SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

  X      Annual Report Pursuant to Section 13 or 15(d) of
-----    The Securities Exchange Act of 1934

For the fiscal year ended December 31, 1999

                                       Or

         Transition Report Pursuant to Section 13 or 15(d) of
-----    The Securities Exchange Act of 1934

                         Commission file number 33-6534

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
             (Exact name of registrant as specified in its charter)

         Barbados                                         Not Applicable
(State or other jurisdiction                     (I.R.S. employer identification
of incorporation or organization)                            number)


One Financial Place
Collymore Rock                                            Not Applicable
St. Michael, Barbados, W.I.                                 (Zip Code)
(Address of principal
executive offices)

Registrant's telephone number, including area code (246) 436-4895


Securities registered pursuant to Section 12(b) of the Act:

                                                            Name of each
Title of each class                                 Exchange on which registered

        None                                                    None


Securities registered pursuant to Section 12(g) of the Act:

                                      None

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     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 such shorter  period that the registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.   YES  X  No
                                         ---    ---

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]


     Aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of March 1, 2000, was $1,995,000.*


     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date.

                 Class                         As of March 1, 2000
                 -----                         -------------------
     Common Stock, no-par value                       2,000
     Participating Stock, no-par value               26,600


----------
* Based on current offering price of $75 per share.

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                                     PART I

Item 1.  BUSINESS

INTRODUCTION

Motors Mechanical Reinsurance Company,  Limited (the "Company") was incorporated
in Barbados on June 12, 1986. It became  registered in Barbados as an insurer on
June 30, 1986 and commenced insurance operations on December 11, 1987.

The  business  of the  Company is the  assumption  of motor  vehicle  mechanical
service   agreements  arising  under  insurance  policies  reinsured  by  Motors
Insurance Corporation ("MIC") to the extent such policies are attributable to an
MIC  Mechanical  account  in  respect  of which a series of shares is issued and
outstanding (the "Policies"). These policies are issued either to General Motors
Corporation or affiliates ("GM") or to automobile dealers, reinsured by MIC, and
retroceded  to the Company.  Shares of the  Company's  Participating  Stock (the
"Shares")  are sold to  persons  designated  by  owners of motor  vehicle  sales
franchises  with respect to which MIC  maintains an MIC  Mechanical  Account.  A
separate series is created for Shares  relating to each MIC Mechanical  Account,
and a separate  "Subsidiary Capital Account" is maintained for each such series.
The  profitability  of the Company  reflects both  underwriting  and  investment
experience, which is allocated among the Subsidiary Capital Accounts.

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PAGE 4

THE RETROCESSION

The Retroceding  Company.  MIC, the retroceding  company under the  Retrocession
Agreement described below, is a stock insurance company organized under the laws
of Michigan. All of MIC's outstanding stock is owned by GMAC Insurance Holdings,
Inc., a subsidiary of General Motors Acceptance Corporation which, in turn, is a
wholly  owned  subsidiary  of GM. MIC,  directly  and through its  subsidiaries,
offers  property  and  casualty  coverages  in all 50 states and the District of
Columbia,  Canada,  Europe, Latin America and Asia Pacific. MIC consistently has
been awarded A.M. Best Company's  insurance  financial rating of A + (Superior),
one of the highest possible ratings.

The Retrocession Agreement -- Principal Agreement.  The Company has entered into
a "quota share" retrocession  agreement (the "Agreement") which became effective
as of December  11,  1987.  Pursuant to the  Agreement,  MIC  retrocedes  to the
Company,  and the  Company is  obligated  to assume,  MIC's  risks in respect of
policies  issued by any MIC  subsidiary  and  reinsured  by MIC that cover motor
vehicle  mechanical  service  agreements,  to the extent  that risks  under such
policies are  attributable  to an MIC  Mechanical  Account in respect of which a
series of Shares is issued and outstanding.  MIC retrocedes 100% of the risk and
the Company  receives  75% of the  original  gross  premium,  reduced by agents'
commissions, if any, and cancellations.  The remaining 25% of the net premium is
retained by MIC as a ceding commission. The Company assumes 75% of the risk with
respect to these policies and MIC pays 56.25% of the net premium at the time the
policies are written.  The remaining 25% of the risk is ceded to the Company and
MIC pays 18.75% of the net premium as the premiums are earned.

