<PAGE>

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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                    FORM 10-Q

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

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2004

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

For the Transition Period From __________ to __________.

                        Commission File Number: 001-14593

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


           DELAWARE                                         22-3586492
  (State or other jurisdiction                           (I.R.S. employer
of incorporation or organization)                      identification number)


               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)


        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 that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                               YES          NO  X
                                  -----       -----

        Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).

                               YES          NO  X
                                  -----       -----

        As of October 28, 2004, the number of outstanding shares of the
Registrant's Common Stock was 13,993,425.

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

<PAGE>

TABLE OF CONTENTS



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...........19

ITEM 4.  CONTROLS AND PROCEDURES..............................................20

PART II  OTHER INFORMATION....................................................20

ITEM 1.  LEGAL PROCEEDINGS....................................................20

ITEM 6.  EXHIBITS.............................................................22

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






                                                                               2

<PAGE>

                           FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements that are based on the
Company's estimates and expectations concerning future events and anticipated
results and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in the forward-looking
statements. In particular, the Company anticipates that its capital reserves and
liquidity are insufficient to allow it to continue to operate. This and other
risks are set forth in the Company's filings made from time to time with the
Securities and Exchange Commission. The words "believe," "expect," "anticipate,"
"project" and similar expressions identify forward-looking statements. The
Company's expectations regarding future earnings, wind-down initiatives,
underwriting, cost controls, adequacy of loss and loss adjustment expense
reserves, and enhancing shareholder value depend on a variety of factors,
including economic, competitive and market conditions which may be beyond the
Company's control and are thus difficult or impossible to predict. In light of
the significant uncertainties inherent in the forward-looking information
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the Company's objectives
or plans will be realized. 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>
<TABLE>
<CAPTION>

PART I    FINANCIAL INFORMATION

ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS

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

                                                                                   SEPTEMBER 30,       DECEMBER 31,
                                                                                  ----------------------------------
                                                                                       2004               2003
                                                                                  --------------      --------------
                                     ASSETS                                        (Unaudited)
<S>                                                                                   <C>              <C>
Securities available-for-sale:
   Fixed-maturity investments, at fair value (amortized cost: 2004 - $1,888;
     2003 - $680,797)                                                                 $     1,931      $   695,735
   Equity investments, at fair value (cost: 2004 - $2; 2003 - $2,781)                           1            3,226
   Short-term investments, at cost which approximates fair value.............               3,168           56,468
                                                                                      -----------      -----------
         Total investments...................................................               5,100          755,429

Cash.........................................................................                  76           18,081
Accrued investment income....................................................                   5            6,520
Premium receivable, net......................................................                   0              708
Reinsurance recoverable on unpaid losses.....................................                   0          425,785
Reinsurance recoverable on paid losses, net..................................                   0           31,874
Other assets.................................................................               3,352           40,242
                                                                                      -----------      -----------
         Total assets........................................................         $     8,533      $ 1,278,639
                                                                                      ===========      ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
LIABILITIES
Unpaid losses and loss adjustment expenses...................................         $       908      $ 1,218,957
Funds held under reinsurance treaties........................................                   0          292,126
Payable to MIIX Insurance Company in Rehabilitation..........................               2,929                0
Other liabilities............................................................               3,799           46,077
                                                                                      -----------      -----------
         Total liabilities...................................................               7,636        1,557,160
                                                                                      -----------      -----------

STOCKHOLDERS' EQUITY (DEFICIENCY)
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 (2004 - 13,993,425 shares outstanding; 2003 - 14,497,536
   shares outstanding).......................................................                 166              166
Additional paid-in capital...................................................              43,322           40,270
Retained earnings (deficit)..................................................             (12,379)        (301,402)
Treasury stock, at cost (2004 - 2,544,580 shares; 2003 - 2,040,469 shares)...             (28,624)         (25,115)
Stock purchase loans and unearned stock compensation.........................              (1,630)          (2,617)
Accumulated other comprehensive income ......................................                  42           10,177
                                                                                      -----------      -----------
         Total stockholders' equity (deficiency).............................                 897         (278,521)
                                                                                      -----------      -----------
         Total liabilities and stockholders' equity (deficiency).............         $     8,533      $ 1,278,639
                                                                                      ===========      ===========

SEE ACCOMPANYING NOTES

                                                                                                                 4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                     THE MIIX GROUP, INCORPORATED

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


                                                              THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                 SEPTEMBER 30,
                                                         -----------------------------  -----------------------------
                                                             2004             2003          2004             2003
                                                         ------------     ------------  ------------     ------------
<S>                                                      <C>              <C>            <C>              <C>
REVENUES
Net premiums earned...................................   $   (19,171)     $     1,989    $  (19,894)      $   29,126
Net investment income.................................         4,800            7,839        17,749           27,699
Realized investment gains.............................         1,771            2,595        10,919            4,950
Other revenue.........................................         2,023            1,879         5,192            5,002
                                                         ------------     ------------  ------------     ------------
     Total revenues...................................       (10,577)          14,302        13,966           66,777
                                                         ------------     ------------  ------------     ------------

EXPENSES
Losses and loss adjustment expenses...................           463           (3,844)        5,683           17,719
Underwriting expenses.................................         4,536            4,287        13,747           14,706
Funds held charges....................................        14,734            4,984        24,490           14,662
Other expenses........................................           (11)             162            18              631
                                                         ------------     ------------  ------------     ------------
     Total expenses...................................        19,722            5,589        43,938           47,718
                                                         ------------     ------------  ------------     ------------

Gain resulting from Order of Rehabilitation of MIIX
   Insurance Company..................................       319,003                0       319,003                0
                                                         ------------     ------------  ------------     ------------

Income before income taxes............................       288,704            8,713       289,031           19,059
Income tax provision (benefit)........................           (73)           1,679             8           (2,634)
                                                         ------------     ------------  ------------     ------------
     Net income.......................................   $   288,777      $     7,034   $   289,023      $    21,693
                                                         ============     ============  ============     ============

Basic and diluted earnings per share..................        $21.00            $0.52        $21.11            $1.62
                                                         ============     ============  ============     ============

Dividend per share of common stock....................         $0.00            $0.00         $0.00            $0.00
                                                         ============     ============  ============     ============

SEE ACCOMPANYING NOTES

                                                                                                                    5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                     THE MIIX GROUP, INCORPORATED

                                      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                                                  (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                                              (UNAUDITED)


                                                                                         STOCK
                                                                                        PURCHASE
                                                                                        LOANS AND      ACCUMULATED       TOTAL
                                 NUMBER OF   COMMON  ADDITIONAL   RETAINED              UNEARNED          OTHER      STOCKHOLDERS'
                                   SHARES    STOCK    PAID-IN     EARNINGS  TREASURY      STOCK       COMPREHENSIVE      EQUITY
                                OUTSTANDING  ISSUED   CAPITAL    (DEFICIT)    STOCK    COMPENSATION      INCOME       (DEFICIENCY)
                                -----------  ------   -------    ---------    -----    ------------      ------       ------------

