<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 JUNE 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 of incorporation or          (I.R.S. employer
                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.............................................13

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........20

ITEM 4.   CONTROLS AND PROCEDURES.............................................21

PART II   OTHER INFORMATION...................................................22

ITEM 1.   LEGAL PROCEEDINGS...................................................22

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K....................................23

SIGNATURES ...................................................................24




                                                                               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 may be insufficient 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>



PART I        FINANCIAL INFORMATION

ITEM 1.       CONSOLIDATED FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
                                                                                    JUNE 30,     DECEMBER 31,
                                                                                  ---------------------------
                                                                                      2004         2003
                                                                                  -----------    -----------
<S>                                                                               <C>            <C>
                                     ASSETS                                         (Unaudited)
Securities available-for-sale:
   Fixed-maturity investments, at fair value (amortized cost: 2004 - $418,817;
     2003 - $680,797) .........................................................   $   422,976    $   695,735
   Equity investments, at fair value (cost: 2004 - $2,781; 2003 - $2,781) .....         3,256          3,226
   Short-term investments, at cost which approximates fair value ..............       131,141         56,468
                                                                                  -----------    -----------
         Total investments ....................................................       557,373        755,429

Cash ..........................................................................        22,715         18,081
Accrued investment income .....................................................         3,764          6,520
Premium receivable, net .......................................................           903            708
Reinsurance recoverable on unpaid losses ......................................       307,602        425,785
Reinsurance recoverable on paid losses, net ...................................        41,179         31,874
Other assets ..................................................................        40,926         40,242
                                                                                  -----------    -----------
         Total assets .........................................................   $   974,462    $ 1,278,639
                                                                                  ===========    ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

LIABILITIES

Unpaid losses and loss adjustment expenses ....................................   $ 1,018,597    $ 1,218,957
Funds held under reinsurance treaties .........................................       202,252        292,126
Other liabilities .............................................................        42,289         46,077
                                                                                  -----------    -----------
         Total liabilities ....................................................     1,263,138      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 - 14,072,168 shares outstanding; 2003 - 14,497,536 shares
   outstanding) ...............................................................           166            166
Additional paid-in capital ....................................................        43,322         40,270
Retained earnings (deficit) ...................................................      (301,156)      (301,402)
Treasury stock, at cost (2004 - 2,465,837 shares; 2003 - 2,040,469 shares) ....       (28,611)       (25,115)
Stock purchase loans and unearned stock compensation ..........................        (1,828)        (2,617)
Accumulated other comprehensive income ........................................          (569)        10,177
                                                                                  -----------    -----------
         Total stockholders' equity (deficiency) ..............................      (288,676)      (278,521)
                                                                                  -----------    -----------
         Total liabilities and stockholders' equity (deficiency) ..............   $   974,462    $ 1,278,639
                                                                                  ===========    ===========

SEE ACCOMPANYING NOTES
</TABLE>


                                                                               4
<PAGE>

<TABLE>
<CAPTION>
                                               THE MIIX GROUP, INCORPORATED

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

                                                               THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                                    JUNE 30,                             JUNE 30,
                                                         ----------------------------       -----------------------------
                                                           2004                2003              2004               2003
                                                         --------            --------       ----------            -------
<S>                                                      <C>                 <C>            <C>                   <C>
REVENUES
Net premiums earned..............................        $   (700)           $  7,277       $     (723)           $27,137
Net investment income............................           5,282               8,915           12,949             19,860
Realized investment gains........................           2,068               4,359            9,148              2,355
Other revenue....................................           1,365               1,485            3,169              3,123
                                                         --------            --------       ----------            -------

     Total revenues..............................           8,015              22,036           24,543             52,475
                                                         --------            --------       ----------            -------

EXPENSES
Losses and loss adjustment expenses..............           5,101               4,600            5,220             21,563
Underwriting expenses............................           4,231               4,676            9,211             10,419
Funds held charges...............................           5,577               5,543            9,756              9,678
Other expenses...................................               3                 223               29                469
                                                         --------            --------       ----------            -------