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PAGE 5

Net  settlements  between the Company and MIC are made quarterly and accordingly
will fluctuate quarter to quarter.

The Agreement may be terminated at any time by mutual consent of the parties, or
by either party upon 30 days written notice.  Upon termination of the Agreement,
MIC and the Company will remain bound by their respective  obligations under the
Agreement with respect to risks retroceded prior to the close of business on the
date of termination.  However, risks not yet retroceded to the Company under the
Agreement shall remain risks of MIC.

The  Retrocession  Agreement --  Supplemental  Agreement.  MIC from time to time
enters into agreements with Franchise owners for which an MIC Mechanical Account
is  established,  pursuant  to which  MIC,  acting  for  itself and on behalf of
certain of its  subsidiaries,  agrees to cede or retrocede to another  insurance
company  mutually  satisfactory to MIC and the respective  Franchise  owners the
unexpired liability on service contracts, insured under the Policies, sold after
the date  specified  in each  such  agreement.  This  liability  can be ceded or
retroceded to dealer-owned  companies  organized  specifically with respect to a
particular  Franchise  or, if a series of Shares is issued which  relates to the
Franchise,   pursuant  to  an  agreement   between  MIC  and  the  Company  (the
"Supplemental  Retrocession Agreement").  For this purpose,  unexpired liability
means MIC's  liability in respect of the remaining  period of coverage under the
Policy  as of  the  effective  date  of  the  cession.  Under  the  Supplemental
Retrocession Agreement, unexpired liability in respect

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PAGE 6

of the Policies is assumed on the same basis as risks  retroceded to the Company
under the principal Retrocession Agreement.

Types of Risks Subject to  Retrocession.  Coverages  assumed under the Agreement
are limited to service  contracts or insurance  policies insured or reinsured by
MIC that provide  indemnification  against  specific  motor  vehicle  mechanical
repairs  not covered by  manufacturer's  new vehicle  warranties.  Such  service
contracts or insurance  policies  often provide  additional  coverages,  such as
towing and rental allowances.

Loss Reserves.  Reserves are balance sheet liabilities representing estimates of
amounts  needed in the future to pay claims with respect to insured events which
have occurred as of the balance sheet dates.

For purposes of establishing  loss reserves,  the Company relies upon the advice
of MIC. Loss reserves are established after periodic actuarial reviews, based on
judgments of the effects of technological change, manufacturers' warranties, and
MIC's historical  experience with motor vehicle mechanical  service  agreements.
Consequently,  the  determination  of loss reserves is an estimate and a process
inherently  subject to a number of highly variable  factors.  Any adjustments to
reserves are  reflected in the  operating  results for the periods in which they
become known.

The  Company's  incurred  loss ratios  (losses  incurred as a percentage  of net
premium  earned) on all  mechanical  business  for the years ended  December 31,
1999, 1998, and 1997 were 80%, 78.8% and 68.1% respectively.

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The  following  table sets forth an analysis of changes in the loss reserves for
the years ended December 31, 1999, 1998 and 1997:

                                                     Year Ended
                                    -------------------------------------------
                                      12/31/99        12/31/98        12/31/97
                                      --------        --------        --------
Beginning balance in
reserves for losses.......          $ 5,393,818     $ 5,421,160     $ 4,284,304
                                    -----------     -----------     -----------
Add-provision for losses
incurred related to:

   Current claim year.....           47,211,542      45,843,093      31,904,950

   Prior claim years......             (427,390)       (290,547)       (746,024)
                                    -----------     -----------     -----------
      Total...............           46,784,152      45,552,546      31,158,926
                                    -----------     -----------     -----------
Deduct-paid losses
attributable to:

   Current claim year.....           43,514,155      40,767,738      27,024,981

   Prior claim years......            3,938,576       4,812,150       2,997,089
                                    -----------     -----------     -----------
      Total...............           47,452,731      45,579,888      30,022,070

Ending balance in reserves
for losses................          $ 4,725,239     $ 5,393,818     $ 5,421,160
                                    ===========     ===========     ===========

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The  following  table  analyzes the  development  of losses and loss  adjustment
expenses from January 1, 1994 through December 31, 1999.