<S>                              <C>          <C>     <C>        <C>         <C>           <C>        <C>              <C>
Balance at January 1, 2004....   14,497,536   $166    $40,270    $(301,402)  $(25,115)     $(2,617)   $     10,177     $  (278,521)
 Net income...................                                     289,023                                                 289,023

 Other comprehensive
   income (loss), net of tax:

 Net change in unrealized
   appreciation on securities
   available-for-sale, net
   of deferred taxes of $0....                                                                             (10,135)        (10,135)

 Stock purchase and loan
   agreement activities.......     (504,111)                                                   (41)                           (41)

 Stock compensation and
   treasury stock activity....                          3,052                  (3,509)       1,028                            571
                                 ----------   ----    -------    ---------   --------   ----------    ------------     ----------

Balance at September 30, 2004.   13,993,425   $166    $43,322    $ (12,379)  $(28,624)     $(1,630)   $         42     $      897
                                 ==========   ====    =======    =========   ========   ==========    ============     ==========


SEE ACCOMPANYING NOTES


                                                                                                                                 6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                              THE MIIX GROUP, INCORPORATED

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

                                                                                             NINE MONTHS ENDED
                                                                                               SEPTEMBER 30,
                                                                                     ----------------------------------
                                                                                          2004                 2003
                                                                                     --------------       -------------
<S>                                                                                    <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................................................     $   289,023         $    21,693

Adjustments to reconcile net income to net cash used in operating activities:
Gain resulting from the Order of Rehabilitation of MIIX Insurance Company.........        (319,003)                  0
Change in cash resulting from the Order of Rehabilitation of MIIX Insurance
     Company......................................................................         (18,212)                  0
Changes in accounts before the effect of the Order of Rehabilitation:
     Other stock based compensation...............................................             640                  72
     Unpaid losses and loss adjustment expenses...................................        (256,659)           (231,556)
     Unearned premiums............................................................               0             (24,837)
     Premium deposits.............................................................               0                (209)
     Premium receivable, net......................................................            (195)              6,863
     Reinsurance balances, net....................................................          55,011              30,915
     Deferred policy acquisition costs............................................               0               1,016
     Realized gains...............................................................         (10,919)             (4,950)
     Accretion and amortization...................................................           1,985               2,738
     Accrued investment income....................................................           3,217               1,118
     Other assets.................................................................            (503)               (119)
     Other liabilities............................................................          (5,901)            (15,460)
                                                                                       -----------         -----------
Net cash used in operating activities.............................................        (261,516)           (212,716)
                                                                                       -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from fixed-maturity investment sales.....................................         378,274             442,099
Proceeds from fixed-maturity investments matured, called or prepaid...............          73,512             164,855
Proceeds from equity investment sales.............................................               7               2,024
Cost of investments acquired......................................................        (163,636)           (555,462)
Change in short-term investments, net.............................................         (36,224)            157,477
Net payable for securities........................................................          (8,312)             14,223
                                                                                       -----------         -----------
Net cash provided by investing activities.........................................         243,621             225,216
                                                                                       -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds employee stock loans.....................................................               4                 317
Purchase of treasury stock........................................................            (114)                 (8)
                                                                                       -----------         -----------
Net cash (used in) provided by financing activities...............................            (110)                309
                                                                                       -----------         -----------

Net change in cash................................................................         (18,005)             12,809
Cash, January 1...................................................................          18,081               4,667
                                                                                       -----------         -----------
Cash, September 30................................................................     $        76         $    17,476
                                                                                       ===========         ===========

SEE ACCOMPANYING NOTES

                                                                                                                     7
</TABLE>

<PAGE>

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, New Jersey State Medical Underwriters, Inc. and its
wholly-owned subsidiaries (the "Underwriter"), and until September 28, 2004,
MIIX Insurance Company ("MIIX") and its wholly-owned subsidiaries Lawrenceville
Holdings, Inc. ("LHI") and MIIX Insurance Company of New York ("MIIX New York"),
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 (recurring and non-recurring) considered
necessary for a fair presentation. Operating results for the interim period are
not necessarily indicative of the results to be expected for the full year as
explained in Note 2, Recent Developments and Subsequent Events.

Significant aspects of the description of the Company's business contained in
this report are historical in nature and are not necessarily reflective of the
Company's current activities.

As discussed further in Note 7, Deconsolidation of MIIX and its Subsidiaries,
substantially all of the Company's insurance operations were placed into
rehabilitation on September 28, 2004. MIIX and its subsidiaries have been
deconsolidated from The MIIX Group as of September 30, 2004, as The MIIX Group
no longer has control over the assets or operations of MIIX as of September 28,
2004.

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, 2003, which were filed with the Securities and
Exchange Commission on Form 10-K.

2.      RECENT DEVELOPMENTS AND SUBSEQUENT EVENTS

The Company has experienced a number of adverse developments as a result of
unexpected and unprecedented increases in loss and Loss Adjustment Expense
("LAE") reserves over the past four years related to prior years' experience.
These increases have required the Company to increase loss and LAE reserves in
each of the last four years. For a more detailed discussion of these events, see
our Annual Report on Form 10-K for 2003.

As a result of the losses occurring in 2001 and 2002, the Company's insurance
subsidiaries were required by the New Jersey Department of Banking and Insurance
("New Jersey Department") and other applicable state regulatory bodies to cease
writing insurance by September 1, 2002. By December 31, 2003, all insurance
policies written by MIIX had expired.

Since ceasing to write new insurance policies in 2002, the Company's business
has consisted principally of managing the runoff of existing claims, the
Company's investment portfolio, and the operations of a New Jersey insurance
company, MDAdvantage Insurance Company of New Jersey ("MDAdvantage").

The trading of The MIIX Group's common stock was suspended at the opening of
business on April 28, 2003 by the New York Stock Exchange ("NYSE") because The
MIIX Group was "below criteria" as its total capitalization was less than $50
million over a 30-day trading period and stockholders' equity was less than $50
million. The MIIX Group's common stock now trades on the Over-The-Counter
("OTC") Bulletin Board under the ticker symbol "MIIX." See "Risks and
Uncertainties."

During 2003, MIIX entered into an Order with the New Jersey Department that set
forth the framework for the regulatory monitoring of MIIX and established
certain operating limitations on MIIX.

As of December 31, 2003, MIIX's Total Adjusted Capital, as filed with the New
Jersey Department in its Annual Audited Statutory Financial Statements, was a
deficit of $(305.6) million, which is below the Mandatory Control Level.

                                                                               8
<PAGE>

In furtherance of the ongoing monitoring of the runoff of MIIX's insurance
operations, the New Jersey Department appointed an Administrative Supervisor in
April 2004. MIIX continued to operate in voluntary solvent runoff until
September 28, 2004 when the State of New Jersey entered an Order of
Rehabilitation (the "Order") of MIIX.