     Total expenses..............................          14,912              15,042           24,216             42,129
                                                         --------            --------       ----------            -------

Income (loss) before income taxes................          (6,897)              6,994              327             10,346
Income tax provision (benefit)...................              48              (2,425)              81             (4,313)
                                                         --------            --------       ----------            -------
     Net income (loss) ..........................        $ (6,945)            $ 9,419        $     246            $14,659
                                                         ========             =======        =========            =======

Basic earnings (loss) per share..................          $(0.51)              $0.70            $0.02              $1.10
                                                         ========             =======        =========            =======

Diluted earnings (loss) per share................          $(0.51)              $0.65            $0.02              $1.03
                                                         ========             =======        =========            =======

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 SIX MONTHS ENDED JUNE 30, 2004
                           (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                        (UNAUDITED)


                                  NUMBER OF      COMMON     ADDITIONAL     RETAINED
                                    SHARES       STOCK        PAID-IN      EARNINGS
                                 OUTSTANDING     ISSUED       CAPITAL      (DEFICIT)
                                 -----------  ------------  -----------  -------------
<S>                               <C>              <C>        <C>          <C>
Balance at January 1, 2004.....   14,497,536      $166        $40,270      $(301,402)
  Net income...................                                                  246

  Other comprehensive
      income (loss), net of
      tax:

    Net unrealized
      appreciation on
      securities available-
      for-sale, net of
      deferred taxes of $0.....

    Stock purchase and loan
      agreement activities.....     (425,368)

    Stock compensation and
      treasury stock activity..                                 3,052
                                 -----------  ------------  -----------  -------------
Balance at June 30, 2004......    14,072,168      $166        $43,322      $(301,156)
                                 ===========  ============  ===========  =============

(CONT'D)

                                                  STOCK
                                                PURCHASE
                                                LOANS AND       ACCUMULATED         TOTAL
                                                UNEARNED          OTHER         STOCKHOLDERS'
                                  TREASURY        STOCK        COMPREHENSIVE        EQUITY
                                    STOCK      COMPENSATION       INCOME         (DEFICIENCY)
                                 -----------  --------------  ---------------  ----------------

Balance at January 1, 2004.....   $(25,115)      $(2,617)         $10,177         $(278,521)
  Net income...................                                                         246

  Other comprehensive
      income (loss), net of
      tax:

    Net unrealized
      appreciation on
      securities available-
      for-sale, net of
      deferred taxes of $0.....                                   (10,746)          (10,746)

    Stock purchase and loan
      agreement activities.....                      (28)                               (28)

    Stock compensation and
      treasury stock activity..     (3,496)          817                                373
                                 -----------  --------------  ---------------  ----------------
Balance at June 30, 2004......    $(28,611)      $(1,828)         $  (569)        $(288,676)
                                 ===========  ==============  ===============  ================


SEE ACCOMPANYING NOTES


                                                                                              6
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                        THE MIIX GROUP, INCORPORATED

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

                                                                                       SIX MONTHS ENDED
                                                                                           JUNE 30,
                                                                                  ------------------------
                                                                                     2004           2003
                                                                                  ---------      ---------
<S>                                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..................................................................     $     246      $  14,659
Adjustments to reconcile net income to net cash used in operating activities:
Other stock based compensation ..............................................           443           (177)
Unpaid losses and loss adjustment expenses ..................................      (200,360)      (140,890)
Unearned premiums ...........................................................             0        (22,497)
Premium deposits ............................................................             0           (209)
Premium receivable, net .....................................................          (195)         6,249
Reinsurance balances, net ...................................................        19,004         17,719
Deferred policy acquisition costs ...........................................             0          1,016
Realized gains ..............................................................        (9,148)        (2,355)
Depreciation, accretion and amortization ....................................         1,460          1,569
Accrued investment income ...................................................         2,756          1,337
Other assets ................................................................          (684)        (2,767)
Other liabilities ...........................................................        (3,787)        (6,905)
                                                                                  ---------      ---------
Net cash used in operating activities .......................................      (190,265)      (133,251)
                                                                                  ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from fixed-maturity investment sales ...............................       342,029        306,833
Proceeds from fixed-maturity investments matured, called or prepaid .........        49,043         97,590
Proceeds from equity investment sales .......................................             0          2,023
Cost of investments acquired ................................................      (121,405)      (291,589)
Change in short-term investments, net .......................................       (74,670)        45,146
Net payable for securities ..................................................             0        (20,582)
                                                                                  ---------      ---------
Net cash provided by investing activities ...................................       194,997        139,421
                                                                                  ---------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds employee stock loans ...............................................             4             32
Purchase of Treasury Stock...................................................          (102)            (8)
                                                                                  ---------      ---------
Net cash used in financing activities .......................................           (98)            24
                                                                                  ---------      ---------