<TABLE>
<CAPTION>
                                                           Years Ended
                         --------------------------------------------------------------------------------
                          12/31/94      12/31/95      12/31/96      12/31/97      12/31/98      12/31/99
                          --------      --------      --------      --------      --------      --------
<S>                      <C>           <C>           <C>           <C>           <C>           <C>
Liability for unpaid
  claims and claims
  adjustment expense     $2,660,270    $3,480,334    $4,284,304    $5,421,160    $5,393,818    $4,725,239
                         ==========    ==========    ==========    ==========    ==========    ==========
Paid (cumulative) in
  subsequent year(s)     $2,149,200    $2,903,588    $2,997,089    $4,812,150     3,938,576

Estimated unpaid
  liability as of
  year end*                 401,910       534,495       541,191       318,463     1,027,852
                         ----------    ----------    ----------    ----------    ----------
Cumulative Redundancy    $  109,160    $   42,251    $  746,024    $  290,547    $  427,390
                         ==========    ==========    ==========    ==========    ==========
</TABLE>

*/ Because mechanical breakdown claims are generally paid within 90 days of when
they are  incurred,  liability  for unpaid  claims  incurred  in prior  years is
negligible. Accordingly, liability for unpaid claims incurred in all prior years
has been combined at each year end.

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The table shows initial  estimated  reserves at December 31, 1999,  1998,  1997,
1996,  1995, and 1994 and amounts paid on claims  unsettled at each prior period
end.  Claims  are  typically  processed  for  payment  at the time the  claim is
reported.  Therefore,  the recorded claim  liability at each year end represents
the  estimated  incurred  but not  reported  claims and claims in the process of
payment. The cumulative  deficiency or redundancy represents the total change in
reserve estimates covering prior years.

The policies  reinsured by the Company are written for multiple years (up to six
years) and losses do not occur  equally  over the period for which the policy is
written but tend to be clustered in the later years. Therefore,  loss experience
for prior years may not be indicative of that for future years.

INVESTMENT INCOME

A major  source of  income  to an  insurance  company  is  income  earned on the
investment  of amounts not  currently  required to meet losses or expenses.  The
principal  funds  available for investment by the Company come from  accumulated
capital  and the  cumulative  excess  of  premiums  collected  over  losses  and
operating expenses paid.

Effective  February 8, 2000, the Company  entered into an investment  management
agreement with BlackRock  International,  Ltd.  ("BlackRock")  pursuant to which
BlackRock  manages the investment and reinvestment of the Company's fixed income
portfolio in accordance with the Company's investment guidelines. BlackRock is a
subsidiary of BlackRock,  Inc. which had approximately  $164.5 billion of assets
under  management as of December 31, 1999.  BlackRock,  Inc.  manages  assets on
behalf of more than 3,000 institutions and 150,000 individuals through a variety
of equity, fixed income, liquidity and

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PAGE 10

alternative  investment,  and  mutual  fund  products.  Under  the  terms of the
investment management  agreement,  BlackRock charges a management fee calculated
as a percentage  of the net asset value of the  Company's  portfolio  managed by
BlackRock.  The applicable percentage is based on the aggregate amount of assets
managed  by  BlackRock  on behalf  of the  Company  and  certain  other  related
entities. The applicable percentage is tiered on the first $50 million of assets
under management on behalf of the foregoing  entities and lower on all assets in
excess of $50 million.  Prior to the effective  date of the Company's  agreement
with BlackRock,  the Company's fixed income  portfolio was managed by Rothschild
Asset Management Limited ("Rothschild").