On September 28, 2004, the Superior Court of New Jersey entered an Order placing
MIIX into rehabilitation and naming the Commissioner of the New Jersey
Department as Rehabilitator with immediate and exclusive control over the
business and property of MIIX. The Order provides that The MIIX Group and the
Underwriter will continue to provide administrative services to MIIX pursuant to
the current Management Services Agreement until terminated by the New Jersey
Department after appropriate notice. The Order does not stay payment of claims
for any litigation currently pending against MIIX or its insureds and does not
bar claimants from filing new actions against MIIX insureds. The Order, however,
prohibits persons from filing any new action or new claim directly against MIIX
without permission of the Court. The Order also requires notice to and consent
of the Rehabilitator for the assignment of any contract to which MIIX is a
party. Reinsurers are prohibited from canceling current reinsurance agreements
or making additional premium charges to MIIX under the September 28, 2004 Order
of Rehabilitation.

During 2002, the Company engaged financial advisors to assist it in obtaining
offers for the Company's assets. No viable offers to make a significant
investment in the Company or to purchase all of the Company were received. In
2004, the Company engaged additional financial advisors to assist it in
exploring all available alternatives. The Company continues to be interested in
entertaining any and all offers by any interested parties for its assets and/or
for investment in the Company. In connection with that exploration, the
financial advisors have contacted more than 50 prospective purchasers of assets
of the Company or investors in the Company. As a consequence of that effort, the
Company has received one indication of interest from MDAdvantage to acquire
certain assets of the Underwriter and one indication of an additional possible
offer. The Company is proceeding to negotiate with MDAdvantage the documentation
relating to a possible sale of the Underwriter's assets, subject to the receipt
of all necessary approvals and "higher or better offers" prior to closing. The
Company is also continuing to seek other buyers for its assets.

The following disclosures relate to insurance operations:

As a result of the Order entered on September 28, 2004, the Company no longer
has control of the assets or operations of MIIX. Accordingly, as of September
30, 2004, the accounts of MIIX will be no longer be consolidated with the
accounts of the Company in the consolidated financial statements. The
consolidated financial statements subsequent to September 28, 2004 will include
The MIIX Group and its wholly owned subsidiary the Underwriter and its
subsidiaries Medical Brokers, Inc., an insurance agency, Reinsurance Services,
Inc. (formerly Pegasus Advisors, Inc.), an inactive reinsurance intermediary,
MIIX Healthcare Group, an inactive healthcare consulting firm, and Lawrenceville
Re, Ltd. ("Lawrenceville Re"), a Bermuda-domiciled reinsurance company.

New Jersey insurance regulation provides that when an insurance company is
deemed in a hazardous financial condition, the State may step in and assume
control of all operations of the insurance company, including a provision for
any shortfall in funds to pay claims. The New Jersey Department has assumed
control of the operations of MIIX in rehabilitation. Because the Company has no
continuing legal obligation with respect to MIIX, the Company has made no
provision for the excess of liabilities over assets of MIIX as of September 30,
2004. Accordingly, as of September 30, 2004, the Company followed the equity
method of accounting for its investment in MIIX and recorded its investment in
MIIX at $-0-, and the deficiency in equity that existed as of September 30, 2004
was reversed and recognized as a gain on deconsolidation as of and for the
period ended September 30, 2004.

The Company will not report the operations of MIIX as discontinued operations as
of September 30, 2004 because the Company continues to have significant
continuing involvement in the operations of MIIX through November 2004.
Employees of the Underwriter continue to service, process and adjudicate claims
and perform administrative services subsequent to the September 28, 2004 Order
of Rehabilitation. Therefore, the Company will not record MIIX as a discontinued
operation until this activity diminishes significantly.

                                                                               9
<PAGE>

3.      STOCK BASED COMPENSATION

The Company accounts for its stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees ("APB 25") and related interpretations. Under APB 25, because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized. During the first nine months of 2004, 355,092 shares of restricted
stock vested, having a per share market value of $0.64 and 164,348 additional
shares vested, having a per share market value of $0.16. Also in the nine months
of 2004, 28,807 options were cancelled, 0 options were exercised and 266,498
restricted shares of The MIIX Group common stock were cancelled. During the nine
months ended September 30, 2003, 38,671 options were cancelled, options were
exercised, and a former officer tendered 8,922 shares of The MIIX Group common
stock and reduced his stock purchase and loan balance to $0. All transactions
were recorded at the fair market value of The MIIX Group common stock on the
effective date of the transactions.

The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS No.
123, "Accounting for Stock-Based Compensation to Stock-Based Employee
Compensation" for the nine months ended September 30:

<TABLE>
<CAPTION>
                                                                    2004          2003
                                                                    ----          ----
<S>                                                               <C>           <C>
     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
        Net income, as reported                                   $289,023      $ 21,693
        Total stock-based employee compensation expense
          determined under fair value based method for all
          awards, net of related tax effects                          (167)           33
                                                                  --------      --------
        Pro forma net gain                                        $288,856      $ 21,726
                                                                  ========      ========
        Basic earnings per share:
          As reported                                               $21.11         $1.62
          Pro forma                                                  21.10          1.62
        Diluted earnings per share:
          As reported                                               $21.11         $1.62
          Pro forma                                                  21.10          1.62
        Estimated weighted average of the fair value
           of options granted                                        $0.00         $0.00
</TABLE>

The per share weighted-average fair value of stock options was estimated at each
date of grant using a Black-Scholes option pricing model using the following
assumptions: Risk-free interest rates ranging from 1.7% to 6.8%; dividend yields
ranging from 0% to 2.7%; volatility factors of the expected market price of the
Company's common stock ranging from 26.3% to 32.6%; and a three-year weighted
average expected life of the options.

                                                                              10
<PAGE>

4.      EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                SEPTEMBER 30,                 SEPTEMBER 30,
                                                        ----------------------------    ----------------------------
                                                             2004           2003            2004          2003
                                                        -------------  -------------    -------------  -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                         <C>             <C>             <C>            <C>
Numerator for basic and diluted earnings per
  share of common stock:
    Net income ....................................         $288,777        $7,034          $289,023       $21,693
                                                            ========       =======          ========       =======

 Denominator for basic and diluted earnings per
  share of common stock - weighted-average
  shares outstanding...............................           13,752        13,452            13,690        13,395
                                                            ========       =======          ========       =======

Basic and diluted earnings per share of
  common stock.....................................           $21.00         $0.52            $21.11         $1.62
                                                            ========       =======          ========       =======
</TABLE>

5.      COMPREHENSIVE INCOME (LOSS)

The Company has classified its entire investment portfolio as
available-for-sale. Unrealized gains (losses) at September 30, 2004 and December
31, 2003, except those determined to be other-than-temporary, are reflected as
accumulated other comprehensive income in the Consolidated Statement of
Stockholders' Equity (Deficiency) and Consolidated Balance Sheets. However, as
described in Notes 2 and 7, the investment portfolio of MIIX was subject to the
Order of Rehabilitation such that as of September 30, 2004, the investments of
MIIX are no longer included in the accounts and operations of the Company.