Net change in cash ..........................................................         4,634          6,194
Cash, January 1 .............................................................        18,081          4,667
                                                                                  ---------      ---------
Cash, June 30 ...............................................................     $  22,715      $  10,861
                                                                                  =========      =========
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, MIIX Insurance Company ("MIIX"), Lawrenceville
Holdings, Inc. ("LHI"), 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 (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.

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.

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.


                                                                               8
<PAGE>

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 will make no
provision for the excess of liabilities over assets of MIIX as of September 30,
2004. Accordingly, as of September 30, 2004, the Company will begin using the
equity method of accounting for its investment in MIIX and will record its
investment in MIIX at $-0-, and the deficiency in equity that existed as of that
date will be 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. The table below provides
an unaudited pro forma as if the Company treated MIIX as a discontinued
operation as of and for the six months ended June 30, 2004.



                                                                               9
<PAGE>

<TABLE>
<CAPTION>
                                   THE MIIX GROUP, INCORPORATED
                                    CONSOLIDATED BALANCE SHEETS
                                          (IN THOUSANDS)
                                            (UNAUDITED)

                                                                              JUNE 30, 2004
                                                                              -------------
                                                                     AS REPORTED       PRO FORMA
                                                                     -----------      -----------
                                     ASSETS
<S>                                                                  <C>              <C>
Total investments ..............................................     $   557,373      $     5,239
Cash ...........................................................          22,715               48
Reinsurance recoverable on unpaid losses .......................         307,602                0
Reinsurance recoverable on paid losses, net ....................          41,179                0
Other assets ...................................................          45,593            3,690
                                                                     -----------      -----------
         Total assets ..........................................     $   974,462      $     8,977
                                                                     ===========      ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

LIABILITIES
Unpaid losses and loss adjustment expenses .....................     $ 1,018,597      $     1,048
Funds held under reinsurance treaties ..........................         202,252                0
Other liabilities ..............................................          42,289            8,427
                                                                     -----------      -----------
         Total liabilities .....................................       1,263,138            9,475
                                                                     -----------      -----------

STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock ...................................................             166              166
Additional paid-in capital .....................................          43,322           43,322
Retained earnings (deficit) ....................................        (301,156)         (13,766)
Treasury stock .................................................         (28,611)         (28,611)
Stock purchase loans and unearned stock compensation ...........          (1,828)          (1,828)
Accumulated other comprehensive (loss) income ..................            (569)             219
                                                                     -----------      -----------
         Total stockholders' equity (deficiency) ...............        (288,676)            (498)
                                                                     -----------      -----------
         Total liabilities and stockholders' equity (deficiency)     $   974,462      $     8,977
                                                                     ===========      ===========


                                                                                              10
</TABLE>
<PAGE>


                          THE MIIX GROUP, INCORPORATED
                        CONSOLIDATED STATEMENTS OF INCOME
                                 (IN THOUSANDS)
                                   (UNAUDITED)