The  Company's  funds  are  invested  in a  manner  consistent  with  investment
guidelines  that are proposed by the  Investment  Committee  for adoption by the
Board.  In  February of 2000,  the Company  began  implementing  new  investment
guidelines for its fixed income portfolio.  Under these guidelines,  the Company
is permitted to invest in U.S.  Treasury and agency  securities,  agency and non
agency  mortgage  backed   securities,   obligations  or  domestic  and  foreign
corporations,  asset-backed  securities,  taxable municipal securities and money
market instruments. In addition to these fixed income securities,  pursuant to a
plan adopted in early 1999,  the Company may invest a portion of its  investment
portfolio  in equity  securities  provided  that the  portion  of the  Company's
investment portfolio consisting of equity securities may not exceed 30%.

Under the investment  guidelines for fixed income  securities in effect prior to
the  implementation of the new investment  guidelines,  the Company had invested
primarily in U.S.  dollar-denominated  securities  issued  outside of the United
States  by   non-United   States   private   or   governmental   issuers,   U.S.
dollar-denominated  back  certificates  of deposit  issued by foreign  banks and
foreign

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PAGE 11

branches of U.S. banks, and, in certain situations,  non-U.S. dollar denominated
bonds, on a fully  currency-hedged  basis. It is anticipated  that the Company's
fixed  income  investment   portfolio  will  not  be  completely   converted  to
investments permitted under the new guidelines until the latter half of 2000.

The  Investment  Committee  reviews on a regular basis and,  where  appropriate,
recommends  for  Board  approval  revisions  to the  investment  objectives  and
guidelines  for  management of the Company's  funds.  There can be no assurance,
however, as to whether a particular investment  objective,  once adopted, can be
achieved or that adverse factors would not cause a decrease in the overall value
of the Company's investment portfolio.

ALLOCATIONS TO SUBSIDIARY CAPITAL ACCOUNTS

The Company has  established  a Subsidiary  Capital  Account with respect to the
Common Stock as a class,  and  establishes  such an account with respect to each
series of Shares at the time a series is issued. Subsidiary Capital Accounts are
maintained solely for the purpose of the allocations described below, and do not
serve any other legal or accounting  function.  None of the Company's assets are
segregated or earmarked with respect to those accounts.

The  consideration  received by the Company  upon the  issuance of a  particular
series of Shares and the Common Stock as a class are allocated to the Subsidiary
Capital Account for that series or class. Items of income and expense and losses
attributable to insurance  underwriting  activities are determined and allocated
to the  Subsidiary  Capital  Accounts as of the end of each quarter.  Investment
experience,  and other  items of  income  and  expense,  gains  and  losses  and
distributions with respect to the Capital Stock, are determined and allocated to
the Subsidiary Capital Accounts as of the end of

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PAGE 12

each  quarter.  All such  accounting  determinations  are made using  accounting
principles generally accepted in the United States, unless otherwise required by
the Articles.

For  purposes of the  following  description,  items shall be  "related"  to the
Subsidiary  Capital  Account for the series  identified  with the MIC Mechanical
Account to which such items can be attributed.

(1) Allocations with respect to underwriting activities are made as follows:

(a) With respect to premiums  ceded by MIC to the  Company,  100% to the related
Subsidiary Capital Account; provided, however, that an amount equal to 1-1/3% of
those  premiums,  net of related ceding  commissions,  are subtracted  from such
Subsidiary  Capital Account and allocated to the Subsidiary  Capital Account for
the Common Stock.

(b) With respect to any agents' or brokers' commissions, commissions recaptured,
unearned premiums, reinsurance premiums ceded, and any United States excise tax,
100% to the related Subsidiary Capital Account.

(c) With respect to losses incurred,  and any amount of losses recovered through
salvage,  subrogation,  reimbursement  or otherwise one hundred  percent  (100%)
shall be allocated to the related Subsidiary Capital Account. For the purpose of
this section (1)(c), losses incurred includes both paid and unpaid (reported and
unreported) losses.

(d) With respect to return premiums,  98-2/3% to the related  Subsidiary Capital
Account and 1-1/3% to the Subsidiary Capital Account for the Common Stock.