The components of comprehensive income (loss), net of related tax, for the
periods ended September 30, 2004 and 2003 are as follows:

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                SEPTEMBER 30,                 SEPTEMBER 30,
                                                        ----------------------------    ----------------------------
                                                             2004           2003            2004          2003
                                                        -------------  -------------    -------------  -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                         <C>             <C>             <C>            <C>
Net income.........................................         $288,777        $7,034          $289,023       $21,693

Other comprehensive income (loss):
  Unrealized holding appreciation (depreciation)
    arising during period (net of tax).............            2,382        (4,643)              784        (2,569)

  Reclassification adjustment for gains realized
    in net income (net of tax).....................           (1,771)       (2,595)          (10,919)       (4,950)
                                                          ----------    ----------        ----------    ----------

Net unrealized appreciation (depreciation) arising
    during the period ended September 30
    (net of tax)....................................             611        (7,238)          (10,135)       (7,519)
                                                          ----------    ----------        ----------    ----------


Comprehensive income (loss).........................        $289,388        $ (204)         $278,888       $14,174
                                                          ==========    ==========        ==========    ==========
</TABLE>

                                                                              11
<PAGE>

6.      INCOME TAXES

The effective tax rate differs from the statutory tax rate primarily as a result
of a full valuation allowance being established against the significant net
operating loss of the Company. The income recognized as a result of the Order of
Rehabilitation will not result in a tax liability to the Company due to its
operating loss carryforward.

7.      DECONSOLIDATION OF MIIX AND ITS SUBSIDIARIES

On September 28, 2004, the Superior Court of New Jersey entered an Order placing
MIIX into rehabilitation and naming the Commissioner of the New Jersey
Department as Rehabilitator with immediate and exclusive control over the
business and property of MIIX. See "Recent Developments and Subsequent Events."

New Jersey insurance regulation provides that when an insurance company is
deemed in a hazardous financial condition, the State may step in and assume
control of all operations of the insurance company, including a provision for
any shortfall in funds to pay claims. The New Jersey Department has assumed
control of the operations of MIIX in rehabilitation. Because the Company has no
continuing legal obligation with respect to MIIX, the Company has made no
provision for the excess of liabilities over assets of MIIX as of September 30,
2004. Accordingly, as of September 30, 2004, the Company followed the equity
method of accounting for its investment in MIIX and recorded its investment in
MIIX at $-0-, and the deficiency in equity that existed as of September 28, 2004
was reversed and recognized as a gain on deconsolidation as of and for the
period ended September 30, 2004.

Consequently, MIIX's balance sheet amounts are excluded from the consolidated
financial statements at September 30, 2004 and the operating results only
reflect the result of MIIX's operation in the individual income and expense line
items for periods prior to September 28, 2004.

The Company will not report the operations of MIIX as discontinued operations as
of September 30, 2004 because the Company continues to have significant
continuing involvement in the operations of MIIX through November 2004.
Employees of the Underwriter continue to service, process and adjudicate claims
and perform administrative services subsequent to the September 28, 2004 Order
of Rehabilitation. Therefore, the Company will not record MIIX as a discontinued
operation until this activity diminishes significantly. The table below provides
an unaudited pro forma statement of income as if the Company treated MIIX as a
discontinued operation for the nine months ended September 30, 2004.

                                             As Reported       Pro Forma
                                             -----------       ---------
Revenues
Net premiums earned                         $    (19,894)     $       71
Net investment income                             17,749              (9)
Realized investment gains (losses)                10,919             179
Other income                                       5,192           4,901
                                             -----------      ----------
   Total revenues                                 13,966           5,142
                                             -----------      ----------

Expenses
Losses and loss adjustment expenses                5,683            (128)
Underwriting and other expenses                   13,765           6,353
Funds held charges                                24,490               4
                                             -----------      ----------
   Total expenses                                 43,938           6,229
                                             -----------      ----------

Gain resulting from Order of
   Rehabilitation of MIIX Insurance Company      319,003         319,003
                                             -----------      ----------

Income before income taxes                       289,031         317,916
Income tax provision                                   8               8
                                             -----------      ----------
   Net income                                $   289,023      $  317,908
                                             ===========      ==========

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 elsewhere in this Form 10-Q.

CRITICAL ACCOUNTING POLICIES

The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reporting amounts of
assets, liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities. On an on-going basis, management evaluates
its estimates, including those related to income taxes, loss and LAE reserves,
contingencies and litigation. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

In the discussion and analysis that follows, consideration should be given to
the Order of Rehabilitation discussed in Notes 2 and 7.

                                                                              12
<PAGE>

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements:

REPORTING AND CONSOLIDATION. The Company has not reported the operations of MIIX
as discontinued operations because the Company continues to have significant
continuing involvement in the operations of MIIX through November 2004.
Employees of the Underwriter continue to service, process and adjudicate claims
and perform administrative services subsequent to the September 28, 2004 Order
of Rehabilitation (see "Recent Developments" following). Therefore, the Company
will not record MIIX as a discontinued operation until this activity diminishes
significantly. However, as described in Note 7, the Company did not consolidate
the accounts of MIIX as of September 30, 2004.

REINSURANCE. Until September 28, 2004, reinsurance recoverables included the
balances due from reinsurance companies for paid and unpaid losses and LAE that
will be recovered from reinsurers, based on contracts in force. Amounts
recoverable from reinsurers were estimated in a manner consistent with the claim
liability associated with the reinsured policy. Reinsurance contracts do not
relieve MIIX from its primary obligations to policyholders. Failure of
reinsurers to honor their obligations could result in losses to MIIX. As a
result of the Order of Rehabilitation, the Company no longer consolidates the
reinsurance accounts of MIIX.

PREMIUMS. Premiums are recorded as earned over the period the policies to which
they apply are in force. The reserve for unearned premiums is determined on a
monthly pro-rata basis. Gross premiums include both direct and assumed premiums
earned.

LOSS AND LOSS ADJUSTMENT EXPENSES. Until September 28, 2004, the Company
estimated its liability for losses and LAE using actuarial projections of
ultimate losses and LAE and other quantitative and qualitative analyses of
conditions expected to affect the future development of claims and related
expenses. The estimated liability for losses were based upon paid and case
reserve estimates for losses reported, adjusted through judgmental formulaic
calculations to develop ultimate loss expectations; related estimates of IBNR
losses and expected cash reserve developments based on past experience and
projected future trends; deduction of amounts for reinsurance placed with
reinsurers; and estimates received related to assumed reinsurance. Amounts
attributable to ceded reinsurance derived in estimating the liability for loss
and LAE were reclassified as assets in the consolidated balance sheets as
required by FAS No. 113. The liability for LAE was provided by estimating future
expenses to be incurred in settlement of claims provided for in the liability
for losses and was estimated using similar techniques.

The liabilities for losses and LAE and the related estimation methods were
continually reviewed and revised to reflect current conditions and trends. The
resulting adjustments were reflected in the operating results of the current
period. While management believed the liabilities for losses and LAE were
adequate to cover the ultimate liability, the actual ultimate loss costs may
vary from the amounts presently provided and such differences may be material.
However, as indicated elsewhere, on September 28, 2004, the New Jersey
Department placed MIIX in rehabilitation, which resulted in the New Jersey
Department having full control of MIIX operations.