                                            SIX MONTHS ENDED
                                               JUNE 30, 2004
                                       --------------------------
                                       AS REPORTED    PRO FORMA
                                       ----------     ----------
REVENUES
Net premiums earned ...............     $   (723)     $      0
Net investment income .............       12,949            32
Realized investment gains .........        9,148             0
Other revenue .....................        3,169         2,650
                                        --------      --------
     Total revenues ...............       24,543         2,682
                                        --------      --------

EXPENSES
Losses and loss adjustment expenses        5,220           (85)
Underwriting and other expenses ...        9,240         5,165
Funds held charges ................        9,756             3
                                        --------      --------
     Total expenses ...............       24,216         5,083
                                        --------      --------

Income before income taxes ........          327        (2,401)
Income tax provision ..............           81            81
                                        --------      --------

     Net income ...................     $    246      $ (2,482)
                                        ========      ========

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 first six months of 2004, 355,092 shares of restricted stock vested,
having a per share market value of $0.64. Also in the first half 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 first six months of
2003, 1,190,982 restricted shares of The MIIX Group common stock were granted,
having a per share market value of $1.29 resulting in an increase to unearned
stock compensation of $1.5 million, a reduction to treasury stock of $15.2
million, which was calculated using the average value reduction of additional
paid-in capital for the difference of $13.7 million. Also during the first six
months of 2003, 24,306 options were cancelled and 0 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 value of The MIIX Group common stock on the effective dates
of the transactions.

                                                                              11
<PAGE>


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 six months ended June 30:

<TABLE>
<CAPTION>
                                                                           2004          2003
                                                                         -------      ----------
    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                                      <C>          <C>
          Net income, as reported ..................................     $   246      $   14,659
          Total stock-based employee compensation expense determined
            under fair value based method for all awards, net of
            related tax effects ....................................        (167)             19
                                                                         -------      ----------
          Pro forma net gain .......................................     $    79      $   14,678
                                                                         =======      ==========
          Basic earnings per share:
            As reported ............................................     $  0.02      $     1.10
            Pro forma ..............................................        0.01            1.10
          Diluted earnings per share:
            As reported ............................................     $  0.02      $     1.03
            Pro forma ..............................................        0.01            1.03
          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 1.9% 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 28.2% to 34.8%; and a three-year weighted
average expected life of the options.

4.   EARNINGS PER SHARE

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,
                                                           ---------------------      ---------------------
                                                              2004         2003         2004         2003
                                                           --------      --------     --------     --------
<S>                                                        <C>           <C>          <C>          <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
----------------------------------------
Numerator for basic and diluted earnings (loss) per
   share of common stock:
     Net income (loss) ...............................     $ (6,945)     $  9,419     $    246     $ 14,659
                                                           ========      ========     ========     ========

Denominator:
     Denominator for basic earnings (loss) per share
        of common stock - weighted-average shares
        outstanding ..................................       13,719        13,363       13,658       13,366
Effect of dilutive securities:
     Stock options and nonvested restricted stock ....            0         1,201            0          831
                                                           --------      --------     --------     --------

     Denominator for diluted earnings (loss) per share
        of common stock - adjusted weighted-average
        shares outstanding ...........................       13,719        14,564       13,658       14,197
                                                           ========      ========     ========     ========

Basic earnings (loss) per share of common stock ......     $  (0.51)     $   0.70     $   0.02     $   1.10
                                                           ========      ========     ========     ========

Diluted earnings (loss) per share of common stock ....     $  (0.51)     $   0.65     $   0.02     $   1.03
                                                           ========      ========     ========     ========
</TABLE>

                                                                              12
<PAGE>

5.   COMPREHENSIVE INCOME (LOSS)

The Company has classified its entire investment portfolio as
available-for-sale. Unrealized gains (losses) at June 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.