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(2) Any expenses or liabilities  attributable to day-to-day Company  operations,
excluding any United States Federal income taxes,  shall be allocated  among all
Subsidiary  Capital  Accounts  for the  Shares pro rata in  accordance  with the
number  of  series  issued  and  outstanding  at the end of the  fiscal  quarter
immediately  preceding  the fiscal  quarter in which the expense or liability is
incurred,  provided,  that for  purposes  of such  allocation,  series of shares
issued at any time during the twelve  calendar  months  preceding the end of the
fiscal  quarter in which the expense or  liability  is incurred  and series with
respect to which  unearned  premium  is zero as of the date of such  allocation,
shall be excluded.

(3) Any United States Federal income tax liability (and any interest  thereon or
any  penalties  related  thereto)  is  allocated  among the  Subsidiary  Capital
Accounts based upon the relative  contribution  of each of those accounts to the
taxable  income of the Company upon which the tax (or any interest or penalties)
is imposed.

(4) Any expenses or liabilities attributable to the sale and issuance of Shares,
including  but not  limited  to the costs of  compliance  with  regulations  and
requirements of the Securities and Exchange Commission and state securities laws
(but not  including  ongoing  periodic  reporting  costs),  are allocated to the
Subsidiary Capital Account for the Common Stock;  however,  MIC may undertake to
pay such expenses.

(5) Any  expenses or  liabilities  of the Company  not  allocable  in the manner
described in  paragraphs 2 through 4 above are  allocated  among the  Subsidiary
Capital Accounts on the basis of the relative balances of those accounts as of

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PAGE 14

the end of the quarter  preceding  the date on which the expense or liability is
incurred.

(6) (a) Investment  income, net of any direct investment  expense,  is allocated
among  the  Subsidiary  Capital  Accounts  pro  rata  based  upon  the  relative
Investment Asset Balance (as defined in subparagraph (b) below) of each of those
accounts as of the last day of the quarter  preceding  the quarter for which the
investment income is being allocated.  For these purposes, net investment income
includes realized (but not unrealized) gains and losses.

(b) The Investment Asset Balance of each Subsidiary  Capital Account is equal to
the capital and surplus of each account, increased by:

(i) the unearned  portions of the written  premiums that have been  collected by
the  Company  attributable  to those  accounts as of the last day of the quarter
preceding  the  quarter  for which the  income  is being  allocated,  net of any
applicable commissions and taxes;

(ii) the outstanding loss reserves  attributable to each of those accounts as of
the last day of the quarter  preceding the quarter for which the income is being
allocated; and

(iii) any other outstanding liability that has been charged to the account as of
the last day of the quarter  preceding the quarter for which the income is being
allocated.

(7) (a) If, after the credits and charges  described in paragraphs 1-6 above are
made to the Subsidiary Capital Accounts there exists a deficit in

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PAGE 15

one or more of the accounts,  then each such deficit is allocated to and charged
against:

(i) first, the Subsidiary  Capital Account for the Common Stock to the extent of
Restricted Earned Surplus (the phrase  "Restricted Earned Surplus" refers to the
portion of the earned surplus, if any, in the Subsidiary Capital Account for the
Common  Stock equal to that 1-1/3% of the premiums  ceded to the Company  during
the  immediately  preceding  five-year  period  which  was  subtracted  from the
Subsidiary  Capital  Accounts for the Shares pursuant to paragraph (1)(a) above,
net of losses  allocated  to that  account  during such  period  pursuant to the
allocation  procedure described in this paragraph (7) and net of return premiums
allocated  to  that  Account  during  such  period  pursuant  to the  allocation
procedure described in paragraph (1)(d) above);

(ii) then, the Subsidiary  Capital Accounts for the Shares, pro rata, based upon
the relative earned premiums  allocated to each such account for the quarter for
which the allocation is being made, provided,  however, that only accounts which
have positive balances are taken into account for purposes of this allocation;

(iii)  then,  the  remaining  Subsidiary  Capital  Accounts  for the Shares with
positive  balances as of the last day of the quarter for which the allocation is
being made, pro rata, based upon such balances; and

(iv) then,  to the extent  necessary,  the  Subsidiary  Capital  Account for the
Common Stock.