The Company also has direct and assumed liabilities under covered extended
reporting endorsements associated with claims-made policy forms, which generally
provide at no additional charge, continuing coverage for claims-made insureds in
the event of death, disability or retirement. These liabilities are carried
within unearned premium reserves and are estimated through formula calculations
that have been verified by the Company's independent actuarial firm using
techniques, which possess elements of both loss reserves and pension
liabilities, and thus include additional assumptions for mortality, morbidity,
retirement, interest and inflation. Since the Company had no policies in force
as of December 31, 2003 or September 30, 2004, the Company had no liability with
respect to extended reporting endorsements.

INVESTMENTS. The Company designated its entire investment portfolio as
available-for-sale. As such, all investments are carried at their fair values.
The fair value of securities is based upon quoted market prices when available.
Where market prices or broker quotations are not available, the fair value is
estimated based upon discounted cash flow, applying current interest rates for
similar financial instruments with comparable terms and credit quality. The
estimated fair value of a financial instrument may be significantly different
from the amount that could be realized if the security were sold immediately.
Under the Order of Rehabilitation, which was entered on September 28, 2004, the
New Jersey Department has assumed control of the investment portfolio. As a
result, as of that date the

                                                                              13
<PAGE>

Company no longer has control over MIIX's investments, the liquidation of those
investments, or investment policy. The discussion set forth below does not
describe the management of MIIX's investment portfolio subsequent to September
28, 2004, as the New Jersey Department's approach to the management of that
portfolio is not known to the Company.

The Company has no securities classified as "trading" or "held-to-maturity."
Investments are recorded at the trade date.

Securities available-for-sale, deemed to have declines in fair value that are
other than temporary, are written down to fair value and a realized loss
recorded in operations. The fixed maturity securities to which these write-downs
apply are generally of investment grade quality at the time of purchase but, are
subsequently down graded by rating agencies to "below-investment grade." Factors
considered by the Company in determining whether declines in the fair value of
fixed maturity securities are other than temporary include: (1) the significance
of the decline, (2) the Company's ability and intent to retain the investment
for a sufficient period of time for it to recover, (3) the time period during
which there has been a significant decline in value, and (4) fundamental
analysis of the liquidity, business prospects and overall financial condition of
the issuer. Based upon these factors, securities that have indications of
potential impairment are subject to review. Where such analysis results in a
conclusion that declines in fair values are other than temporary, the security
is written down to fair value.

As the discussion above indicates, there are risks and uncertainties associated
with determining whether declines in the fair value of investments are other
than temporary. These include subsequent significant changes in general overall
economic conditions as well as specific business conditions affecting particular
issuers, future financial market effects such as interest rate spreads,
stability of foreign governments and economies, future ratings agency actions
and significant accounting, fraud or corporate governance issues that may
adversely affect certain investments. In addition, there are often significant
estimates and assumptions required by the Company to estimate the fair values of
securities, including projections of expected future cash flows and pricing of
private securities. The Company is routinely monitoring developments and
updating underlying assumptions and financial models based upon new information.

Premiums and discounts on investments (other than loan-backed and asset-backed
bonds) are amortized/accreted to investment income using the interest method
over the contractual lives of the investments. Realized investment gains and
losses are included as a component of revenues based on a specific
identification of the investment sold.

Short-term investments include investments maturing within one-year and other
cash and cash equivalent balances earning interest.

RECENT DEVELOPMENTS

The Company has experienced a number of adverse developments as a result of
unexpected and unprecedented increases in loss and LAE reserves over the past
four years related to prior years' experience. These increases have required the
Company to increase loss and LAE reserves in each of the last four years. For a
more detailed discussion of these events, see our Annual Report on Form 10-K for
2003.

During 2003, MIIX entered into an Order with the New Jersey Department that set
forth the framework for the regulatory monitoring of MIIX and established
certain operating limitations on MIIX. On September 28, 2004, the Superior Court
of New Jersey entered an Order placing MIIX into rehabilitation.

The trading of The MIIX Group's common stock was suspended at the opening of
business on April 28, 2003 by the NYSE because The MIIX Group was "below
criteria" as its total capitalization was less than $50 million over a 30-day
trading period and stockholders' equity was less than $50 million. The MIIX
Group's common stock now trades on the OTC Bulletin Board under the ticker
symbol "MIIX." See "Risks and Uncertainties."

During 2002, the Company engaged financial advisors to assist it in obtaining
offers for the Company's assets. No viable offers to make a significant
investment in the Company or to purchase all of the Company were received. In
2004, the Company engaged additional financial advisors to assist it in
exploring all available alternatives. The

                                                                              14
<PAGE>

Company continues to be interested in entertaining any and all offers by any
interested parties for its assets and/or for investment in the Company. In
connection with that exploration, the financial advisors have contacted more
than 50 prospective purchasers of assets of the Company or investors in the
Company. As a consequence of that effort, the Company has received one
indication of interest from MDAdvantage to acquire certain assets of the
Underwriter and one indication of an additional possible offer. The Company is
proceeding to negotiate with MDAdvantage the documentation relating to a
possible sale of the Underwriter's assets, subject to the receipt of all
necessary approvals and "higher or better offers" prior to closing. The Company
is also continuing to seek other buyers for its assets.

On September 28, 2004, the Superior Court of New Jersey entered an Order placing
MIIX, a subsidiary of The MIIX Group, into rehabilitation and naming the
Commissioner of the New Jersey Department as Rehabilitator with immediate and
exclusive control over the business and property of MIIX. The Order provides
that The MIIX Group and the Underwriter will continue to provide administrative
services to MIIX pursuant to the current Management Services Agreement until
terminated by the New Jersey Department after appropriate notice. The Order does
not stay payment of claims for any litigation currently pending against MIIX or
its insureds and does not bar claimants from filing new actions against MIIX
insureds. The Order, however, prohibits persons from filing any new action or
new claim directly against MIIX without permission of the Court. See "Risks and
Uncertainties."

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2003

The following comparative results are prior to the affects of the September 28,
2004 Order of Rehabilitation.

NET PREMIUMS EARNED. Net premiums earned were $(19.2) million for the three
months ended September 30, 2004, a decrease of approximately $21.2 million, from
$2.0 million for the three months ended September 30, 2003. The net decrease
consists of a decrease in direct premiums earned of $2.6 million and an increase
in ceded premiums earned of $18.6 million. The decrease in direct premiums
earned reflects the Company's cessation of writing or renewing policies during
2002.

MIIX's excess reinsurance contracts currently contain a provision allowing
reinsurers to offer additional reinsurance coverage that MIIX is obligated to
accept. In September and October 2004, the reinsurers initiated requests for
additional premiums in accordance with contract terms. The increase in ceded
premiums earned is due to the accrual of $20.3 million of additional premiums
ceded to reinsurers as a result of these requests. Reinsurers are prohibited
from canceling current reinsurance agreements or making additional premium
charges to MIIX under the September 28, 2004 Order of Rehabilitation.