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

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                     JUNE 30,                    JUNE 30,
                                                              ----------------------      ----------------------
                                                                2004           2003         2004          2003
                                                              --------      --------      --------      --------
                                                                  (in thousands)              (in thousands)
<S>                                                           <C>           <C>           <C>           <C>
Net income (loss) .......................................     $ (6,945)     $  9,419      $    246      $ 14,659

Other comprehensive income (loss):
  Unrealized holding appreciation (depreciation) arising
     during period (net of tax) .........................      (14,352)        4,856        (1,598)        2,074

  Reclassification adjustment for gains realized in net
     income (loss) (net of tax) .........................       (2,068)       (4,359)       (9,148)       (2,355)
                                                              --------      --------      --------      --------

Net unrealized appreciation (depreciation) arising during
     the period ended June 30 (net of tax) ..............      (16,420)          497       (10,746)         (281)
                                                              --------      --------      --------      --------

Comprehensive income (loss) .............................     $(23,365)     $  9,916      $(10,500)     $ 14,378
                                                              ========      ========      ========      ========
</TABLE>

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.

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



                                       13
                                                                          <PAGE>

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.

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

FINANCIAL REPORTING. 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 provide 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.

REINSURANCE. Reinsurance recoverables include 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 are
estimated in a manner consistent with the claim liability associated with the
reinsured policy. Reinsurance contracts do not relieve the Company from its
primary obligations to policyholders. Failure of reinsurers to honor their
obligations could result in losses to the Company. The Company evaluates the
financial condition of its reinsurers and monitors concentrations of credit risk
with respect to the individual reinsurers, which participate in its ceded
programs to minimize its exposure to significant losses from reinsurer
insolvencies. The Company holds collateral in the form of letters of credit or
trust accounts for amounts recoverable from reinsurers that are not designated
as authorized reinsurers by the domiciliary Departments of Insurance.

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. The Company estimates 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 is 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 are reclassified as assets in the
consolidated balance sheets as required by FAS No. 113. The liability for LAE is
provided by estimating future expenses to be incurred in settlement of claims
provided for in the liability for losses and is estimated using similar
techniques.

The liabilities for losses and LAE and the related estimation methods are
continually reviewed and revised to reflect current conditions and trends. The
resulting adjustments are reflected in the operating results of the current
period. While management believes the liabilities for losses and LAE are
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



                                                                              14
<PAGE>

include additional assumptions for mortality, morbidity, retirement, interest
and inflation. Since the Company had no policies in force as of December 31,
2003 or June 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 Company no longer has control over its 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.


                                                                              15
<PAGE>


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

NET PREMIUMS EARNED. Net premiums earned were $(0.7) million for the three
months ended June 30, 2004, a decrease of approximately $8.0 million, from $7.3
million for the three months ended June 30, 2003. This net decrease consists of
a decrease in direct premiums earned of $7.3 million and an increase in ceded
premiums earned of $0.7 million. The decrease in direct premiums earned reflects
the Company's cessation of writing or renewing policies during 2002.

Total premiums written were approximately $(12,000) for the three months ended
June 30, 2004, a decrease of $0.2 million, from total premiums written of $0.2
million for the three months ended June 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 and primarily reflects policy
cancellations.

NET INVESTMENT INCOME. Net investment income decreased approximately $3.6
million, or 40.8%, to $5.3 million for the three months ended June 30, 2004 from
$8.9 million for the same period in 2003. Average invested assets at amortized
cost decreased to approximately $590.5 million for the three months ended June
30, 2004 compared to approximately $928.3 million for the same period last year.
The decrease in net investment income reflects the combined effects of a decline
in market yields and a decline in the total invested asset base during the
second quarter of 2004 as compared to second quarter 2003. The average
annualized pre-tax yield on the investment portfolio was 4.1% for the three
months ended June 30, 2004 from 4.0% for the same period in 2003.