(b) If, as a result of an allocation  of a deficit as described in  subparagraph
(ii) or (iii) of paragraph (a) above, a deficit is created in one

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PAGE 16

or more of the Subsidiary  Capital Accounts,  then the resulting  deficit(s) are
further allocated in the manner provided in that subparagraph  before applying a
subsequent subparagraph.

(c)  Notwithstanding  the  foregoing,  if any Subsidiary  Capital  Account for a
series of Shares had a deficit  that was  allocated  to and charged  against the
Restricted  Earned Surplus or, after January 1, 1995, to the Subsidiary  Capital
Account for any series of Shares,  then at the end of any succeeding quarter for
which that account  otherwise  would show an account  balance greater than zero,
the balance is reallocated to the Restricted Earned Surplus until all reductions
of that  surplus  attributable  to that  Subsidiary  Capital  Account  have been
restored and thereafter,  to the Subsidiary Capital Accounts for the Shares, pro
rata based on the relative amount of deficits allocated to such accounts,  until
all reductions of such  Subsidiary  Capital  Accounts after January 1, 1995 have
been restored.

Thus, a loss in a Subsidiary  Capital  Account which exceeds the balance in that
account is  absorbed  by other  Subsidiary  Capital  Accounts,  in  general,  as
follows:  The amount of such excess  losses is charged  first to the  Restricted
Earned Surplus  portion of the Subsidiary  Capital  Account of the Common Stock.
Any remaining  losses,  should the Restricted  Earned  Surplus be exhausted,  is
allocated among the Subsidiary Capital Accounts of other  participating  series.
Any then unabsorbed losses are charged to the Subsidiary  Capital Account of the
Common Stock.

Funds  drawn  from the  Restricted  Earned  Surplus  or the  Subsidiary  Capital
Accounts for the Shares in the manner  described above must be restored from the
Subsidiary  Capital  Account  that drew the funds if at any time it returns to a
positive balance.

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(8) (a) Dividends,  payments upon redemption or liquidation  (described  below),
and any other  distributions  with respect to the Capital Stock are allocated to
the Subsidiary Capital Account for the class or series with respect to which the
dividend, payment or distribution was made.

(b) Where all Shares of a series are repurchased by the Company  pursuant to its
right of first refusal or redeemed in accordance  with the Company's  procedures
for  redemption,  the Subsidiary  Capital Account for that series is terminated.
Thereafter,  all  underwriting  income and expenses,  and losses that would have
been allocated to the  terminated  account,  are allocated  among the Subsidiary
Capital  Accounts of the existing  series of Shares pro rata based upon relative
earned premiums  attributable to each of those accounts for the calendar quarter
in which the item was earned or incurred;  provided, however, that a net deficit
for any such  period is  allocated  to the  Subsidiary  Capital  Account for the
Common Stock (to the extent of Restricted  Earned Surplus) before allocating any
remaining  deficits to the  Subsidiary  Capital  Accounts for the  participating
series.

Using the procedures  described  above,  the Company has allocated items of gain
and loss to the  Subsidiary  Capital  Account for each  series.  Initially  each
Account had a balance of $7,500  representing  the amount paid for the Shares of
that  series.  During  the year  ended  December  31,  1999,  $3,519,136  of net
underwriting losses and $671,587 of administrative expenses were allocated among
the series of Shares  outstanding  during the year ended  December 31, 1999, and
$655,755 of net investment  income was allocated among such series of Shares and
the Common Stock.