There were no total written premiums for the three months ended September 30,
2004, a decrease of $0.3 million from total premiums written of $0.3 million for
the three months ended September 30, 2003. The decrease in total premiums
written primarily reflects the Company's cessation of writing or renewing
policies during the second quarter of 2002.

NET INVESTMENT INCOME. Net investment income decreased approximately $3.0
million, or 38.5%, to $4.8 million for the three months ended September 30, 2004
from $7.8 million for the same period in 2003. Average invested assets at
amortized cost decreased to approximately $524.8 million for the three months
ended September 30, 2004 compared to approximately $854.8 million for the same
period last year. The decrease in net investment income reflects the decline in
the total invested asset base during the third quarter of 2004 as compared to
the third quarter of 2003. The average annualized pre-tax yield on the
investment portfolio was 3.7% for the three months ended September 30, 2004 and
2003.

REALIZED INVESTMENT GAINS. Net realized investment gains were $1.8 million for
the three months ended September 30, 2004, a decrease in investment gains of
approximately $0.8 million, or 30.8%, compared to net realized investment gains
of $2.6 million for the same period in 2003. During the quarter ended September
30, 2004, the Company recorded realized gains of approximately $1.8 million. In
the third quarter of 2003, realized gains of approximately $5.2 million were
recognized due to sales of fixed maturity investments and realized losses of

                                                                              15
<PAGE>

$2.6 million included $1.7 million of other-than-temporary declines in
investment values, primarily as the result of continued poor performance in
collateralized bond and loan obligations.

OTHER REVENUE. Other revenue increased approximately $0.1 million, or 5.3%, to
$2.0 million for the three months ended September 30, 2004 from $1.9 million for
the same period last year. This net increase primarily results from
approximately $0.4 million associated non-insurance income of the Underwriter,
offset by a $0.3 million decrease relating to management services and related
contracts with MDAdvantage.

LOSS AND LOSS ADJUSTMENT EXPENSE (LAE). The provision for losses and LAE
increased $4.3 million, to $0.5 million for the three months ended September 30,
2004 from $(3.8) million for the three months ended September 30, 2003. The
provision for losses and LAE is net of ceded losses and LAE of $1.1 million and
$(5.0) million for the three months ended September 30, 2004 and 2003,
respectively. The increase in net loss and LAE for the three months ended
September 30, 2004 was composed of a decrease in gross losses and LAE of $1.7
million and a decrease in ceded losses of $6.0 million.

UNDERWRITING EXPENSES. Underwriting expenses increased $0.2 million, or 4.7%, to
$4.5 million for the three months ended September 30, 2004, from $4.3 million
for the three months ended September 30, 2003. The net increase for the quarter
ended September 30, 2004 primarily results from the increased professional and
advisory fees associated with MIIX's entry into rehabilitation.

FUNDS HELD CHARGES. Funds held charges related to the Company's aggregate
reinsurance contracts increased $9.7 million, or 194.0%, to $14.7 million for
the three months ended September 30, 2004 from $5.0 million for the three months
ended September 30, 2003. The increase is an adjustment to the interest charge
on the aggregate reinsurance treaties of $11.3 million, which is due to the
reinsurers' September and October 2004 request for additional premiums. 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 approximately $0.2 million, to
$(11,000) for the three months ended September 30, 2004, from $0.2 million for
the three months ended September 30, 2003, with the decrease due to MIIX
Healthcare Group, which ceased operations in 2003.

INCOME TAX PROVISION. The income tax benefit was $0.1 million for the three
months ended September 30, 2004, compared to an income tax provision of $1.7
million for the same period in 2003. The income tax benefit of $0.1 million in
the third quarter of 2004 reflects state income taxes.

NET INCOME. Net income was $288.8 million for the three months ended September
30, 2004, an increase of $281.8 million, from net income of $7.0 million for the
three months ended September 30, 2003 for the reasons discussed above and in
Note 7, Deconsolidation of MIIX and its Subsidiaries.

NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 2003

The following comparative results are prior to the affects of the September 28,
2004 Order of Rehabilitation.

NET PREMIUMS EARNED. Net premiums earned were $(19.9) for the nine months ended
September 30, 2004, a decrease of approximately $49.0 million, from $29.1
million for the nine months ended September 30, 2003. This net decrease consists
of a decrease in direct premiums earned of $24.2 million and an increase in
ceded premiums earned of $24.8 million. The decrease in direct premiums earned
reflects the Company's cessation of writing or renewing policies during 2002.
The increase in ceded premiums earned is due to the accrual of $20.3 million of
additional premiums ceded to reinsurers under MIIX's aggregate reinsurance
treaties.

Total premiums written were $(0.1) million for the nine months ended September
30, 2004, an increase of $0.6 million, or 85.7%, from total premiums written of
$(0.7) million for the nine months ended September 30, 2003. The negative total
premiums written in both periods reflects the Company's cessation of writing or
renewing policies during the second quarter of 2002 and primarily reflects
policy cancellations.

                                                                              16
<PAGE>

NET INVESTMENT INCOME. Net investment income decreased approximately $10.0
million, or 36.1%, to $17.7 million for the nine months ended September 30, 2004
from $27.7 million for the same period in 2003. Average invested assets at
amortized cost decreased to approximately $606.1 million for the nine months
ended September 30, 2004 compared to approximately $931.3 billion for the same
period last year. The decrease in net investment income reflects the decline in
the total invested asset base during the first nine months of 2004 as compared
to first nine months of 2003. The average annualized pre-tax yield on the
investment portfolio decreased to 3.9% for the nine months ended September 30,
2004 from 4.0% for the same period in 2003.

REALIZED INVESTMENT GAINS. Net realized investment gains were $10.9 million for
the nine months ended September 30, 2004, an increase in investment gains of
approximately $6.0 million, compared to net realized investment gains of $4.9
million for the same period in 2003. During the nine months ended September 30,
2004, the Company recorded realized gains of approximately $12.4 million
primarily due to sales of fixed maturity investments as a result of
modifications to the investment portfolio and recognized approximately $1.5
million of realized losses. In the nine months ended September 30, 2003,
realized gains of approximately $17.3 million were recognized due to sales of
fixed maturity investments and realized losses of $12.4 million included $10.4
million of other-than-temporary declines in investment values, of which $8.1
million was associated with Conseco / Green Tree Financial corporate bonds and
$2.1 million was attributable to collateralized bond obligations.

OTHER REVENUE. Other revenue increased approximately $0.2 million, or 4.0%, to
$5.2 million for the nine months ended September 30, 2004 from $5.0 million for
the same period last year. This net increase is primarily composed of an
increase of approximately $0.3 million associated with management services and
related contracts with MDAdvantage, offset by a $0.1 million reduction in
finance revenue.

LOSS AND LOSS ADJUSTMENT EXPENSE (LAE). The provision for losses and LAE
decreased $12.0 million, or 67.8%, to $5.7 million for the nine months ended
September 30, 2004 from $17.7 million for the nine months ended September 30,
2003. The provision for losses and LAE is net of ceded losses and LAE of $(6.3)
million and $(6.4) million for the nine months ended September 30, 2004 and
2003, respectively. The decrease in net loss and LAE for the nine months ended
September 30, 2004 was composed of a decrease in gross losses and LAE of $11.9
million and a decrease in ceded losses and LAE of $0.1 million.