                                                                              16
<PAGE>

REALIZED INVESTMENT GAINS. Net realized investment gains were $2.1 million for
the three months ended June 30, 2004, a decrease in investment gains of
approximately $2.3 million, or 52.6%, compared to net realized investment gains
of $4.4 million for the same period in 2003. During the quarter ended June 30,
2004, the Company recorded realized gains of approximately $3.0 million
primarily due to sales of fixed maturity investments as a result of
modifications to the investment portfolio. During the same period, the Company
recognized approximately $0.9 million of realized losses. In the second quarter
of 2003, realized gains of approximately $6.0 million were recognized due to
sales of fixed maturity investments and realized losses of $1.6 million included
$1.3 million of other-than-temporary declines in investment values, primarily
attributable to collateralized bond obligations and Conseco/Green Tree Financial
corporate bonds.

OTHER REVENUE. Other revenue decreased approximately $0.1 million, or 6.7%, to
$1.4 million for the three months ended June 30, 2004 from $1.5 million for the
same period last year. This net decrease is primarily composed of an increase of
approximately $0.5 million associated with management services and related
contracts with MDAdvantage, offset by a $0.6 million reduction in renewal rights
revenue.

LOSS AND LOSS ADJUSTMENT EXPENSE (LAE). The provision for losses and LAE
increased $0.5 million, or 10.9%, to $5.1 million for the three months ended
June 30, 2004 from $4.6 million for the three months ended June 30, 2003. The
provision for losses and LAE is net of ceded losses and LAE of $(5.1) million
and $0.3 million for the three months ended June 30, 2004 and 2003,
respectively. The decrease in net loss and LAE for the three months ended June
30, 2004 was composed of a decrease in gross losses and LAE of $4.9 million and
an decrease of ceded losses and LAE of $5.4 million. The Company's negative
ceded losses for the three months ended June 30, 2004 primarily relates to a
negative ceded loss of $3.5 million related to the commutation of the 1995
aggregate reinsurance treaty and a $1.5 million decrease in ceded reserves
related to the 1994 specific excess of loss treaty.

UNDERWRITING EXPENSES. Underwriting expenses decreased $0.5 million, or 10.6%,
to $4.2 million for the three months ended June 30, 2004, from $4.7 million for
the three months ended June 30, 2003. The net decrease for the quarter ended
June 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 $0.1 million, or 1.8%, to $5.6 million for the
three months ended June 30, 2004, from $5.5 million for the three months ended
June 30, 2003. 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 were approximately $29,000 and $0.2 million for
the three months ended June 30, 2004 and 2003, respectively, with the decrease
due to the MIIX Healthcare Group, which ceased operations in 2003.

INCOME TAX PROVISION. The income tax provision was $48,000 for the three months
ended June 30, 2004, compared to an income tax benefit of $2.4 million for the
same period in 2003. The income tax provision of $48,000 in the second quarter
of 2004 reflects state income taxes.

NET INCOME (LOSS). Net loss was $6.9 million for the three months ended June 30,
2004, a decrease of $16.3 million, or 173.4%, from net income of $9.4 million
for the three months ended June 30, 2003 for the reasons discussed above.

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2003

NET PREMIUMS EARNED. Net premiums earned were $(0.7) million for the six months
ended June 30, 2004, a decrease of approximately $27.8 million, from $27.1
million for the six months ended June 30, 2003. This net decrease consists of a
decrease in direct premiums earned of $21.6 million and an increase in ceded
premiums earned of $6.2 million. The decrease in direct premiums earned reflects
the Company's cessation of writing or renewing policies during 2002.


                                                                              17
<PAGE>

Total premiums written were approximately $(0.1) for the six months ended June
30, 2004, an increase of $0.8 million, from total premiums written of $(0.9)
million for the six months ended June 30, 2003. The increase in total premiums
written primarily reflects the Company's cessation of writing or renewing
policies during the second quarter of 2002 and primarily reflects policy
cancellations, which were greater in 2003 than 2004.

NET INVESTMENT INCOME. Net investment income decreased approximately $7.0
million, or 34.8%, to $12.9 million for the six months ended June 30, 2004 from
$19.9 million for the same period in 2003. Average invested assets at amortized
cost decreased to approximately $646.3 million for the six months ended June 30,
2004 compared to approximately $959.1 million for the same period last year. The
decrease in net investment income reflects the combined effects of a decline in
market yields and a decline in the total invested asset base. The average
annualized pre-tax yield on the investment portfolio was 4.1% for the six
months ended June 30, 2004 and 2003.

