE
decreased $73.9 million, or 44.5%, to $92.0 million for the six months ended
June 30, 2001 from $165.9 million for the six months ended June 30, 2000. The
provision for losses and LAE is net of ceded losses and LAE of $21.4 million and
$28.9 million for the six months ended June 30, 2001 and 2000, respectively.

The significant decrease in loss and loss adjustment expenses for the six months
ended June 30, 2001 was principally due to the reserve strengthening actions
taken by the Company at June 30, 2000 which resulted from a loss and LAE reserve
study conducted as of June 30, 2000. Following from the reserve study, gross
loss and LAE reserves were increased by $92.4 million, including $78.4 million
for 1999 and prior accident years and $14.0 million for accident year 2000.
Ceded loss and LAE reserves were increased by $22.3 million, including $20.3
million for 1999 and prior accident years and $2.0 million for accident year
2000. Net loss and LAE reserves were increased by $70.1 million, including $58.1
million for 1999 and prior accident years and $12.0 million for accident year
2000. The increase in loss and loss adjustment expense reserves in 2000 resulted
from three primary factors: increased loss severity combined with a lengthened
loss development period on the New Jersey physician book; higher than
anticipated loss frequency and, particularly, severity in certain of the
Company's expansion states; and greater than expected loss frequency and
severity on the Pennsylvania physician and institution book. The ratio of net
losses and LAE to net earned premiums decreased to 101.0% from 207.6% for the
six months ended June 30, 2001 and 2000, respectively. For the six months ended
June 30,





                                                                              15
<PAGE>   16

2001 gross and ceded loss and LAE reserves held on prior accident years were
adjusted by approximately $5.2 million and $3.2 million, respectively.

Underwriting expenses. Underwriting expenses increased $1.9 million or 9.7% to
$21.0 million for the six months ended June 30, 2001, from $19.1 million for the
six months ended June 30, 2000. This increase is primarily due to $0.9 million
severance costs associated with termination of the Company's prior CEO and $1.0
million largely related to underwriting and marketing initiatives such as the
development of improved policy form language and the development of an
advertising campaign to strategically position the Company in favorable industry
market conditions. The ratio of underwriting expenses to net premiums earned,
however, improved to 23.0% for the six months ended June 30, 2001 from 23.9% for
the same period in 2000. This improvement primarily resulted from higher net
earned premiums during 2001. The ratio of underwriting expenses to net premiums
earned excluding the impact of the severance charges was 22.0% for the six
months ended June 30, 2001.

Funds held charges. Funds held charges increased $7.9 million to $11.7 million
for the six months ended June 30, 2001, from $3.8 million for the six months
ended June 30, 2000. This increase was primarily associated with a $5.7 million
reduction in funds held charges resulting from changes to ceded loss and loss
adjustment expense reserves attributable to the loss reserve strengthening at
June 30, 2000. During the six months ended June 30, 2001, funds held charges
decreased $0.4 million associated with prior year loss and LAE reserve
adjustments. Funds held charges are calculated based upon the beginning of
quarter funds held balances and are adjusted based upon changes to ceded
premiums associated with changes in ceded losses.

Other expenses. Other expenses decreased $1.8 million or 49.4% to $1.8 million
for the six months ended June 30, 2001, from $3.6 million for the same period
last year and primarily consist of the costs associated with the leasing and
other businesses owned by the Company. The decrease is primarily related to the
sale of substantially all of the assets of the Company's reinsurance
intermediary subsidiary on July 1, 2000.

Income tax provision/(benefit). Income taxes increased approximately $30.2
million to a tax expense of $5.8 million for the six months ended June 30,
2001, resulting in an effective tax rate of 29.7%, compared to income tax
benefit of $24.4 million and an effective tax rate of 37.3% for the same period
in 2000. The increase in taxes was primarily attributable to pre-tax income for
the six months ended June 30, 2001 compared to a pre-tax loss for the same
period in 2000. The decrease in the effective tax rate relates to tax exempt
investment income which has the effect of reducing the effective rate when
pre-tax income is present and increasing the effective rate when a pre-tax loss
is present.