UNDERWRITING EXPENSES. Underwriting expenses decreased $1.0 million, or 6.8%, to
$13.7 million for the nine months ended September 30, 2004, from $14.7 million
for the nine months ended September 30, 2003. The net decrease for the nine
months ended September 30, 2004 primarily results from the effects of all MIIX
policies expiring by December 31, 2003 and reductions in compensation and
benefit costs related to the restructuring and downsizing actions which began in
the first quarter of 2002.

FUNDS HELD CHARGES. Funds held charges related to the Company's aggregate
reinsurance contracts increased $9.8 million, or 66.7%, to $24.5 million for the
nine months ended September 30, 2004 from $14.7 million for the nine months
ended September 30, 2003. The increase is an adjustment to the interest charge
on the aggregate reinsurance treaties of $11.3 million, which is due to the
reinsurers' September and October 2004 request for additional premiums. 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 approximately $0.6 million, or 97.0%,
to $18,000 for the nine months ended September 30, 2004, from $0.6 million for
the nine months ended September 30, 2003 with the decrease due to MIIX
Healthcare Group, which ceased operations in 2003.

INCOME TAX PROVISION. The income tax provision was $8,000 for the nine months
ended September 30, 2004, compared to an income tax benefit of $2.6 million for
the same period in 2003. The income tax provision of $8,000 for the first nine
months of 2004 reflects state income taxes.

NET INCOME. Net income was $289.0 million for the nine months ended September
30, 2004, an increase of $267.3 million from net income of $21.7 million for the
nine months ended September 30, 2003 for the reasons discussed above and in Note
7, Deconsolidation of MIIX and its Subsidiaries.

                                                                              17
<PAGE>

FINANCIAL CONDITION

CASH AND INVESTED ASSETS. Aggregate invested assets at fair value, including
cash and short-term investments, were $5.2 million at September 30, 2004 and
$773.5 million at December 31, 2003. The net decrease of $768.3 million largely
resulted from the deconsolidation of MIIX from The MIIX Group (see Note 7,
Deconsolidation of MIIX and its Subsidiaries).

UNPAID LOSSES AND LAE, REINSURANCE RECOVERABLE ON UNPAID LOSSES AND LAE AND
FUNDS HELD UNDER REINSURANCE TREATIES. Gross unpaid losses and LAE were $0.9
million at September 30, 2004 and $1,219.0 million at December 31, 2003.
Reinsurance recoverable on unpaid losses and LAE was $0 at September 30, 2004
and $425.8 million at December 31, 2003. The net decrease in unpaid losses and
LAE reserves and in reinsurance recoverable is primarily attributable to the
deconsolidation of MIIX from The MIIX Group (see Note 7, Deconsolidation of MIIX
and its Subsidiaries).

STOCKHOLDERS' EQUITY (DEFICIENCY). Total stockholders' equity was $0.9 million
at September 30, 2004 and $(278.5) million at December 31, 2003. The net
increase of $279.4 million consisted primarily of the net income of $288.8
million which resulted primarily from the deconsolidation of MIIX from The MIIX
Group (see Note 7, Deconsolidation of MIIX and its Subsidiaries).

LIQUIDITY AND CAPITAL RESOURCES

The MIIX Group is a holding company whose assets primarily consist of all of the
capital stock of its subsidiaries. Cash flow needs at the holding company level
include corporate operating expenses. Prior to the Order of Rehabilitation, the
Company's principal sources of funds were dividends and other permissible
payments from its subsidiaries and revenues from its non-insurance operations.
Subsequent to the Order of Rehabilitation, the Company cannot receive payments
from MIIX without the approval of the Rehabilitator; accordingly, the Company's
principal source of funds is derived from the management contract with
MDAdvantage. The Company does not believe that its cash flow will be sufficient
to allow it to continue to operate. Accordingly, the Company continues the
wind-down of its business activities. See " Risks and Uncertainties."

MIIX, while in supervised runoff through September 28, 2004, needed to have cash
and liquid assets available to meet its obligations to policyholders in
accordance with contractual obligations, in addition to having funds available
to meet ordinary operating costs. The primary sources of the Company's liquidity
are net investment income, proceeds from the maturity or sale of invested assets
and recoveries from reinsurance. Funds are used to pay primarily losses and LAE,
operating expenses and reinsurance premiums. The Company's net cash flow used in
operating activities were approximately $(261.5) million and $(212.7) million
for the nine months ended September 30, 2004 and 2003, respectively. The
decrease in cash flow during 2004 was primarily the result of increased loss
payments, reflecting both the maturation of the Company's expansion book of
business and the settlement of several higher severity cases, lower investment
income and a cessation in premium collection reflecting runoff of MIIX. Because
of the inherent unpredictability related to the timing of the payment of claims,
it is not unusual for cash flow from operations for a medical malpractice
insurance company to vary, perhaps substantially, from year to year. However, as
a result of the Order of Rehabilitation on September 28, 2004, the Company no
longer has control over the operations of MIIX and, accordingly, the financial
position and results of operations of MIIX will no longer be reflected in the
Company's financial statements after September 28, 2004.

The Company held collateral of $0 and $292.1 million at September 30, 2004 and
December 31, 2003, respectively, in the form of funds held and $0 and $161.2
million at September 30, 2004 and December 31, 2003, respectively, in the form
of letters of credit, for recoverable amounts on ceded unpaid losses and LAE
under certain reinsurance contracts. Under the contracts, and as a result of the
downgrade of the Company's A.M. Best rating to below B+ during the first quarter
of 2002, reinsurers requested that assets supporting the funds withheld account
be placed in trust. The Company has established the required trust accounts in
accordance with contract provisions. Under the terms of the reinsurance
contracts, the funds held are credited with interest at contractual rates
ranging from 6.0% to 8.6%, which is recorded as an expense in the period
incurred.

                                                                              18
<PAGE>

During 2002, The MIIX Group's Board of Directors suspended the payments of
dividends to stockholders. The Company does not expect to pay dividends for the
foreseeable future as it continues to wind-down.

RISKS AND UNCERTAINTIES

The Company's business is subject to a number of risks and uncertainties.
However, many of these risks and uncertainties were impacted by the September
28, 2004 Order of Rehabilitation. The risks include:

The Company may not be able to retain the key employees necessary to operate the
Company.

The loss of any of its key executives and/or senior managers may materially
adversely impact the Company's ability to continue to manage its business.

The Company may not be able to maintain adequate cash flow and liquidity.

The Company's scope of operations has been significantly diminished. As a result
of the entry of the Order of Rehabilitation, the Company no longer controls the
operations of MIIX, the process of resolving claims, or the management of MIIX's
investment portfolio. As a result, the Company's cash flow has decreased
significantly. The Company does not believe that it has adequate cash to
continue to operate.