REALIZED INVESTMENT GAINS. Net realized investment gains were $9.1 million for
the six months ended June 30, 2004, an increase in investment gains of
approximately $6.7 million, or 279.2%, compared to net realized investment gains
of $2.4 million for the same period in 2003. During the six months ended June
30, 2004, the Company recorded realized gains of approximately $10.6 million
primarily due to sales of fixed maturity investments as a result of
modifications to the investment portfolio. During the same period, the Company
recognized approximately $1.5 million of realized losses. In the six months
ended of 2003, realized gains of approximately $12.2 million were recognized due
to sales of fixed maturity investments. During the same period, the Company
recognized approximately $9.8 million of realized losses. The realized losses
included $8.7 million of other-than-temporary declines in investment values, of
which $7.7 million was attributable to Conseco/Green Tree Financial corporate
bonds and $1.0 million to collateralized bond obligations.

OTHER REVENUE. Other revenue increased approximately $0.1 million, or 3.2%, to
$3.2 million for the six months ended June 30, 2004 from $3.1 million for the
same period last year. This net increase is primarily composed of an increase of
approximately $1.1 million associated with management services and related
contracts with MDAdvantage, offset by a $1.0 million reduction in renewal rights
revenue.

LOSS AND LOSS ADJUSTMENT EXPENSE (LAE). The provision for losses and LAE
decreased $16.4 million, or 75.9%, to $5.2 million for the six months ended June
30, 2004 from $21.6 million for the six months ended June 30, 2003. The
provision for losses and LAE is net of ceded losses and LAE of $(5.2) million
and $(11.4) million for the six months ended June 30, 2004 and 2003,
respectively. The decrease in net loss and LAE for the six months ended June 30,
2004 was composed of a decrease in gross losses and LAE of $10.2 million and an
increase of ceded losses and LAE of $6.2 million. The Company's negative ceded
losses for the six months ended June 30, 2004 primarily relates to a negative
ceded loss of $3.5 million related to the commutation of the 1995 aggregate
reinsurance treaty and a $1.5 million decrease in ceded reserves related to the
1994 specific excess of loss treaty.

UNDERWRITING EXPENSES. Underwriting expenses decreased $1.2 million, or 11.5%,
to $9.2 million for the six months ended June 30, 2004, from $10.4 million for
the six months ended June 30, 2003. The net decrease for the six months ended
June 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 $0.1 million, or 1.0%, to $9.8 million for the
six months ended June 30, 2004, from $9.7 million for the six months ended June
30, 2003. 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 $0.5 million, or 93.8%, to
approximately $29,000 for the six months ended June 30, 2004, from $0.5 million
for the six months ended June 30, 2003, with the decrease due to MIIX Healthcare
Group, which ceased operations in 2003.


                                                                              18
<PAGE>

INCOME TAX PROVISION. The income tax provision was $0.1 million for the six
months ended June 30, 2004, compared to an income tax benefit of $4.3 million
for the same period in 2003. The income tax provision of $0.1 million in the six
months ended June 30, 2004 reflects state income taxes.

NET INCOME. Net income was $0.2 million for the six months ended June 30, 2004,
a decrease of $14.5 million, or 98.6%, from net income of $14.7 million for the
six months ended June 30, 2003 for the reasons discussed above.

FINANCIAL CONDITION

CASH AND INVESTED ASSETS. Aggregate invested assets at fair value, including
cash and short-term investments, were $580.1 million at June 30, 2004 and $773.5
million at December 31, 2003. The net decrease of $193.4 million largely
resulted from the sale of fixed-maturity investments to meet accelerating claims
settlements.