Cumulative effect of an accounting change for certain debt securities, net of
tax. On April 1, 2001, the Company adopted EITF 99-20, "Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets," which establishes new guidelines for recognition
of income and other-than-temporary declines for interests in securitized assets.
The cumulative effect of adopting EITF 99-20 was a $5.3 million loss, net of
$2.8 million tax, on April 1, 2001.

Net income/(loss). Net income was $8.3 million for the six months ended June 30,
2001, an increase of $49.4 million from a net loss of $41.1 million for the six
months ended June 30, 2000 for the reasons discussed above. Excluding the
cumulative effect of the accounting change associated with adoption of EITF
99-20, net income was $13.6 million for the six months ended June 30, 2001.

FINANCIAL CONDITION

Cash and invested assets. Aggregate invested assets at fair value, including
cash and short term investments, were $1,253.8 million at June 30, 2001 and
$1,261.5 million at December 31, 2000. The net decrease of $7.7 million largely
resulted from the net decline in investment values.

Fixed maturity investments available for sale at fair value, including
short-term investments, were $1,247.3 million, or 99.6% of the investment
portfolio of the Company as of June 30, 2001. At that date, the average credit
quality of the fixed income portfolio was "AA," as defined by Standard & Poor's,
while the total portfolio effective duration (excluding short-term investments)
was 4.63 years.





                                                                              16
<PAGE>   17

Unpaid losses and LAE, reinsurance recoverable on unpaid losses and LAE and
funds held under reinsurance treaties. Gross unpaid losses and LAE were $1,129.4
million at June 30, 2001 and $1,142.5 million at December 31, 2000. Reinsurance
recoverable on unpaid losses and LAE was $440.4 million at June 30, 2001 and
$432.0 million at December 31, 2000. Funds held under reinsurance treaties,
which are unrestricted, collateralize a significant portion of reinsurance
recoverable on unpaid losses and LAE and were $307.7 million at June 30, 2001
and $306.7 million at December 31, 2000.

Equity. Total equity was $297.3 million at June 30, 2001 and $289.4 million at
December 31, 2000. The net increase of $7.9 million was primarily attributable
to net income of $8.3 million, unrealized net appreciation of investments of
$1.0 million and $1.4 million of cash dividends paid to stockholders.

LIQUIDITY AND CAPITAL RESOURCES

The MIIX Group, Incorporated. The MIIX Group is a holding company whose only
material assets are the capital stock of MIIX Insurance Company, a New Jersey
stock insurer, and New Jersey State Medical Underwriters, Inc., a New Jersey
corporation. The MIIX Group's ongoing cash flow will consist primarily of
investment income on its holdings and dividends and other permissible payments
from its subsidiaries. The MIIX Group will depend upon such payments for funds
for general corporate purposes and for the payment of dividends on the Common
Stock.

The payment of dividends to The MIIX Group by MIIX Insurance Company is subject
to limitations imposed by the New Jersey Holding Company Act. Based upon these
limitations, the maximum amount that will be available for payment of dividends
to The MIIX Group by MIIX Insurance Company in any year without the prior
approval of regulatory authorities is subject to restrictions related to surplus
and net income. MIIX Insurance Company's future cash flow available to The MIIX
Group may be influenced by a variety of factors, including cyclical changes in
the medical malpractice insurance market, MIIX Insurance Company's financial
results, insurance regulatory changes, including changes in the limitations
imposed by the New Jersey Holding Company Act on the payment of dividends by
MIIX Insurance Company, and changes in general economic conditions. The MIIX
Group expects that these limitations should not affect the ability of MIIX
Insurance Company to declare and pay dividends sufficient to support The MIIX
Group's dividend policy.

On May 24, 2000, the Company obtained a $20.0 million revolving credit facility
with Amboy National Bank to meet certain non-operating cash needs as they may
arise. The credit facility terminates April 7, 2002 and bears a fixed interest
rate of 8.0% per annum. The Company has pledged 100% of The MIIX Insurance
Company stock as collateral under the credit facility. As of June 30, 2001, the
Company had borrowed approximately $9.1 million against the credit facility.
During the six month period ended June 30, 2001, the company incurred interest
expense on the loan of approximately $0.3 million. The Company's former CEO is a
brother of the Senior Vice President and CFO of Amboy National Bank. The Company
believes that the related party transaction described above was on terms as fair
to the company as could have been obtained from an unaffiliated third party.