The Company is subject to litigation that could have a material adverse effect
on its financial condition.

In 2002, a stockholder of the Company filed a putative class action suit against
the Company, among other plaintiffs, alleging securities fraud, breaches of
fiduciary duty, violations of New Jersey antitrust laws and alleged
misrepresentations and omissions of material facts in various of the Company's
filings with the SEC. See "Legal Proceedings."

Because of these risks and uncertainties, the Company's financial statements and
the discussion in Management's Discussion and Analysis of Financial Condition
and Results of Operations should not be relied upon by investors as indicating
the Company's ability to operate.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information in the paragraphs that follow represent historical information
and do not discuss the change resulting from the Order of Rehabilitation on
September 28, 2004.

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 September 30, 2004 is composed of a
fixed-maturity U.S. Government Agency security, accounting for 37.9% of total
investments at market value and short-term investments representing 62.1% of
total investments at market value.

At September 30, 2004 and December 31, 2003, the Company had net unrealized
gains on its fixed-maturity investment portfolio of $0.1 million and $14.9
million, respectively.

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Asset and liability matching is an important part of the Company's portfolio
management 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.

There were no material changes to the Company's financial market risks between
December 31, 2003 and September 30, 2004.

ITEM 4.    CONTROLS AND PROCEDURES

As of September 30, 2004, and with the participation of management, The MIIX
Group's Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of the design and operation of The MIIX Group's
disclosure controls and procedures (as defined in the Exchange Act Rule 15d-14).
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that The MIIX Group's disclosure controls and procedures
are effective in providing them with timely material information that is
required to be disclosed in reports The MIIX Group files under Section 15(d) of
the Exchange Act.

There were no changes in The MIIX Group's internal control over financial
reporting during the period ended September 30, 2004 that have materially
affected, or that are reasonably likely to materially affect, The MIIX Group's
internal control over financial reporting. There were no significant changes in
The MIIX Group's internal controls or in other factors that could significantly
affect these controls subsequent to the date of the evaluation.

PART II    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

GLASSER V. THE MIIX GROUP, INC. ET AL. On February 5, 2003, a shareholder of the
Company instituted a putative class action in the United States District Court
for the District of New Jersey against the Company, present and former directors
and officers of the Company, the Medical Society of New Jersey ("MSNJ") and
Fox-Pitt Kelton, Inc. ("FPK"), which acted as financial advisor to the Company.
The complaint alleges that the Company and its directors and officers engaged in
securities fraud, breaches of fiduciary duty and violations of New Jersey
antitrust laws in connection with the MIIX Advantage contracts and alleged
misrepresentations and omissions of material fact in various SEC filings by the
Company. On May 13, 2003, another shareholder of the Company instituted a
separate putative class action in the United States District Court for the
District of New Jersey (WASSERSTRUM V. THE MIIX GROUP, INC., ET AL.) against the
Company and certain of its officers alleging securities fraud. The law firms
representing plaintiffs in the two actions agreed to consolidate the plaintiffs'
claim against the Company. On August 12, 2003, a Consolidated Amended Complaint
(the "Complaint") was filed by the plaintiffs against the Company, present and
former directors and officers of the Company and MSNJ alleging securities fraud
based on alleged misrepresentations and omissions of material fact in various
SEC filings by the Company concerning the Company's financial condition, its
statement of reserves, the pricing of its policies, the MIIX Advantage contracts

                                                                              20
<PAGE>

and other matters. The Complaint seeks certification of a plaintiff class of the
Company's shareholders from July 30, 1999 to September 12, 2002 and unspecified
damages, pre- and post-judgment interest, attorneys' fees and costs. On October
21, 2003, the Company filed a motion to dismiss the Complaint, which is
currently pending. On December 11, 2003, the Court ordered that the case be
submitted to mediation and stayed all proceedings pending mediation. The parties
are engaging in mediation discussions.

FOX-PITT KELTON V. THE MIIX GROUP, INC. On February 10, 2003, FPK, which had
been engaged as financial advisor to the Company, instituted suit against the
Company in the Supreme Court of New York to recover fees allegedly due from the
Company as a result of the investment banking services it rendered in connection
with the Company's efforts to dispose of assets or obtain capital and the
agreements entered into between the Company and MIIX Advantage. FPK filed a
motion for summary judgment in its favor, which was denied by the Court. On
April 28, 2004, the suit was dismissed with prejudice.

WEISFELD V. THE MIIX GROUP, INC., ET AL. On November 20, 2002, a former
executive of MSNJ filed suit in the Superior Court of New Jersey against MSNJ
and certain of its officers, including MSNJ officers who were also MIIX Group
board members, alleging wrongful discharge and defamation. On March 19, 2003,
plaintiff filed pleadings amending the Complaint to include The MIIX Group as a
defendant, alleging that The MIIX Group tortiously interfered with his
employment relationship and that its alleged influence over MSNJ was a causative
factor in his discharge. Motions to dismiss plaintiff's Amended Complaint were
filed by all defendants. By order dated August 19, 2003, the Court granted the
defendants' motions to dismiss and the entire Complaint was dismissed with
prejudice. On October 2, 2003, plaintiffs filed a notice of appeal of the
dismissal of the Complaint with the Superior Court of New Jersey, Appellate
Division. Oral argument in the Appellate Division was held on October 25, 2004.
The parties are awaiting the Court's decision.

Given the Company's current financial condition, any negative outcome of the
litigation requiring the payment of damages could have a material adverse effect
on the Company. The Company may also be a party to litigation from time to time
in the ordinary course of business.






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<PAGE>

ITEM 6.   EXHIBITS


       Exhibit                             Exhibit
       Number                            Description

        3.1     Restated Certificate of Incorporation (incorporated by reference
                to Exhibit 3.1 filed with the Company's registration statement
                on Form S-1 filed on October 28, 1998.)

        3.2     Bylaws of The MIIX Group as amended and restated (incorporated
                by reference to Exhibit 3.2 filed with the Company's Annual
                Report on Form 10-K for the year ended December 31, 2002, filed
                on April 1, 2003.)

        31.1*   Certification of Chief Executive Officer under Section 302 of
                the Sarbanes-Oxley Act of 2002.

        31.2*   Certification of Chief Financial Officer under Section 302 of
                the Sarbanes-Oxley Act of 2002.

        32.1*   Certification of Chief Executive Officer under Section 906 of
                the Sarbanes-Oxley Act of 2002.

        32.2*   Certification of Chief Financial Officer under Section 906 of
                the Sarbanes-Oxley Act of 2002.

                * Filed herewith.

        In accordance with SEC Release No. 33-8238, Exhibits 32.1 and 32.2 are
        to be treated as "accompanying" this report rather than "filed" as part
        of the report.



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                                   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/ Patricia A. Costante
                                     -----------------------------------------
                                      Chairman and Chief Executive Officer
                                      (principal executive officer)


                                  By:     /s/ Allen G. Sugerman
                                     -----------------------------------------
                                      Chief Financial Officer
                                      (principal financial and accounting
                                      officer)


                                  Dated:  November 15, 2004




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