Fixed-maturity investments available for sale at fair value, including
short-term investments, were $554.1 million, or 99.4% of the investment
portfolio of the Company, as of June 30, 2004. At that date, the average credit
quality of the fixed income portfolio was "AA," as defined by an independent
rating agency, while the total portfolio effective duration (excluding
short-term investments) was 3.3 years.

UNPAID LOSSES AND LAE, FUNDS HELD UNDER REINSURANCE TREATIES, REINSURANCE
RECOVERABLE ON UNPAID LOSSES AND LAE AND REINSURANCE RECOVERABLE ON PAID LOSSES.
Gross unpaid losses and LAE were $1,018.6 million at June 30, 2004 and $1,219.0
million at December 31, 2003. The net decrease in unpaid losses and LAE reserves
was primarily attributable to claims paid activity. Funds held under reinsurance
contracts decreased from $292.1 million at December 31, 2003 to $202.3 million
at June 30, 2004. Reinsurance recoverable on unpaid losses and LAE was $307.6
million at June 30, 2004 and $425.8 million at December 31, 2003. The net
decrease in reinsurance recoverable on unpaid losses is primarily attributable
to decreases in ceded loss and LAE reserves. Reinsurance recoverable on paid
losses increased $9.3 million in the first six months of 2004 due to increases
in ceded paid losses to reinsurers. Substantially all of the reinsurance
recoverables at June 30, 2004 are collateralized by the funds held under
reinsurance treaties and letters of credit.

STOCKHOLDERS' EQUITY (DEFICIENCY). Total stockholders' deficiency was $(288.7)
million at June 30, 2004 and $(278.5) million at December 31, 2003. The net
increase in the deficiency of $10.2 million consisted primarily of a change in
unrealized net depreciation of investments of $10.7 million.

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 $(190.3) million and $(133.3) million
for the six months ended June 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



                                                                              19
<PAGE>

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's investments consisted primarily of fixed-maturity securities. The
Company's investment strategy sought to maximize after-tax income through
holding an investment grade, intermediate term, diversified, taxable bond
portfolio, while maintaining an adequate level of liquidity. At June 30, 2004,
the portfolio had an average credit quality of "AA," an average duration of 2.5
years, and an annualized yield of 4.1%.

The Company held collateral of $202.3 million and $292.1 million at June 30,
2004 and December 31, 2003, respectively, in the form of funds held, and $147.8
million and $161.2 million at June 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.

During 2002, The MIIX Group's Board of Directors suspended the payments of
dividends to shareholders. 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.



                                                                              20
<PAGE>

The Company's investment portfolio at June 30, 2004 is primarily composed of
fixed-maturity securities, consisting of 75.9% of total investments at market
value. U.S. government and tax-exempt bonds represent 16.2%, corporate bonds
represent 24.5% and mortgage backed and asset backed securities represent 59.3%
of fixed-maturity investments. Short-term investments represent 23.5% of total
investments at market value and equity investments, primarily common stock,
accounts for the remaining 0.6%.

At June 30, 2004 and December 31, 2003, the Company had net unrealized gains on
its fixed-maturity investment portfolio of $4.2 million and $14.9 million,
respectively.

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, 2004 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 process. The Company utilizes financial modeling and
scenario analysis to closely monitor the effective modified duration of assets
and liabilities in order to minimize 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 these risks 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.

The Company also held a number 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.

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

ITEM 4. CONTROLS AND PROCEDURES

As of June 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 June 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.


                                                                              21
<PAGE>

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
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.



                                                                              22
<PAGE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        a.  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.

        b. Reports on Form 8-K

        A current report on form 8-K, dated April 14, 2004, was filed by the
        company to furnish the text of a press release issued April 14, 2004,
        announcing the continuing review of financials and delay of filing
        annual report on Form 10-K.

        A current report on Form 8-K, dated May 14, 2004, was filed by the
        Company to furnish the text of a press release issued May 14, 2004,
        announcing an acquisition offer, extension on filing of statutory
        statements and appointment of administrative supervisor.



                                                                              23
<PAGE>


                                   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



                                                                              24