The primary sources of the Company's liquidity, on both a short and long-term
basis, are funds provided by insurance premiums collected, net investment
income, recoveries from reinsurance and proceeds from the maturity or sale of
invested assets. Such funds are generally used to pay claims, LAE, operating
expenses, reinsurance premiums and taxes. The Company's net cash flows from
operating activities were approximately $(7.3) million and $48.9 million for the
six months ended June 30, 2001 and 2000, respectively, and $59.4 million for the
year ended 2000. This decrease in operating cash flows of $56.2 million was
largely the result of two items, one impacting cash flows during the six months
of 2000 and the other impacting cash flows during the six months of 2001. For
the six months ended June 30, 2000, operating cash flows were significantly
increased due to one-time proceeds of $33.0 million collected on termination of
the Company's corporate-owned life insurance (COLI) program. Without these
one-time proceeds, operating cash flows in the six months ended June 30, 2000
were $15.9 million. For the six months ended June 30, 2001, operating cash flows
were significantly impacted by premium financing activity conducted by the
Company under a program begun in November 2000. Prior to November 2000, premium
financing was conducted by a third party vendor and the Company received full
proceeds from financed policies shortly after the policies were written from the
third party vendor. Excluding the impact of the net premium financing activity
of $19.2 million, operating cash flows in the six months ended June 30, 2001
were $11.9 million, a $4.0 million decrease. This decrease was largely




                                                                              17
<PAGE>   18

the result of a decrease in premiums written and an increase in net losses and
loss adjustment expense paid. Because of the inherent unpredictability related
to the timing of many of these items, particularly the payment of claims, it is
not unusual for cash flows from operations for a medical malpractice insurance
company to vary, perhaps substantially, from period to period.

The Company held collateral of $307.7 million at June 30, 2001 and $306.7 at
December 31, 2000, in the form of funds withheld and $173.2 million at June 30,
2001 and December 31, 2000 in the form of letters of credit for recoverable
amounts on ceded unpaid losses and loss adjustment expenses under certain
reinsurance agreements. Under the contracts, reinsurers may require that a trust
fund be established to hold the collateral should one or more triggering events
occur, such as a downgrade in the Company's A.M. Best rating to below B+, a
reduction in statutory capital and surplus to less than $60 million, or a change
in control. Otherwise, no restrictions are placed on investments held in support
of the funds withheld. In accordance with the provisions of the reinsurance
contracts, the funds withheld are credited with interest at contractual rates
ranging from 7.5% to 8.6%, which is recorded as an expense in the year incurred.

The Company invests substantially all of its positive cash flow from operations
in fixed maturity securities. The current investment strategy seeks to maximize
after-tax income through a high quality, diversified, duration sensitive,
taxable bond and tax-preferenced municipal bond portfolio, while maintaining an
adequate level of liquidity.

Based on historical trends, market conditions and its business plans, the
Company believes that its sources of funds will be sufficient to meet its
liquidity needs over the next 18 months and beyond. However, because economic,
market, and regulatory conditions may change, there can be no assurance that the
Company's funds will be sufficient to meet these liquidity needs.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the potential for loss due to adverse changes in the fair
value of financial instruments. The market risk associated with the financial
instruments of the Company relates to the investment portfolio, which exposes
the Company to risks related to unforeseen changes in interest rates, credit
quality, prepayments and valuations. Analytical tools and monitoring systems are
in place to continually assess and react to each of these elements of market
risk.

Interest rate risk is considered by management to be the most significant market
risk element currently facing the Company. Interest rate risk is the price
sensitivity of a fixed-maturity security to changes in interest rates. The
Company views these potential changes in price within the overall context of
assets and liability management. To reduce the Company's interest rate risk,
duration targets are set for the fixed income portfolio after consideration of
the duration of associated liabilities, primarily losses and LAE reserves, and
other factors.

The Company's investment portfolio at June 30, 2001 is primarily composed of
fixed-maturity securities, excluding short-term, consisting of 82.0% of total
investments at market value. U.S. government and tax-exempt bonds represent
14.2%, corporate bonds represent 47.8%, and mortgage backed and asset backed
securities represent 38.0% of fixed-maturity investments. Short-term investments
represent 17.6% of total investments at market value and equity investments,
primarily common stock, accounts for the remaining 0.4%.

At June 30, 2001, the Company had net after-tax unrealized losses on its fixed
maturity investment portfolio of $7.7 million, which included a deferred tax
valuation allowance of $0.6 million. The net after-tax unrealized losses of $7.7
million on the fixed maturity portfolio represented 2.5% of total stockholders'
equity gross of net after-tax unrealized losses on investments. At December 31,
2000, the Company had net after-tax unrealized losses on its fixed maturity
investment portfolio of $8.6 million, which included a deferred tax valuation
allowance of $0.6 million. The unrealized losses at June 30, 2001 do not
significantly impact the Company's ability to meet all regulatory capital
requirements.

Management does not expect that significant unrealized losses will be realized
on the fixed maturity portfolio given the credit quality of the portfolio at
June 30, 2001 and the Company's policy of matching asset and liability
maturities. Asset and liability matching is an important part of the Company's
portfolio management





                                                                              18
<PAGE>   19

process. The Company utilizes financial modeling and scenario analysis to
closely monitor the effective modified duration of both assets and liabilities
in order to minimize any mismatching. The goal of effective asset/liability
management is to allow payment of claims and operating expenses from operating
funds without disrupting the Company's long-term investment strategy.

In addition to interest rate risk, fixed-maturity securities like those
comprising the Company's investment portfolio involve other risks such as
default or credit risk. The Company manages this risk by limiting the amount of
higher risk corporate obligations (determined by credit rating assigned by
private rating agencies) in which it invests.

Mortgage-backed and asset-backed securities involve similar risks associated
with fixed-maturity investments: interest rate risk, reinvestment rate risk, and
default or credit risk. In addition, mortgage-backed and asset-backed securities
also possess prepayment risk, which is the risk that a security's originally
scheduled interest and principal payments will differ considerably due to
changes in the level of interest rates. The Company purchases mortgage-backed
and asset-backed securities structured to enhance credit quality and/or provide
prepayment stability.

Short-term investments are composed of highly rated money market instruments,
which are subject to an element of interest rate risk, although to a lesser
extent than those instruments discussed above due to a shorter maturity.

The Company also holds a portfolio of equity investments. The value of the
common stock investments is dependent upon general conditions in the securities
markets and the business and financial performance of the individual companies
in the equity portfolio. At June 30, 2001, the cost and fair value of equity
investments was $6.5 million and $5.5 million, respectively, compared to $6.9
million and $5.8 million at December 31, 2000, respectively. The net after-tax
unrealized losses of $0.6 million on the equity portfolio represented 0.2% of
total stockholders' equity gross of net after-tax unrealized losses on
investments at June 30, 2001.

There have been no material changes to the Company's financial market risks
since December 31, 2000.

PART II        OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

ACTIONS OPPOSING THE PLAN OF REORGANIZATION

In January 1999, five physician members of the Medical Inter-Insurance Exchange
("Exchange") filed a putative class action against the Exchange, Underwriter,
MIIX Group, certain of their officers and the board of the Exchange. Other
parties were subsequently added as defendants in the action. Among other things,
plaintiffs sought to force the Exchange to declare a dividend from surplus and
reserves, challenge various components of the reorganization including, but not
limited to, the stock allocation formula contained in the Plan of Reorganization
and the valuation of Underwriter, challenge the composition of the Board of
Directors of MIIX Group as excessive, challenge key executive compensation and
benefit packages as excessive, challenge the proposed IPO share price of MIIX
Group stock as inadequate, challenge the MIIX Prospectus as misleading and to
recover unspecified monetary damages. While the action was pending, the
plaintiffs also sought on numerous occasions to stay the members' vote on the
Plan of Reorganization and the IPO of MIIX Group stock. All of those
applications were denied. In August 1999, the trial court dismissed all of
plaintiffs' claims on the grounds that the court lacked jurisdiction to hear
them because they were part of the appeal of the Commissioner's Order and/or
because they failed to state a legal claim. Plaintiffs filed a Notice of Appeal
with the New Jersey Superior Court, Appellate Division seeking review of the
trial court's orders dismissing the Complaint and denying plaintiffs'
applications for injunctive relief. On July 11, 2001, the Appellate Division
issued an opinion affirming the dismissal of plaintiffs' Complaint in all
respects.

The Company may be a party to litigation from time to time in the ordinary
course of business. Management believes that the Company is not currently a
party to any litigation which may have a material adverse effect on the Company.





                                                                              19
<PAGE>   20

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The MIIX Group's annual meeting of shareholders was held on May 3, 2001, at
which time the following directors were elected by the shareholders of The MIIX
Group, to serve as Class III directors for a term expiring at the Annual Meeting
of shareholders to be held in 2004: Paul J. Hirsch, MD (affirmative: 8,558,202),
A. Richard Miskoff, DO (affirmative: 8,558,917), Eileen Marie Moynihan, MD
(affirmative: 8,555,073) and Martin L. Sorger, MD (affirmative: 8,558,252). The
terms of the following directors continued after such meeting: Angelo S. Agro,
MD, Harry M. Carnes, MD, Vincent A. Maressa, Esq., Carl Restivo, Jr., MD and
Bessie M. Sullivan, MD.





                                                                            20
<PAGE>   21
ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

               a.     Exhibits

<TABLE>
<CAPTION>

                          Item 601
                       Regulation S-K
                      Exhibit Reference                Exhibit
                           Number                    Description
                      <S>                <C>
                      3.1                Restated Certificate of Incorporation
                                         by reference to the exhibit filed with
                                         the registrant's registration statement
                                         on Form S-1 (Reg. No. 333-59371)).

                      3.2                Bylaws of The MIIX Group, (incorporated
                                         by reference to the exhibit filed with
                                         the registrant's registration statement
                                         on Form S-1 (Reg. No. 333-59371)).

                      4.1                Rights Agreement dated as of June 27,
                                         2001 (incorporated by reference to the
                                         exhibit filed with the registrant's
                                         Form 8-K/A dated June 27, 2001 and
                                         filed with the Securities and Exchange
                                         Commission on July 11, 2001).

                      4.2                Certificate of Designation, Preferences
                                         and Rights (incorporated by reference to
                                         the exhibit filed with the registrant's
                                         Form 8-K dated June 27, 2001 and filed
                                         with the Securities and Exchange
                                         Commission on June 28, 2001).

                      10.37*+            Separation Agreement between The
                                         MIIX Group, Inc., New Jersey State
                                         Medical Underwriters, Inc. and
                                         Kenneth Koreyva

                      10.53*             Combined Quota Share And Aggregate
                                         Excess Of Loss Reinsurance Agreement,
                                         effective November 1, 2000, and dated
                                         as of July 30, 2001, between MIIX
                                         Insurance Company and Hannover
                                         Reinsurance (Ireland) Limited/E + S
                                         Reinsurance (Ireland) Limited

                      11                 No statement re: computation of per
                                         share earnings is required to be
                                         filed because the computations can
                                         be clearly determined from the
                                         materials contained herein.

                      15*                Acknowledgement of Independent Accountant
</TABLE>

                      *      Filed herewith
                      +      Represents a management contract or compensatory
                             plan or arrangement.





                                                                             21
<PAGE>   22



               b.     Reports on Form 8-K

                      A current report on Form 8-K was filed by the Company on
                      June 28, 2001 (and amended by the filing of a Form 8-K/A
                      on July 11, 2001) reporting that the Board of Directors of
                      The MIIX Group, Incorporated adopted a Stockholder Rights
                      Plan.




                                                                              22
<PAGE>   23




                                   SIGNATURES

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

                                                   THE MIIX GROUP, INCORPORATED


                                            By:    /s/ Vincent A. Maressa
                                               --------------------------------
                                               Chairman
                                               (principal executive officer)


                                            By:    /s/ Thomas M. Redman
                                               --------------------------------
                                               Chief Financial Officer
                                               (principal financial and
                                               accounting officer)


                                            DATED: AUGUST 10, 2001





                                                                              23
<PAGE>   24


                                   SIGNATURES

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

                                                   THE MIIX GROUP, INCORPORATED


                                            By:
                                               --------------------------------
                                                  Vincent A. Maressa, Esq.
                                               Chairman
                                               (principal executive officer)


                                            By:
                                               --------------------------------
                                                          Thomas M. Redman
                                               Chief Financial Officer
                                               (principal financial and
                                                accounting officer)


                                            DATED: AUGUST 10, 2001





                                                                              24