As of December 31, 1999, 165 series of Shares  outstanding had balances  greater
than or equal to $7,500 (ranging from $7,641 to $389,764) and 101 of such

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PAGE 18

series had balances less than $7,500 (ranging from $7,399 to zero). (The amounts
in the Subsidiary Capital Accounts can fluctuate substantially and therefore may
not be  indicative  of future  accumulated  amounts.) At December  31, 1999,  an
aggregate of $4,201,365  had been advanced from the  Restricted  Earned  Surplus
(which forms a portion of the Account  established for the Common Stock owned by
MIC) to 123 Subsidiary  Capital  Accounts and remained  outstanding at that date
including  net deficits of $2,901,638  associated  with 51 series of Shares that
have been redeemed.  As of December 31, 1999,  $6,226,105 of aggregate  deficits
has been  reallocated  among the Subsidiary  Capital  Accounts of the Shares and
remained  outstanding.  Of this amount  $5,528,657  is available to be recovered
from deficit accounts should they return to profitability and to the extent that
the risk fund is repaid in full.

The  Subsidiary  Capital  Account  for the Common  Stock had, at the time it was
established, a balance of approximately $200,000,  representing the capital paid
in by MIC for the 2,000 shares of the Common Stock issued to it. That Subsidiary
Capital  Account  is not  affected  directly  by  underwriting  gains and losses
attributable to the various  Subsidiary  Capital  Accounts  related to series of
Shares,  but is affected by those gains and losses indirectly to the extent that
one of the Subsidiary  Capital Accounts for a series of Shares incurs a deficit,
in which case an allocation  to the  Subsidiary  Capital  Account for the Common
Stock will result, in the manner described above.

The  allocations  of income and  expense,  gains and losses,  and  distributions
described  above are subject to approval by the Board,  and when so approved are
considered final and conclusive and will be binding on all holders of Shares for
all purposes  including without  limitation any redemption of Shares pursuant to
the Company's procedures for redemption.

<PAGE>

PAGE 19

Barbados  insurance law requires that the Company maintain certain levels of net
assets,  calculated without regard to unrealized gains or losses. The Company is
currently in compliance with these requirements.  However, in the event that the
Company is unable to comply with such  requirements  in the  future,  it has the
right to  reduce  the  business  related  to a  Subsidiary  Capital  Account  by
retrocession or any other means to the extent necessary to permit the Subsidiary
Capital Account to meet its pro rata share of the Company's required capital and
surplus.

EMPLOYEES

The Company does not have any full-time employees. Rather, the Company relies on
Aon Insurance Managers  (Barbados) Ltd. (the "Manager") to handle its day-to-day
operations.  (See "Business of the Company -- Insurance  Management  Agreement,"
below.) In addition, corporate secretarial services for the Company are provided
by Colybrand  Company Services Limited of St. Michael,  Barbados.  The Company's
Board of Directors and the committees thereof,  however,  remain responsible for
the establishment and implementation of policy decisions.

COMPETITION

The insurance business is extremely competitive. MIC management believes that at
present, MIC and its subsidiaries are, as a group, one of the largest mechanical
repair  insurers of new GM vehicles in the United States.  There are other major
companies  offering  similar  coverage.  Because the  insurance  business of the
Company is limited to the assumption of certain motor vehicle mechanical service
agreement  reinsurance  business ceded by MIC, the  profitability of the Company
depends to a large degree on the success  experienced by MIC and its affiliates
in competing with those other insurers.

<PAGE>

PAGE 20

Many commercial  insurance groups are seeking to capture  additional  mechanical
insurance  business by offering to assist automobile dealers in the formation of
their  own  dealer-owned   reinsurance  companies.   MIC  has  assisted  in  the
establishment of such companies for a number of qualified dealers.  However, MIC
believes that  participation in the Company  represents a practical  alternative
for  dealers  who  do not  have  the  available  capital,  insurance  management
expertise  or  time  for  the  personal  involvement  necessary  for  their  own
reinsurance company.

INSURANCE MANAGEMENT AGREEMENT

The Company has entered into an Insurance  Management Agreement (the "Management
Agreement")  with the  Manager,  pursuant  to which  the  Manager  collects  and
disburses  funds  on  behalf  of the  Company,  provides  accounting,  clerical,
telephone, facsimile, information management and other services for the Company,
and  advises  and  consults  with the  Company  in regard to all  aspects of the
Company's  retrocession  activities.  The current Management  Agreement is for a
continuous  term  subject to  termination  by either  party upon 90 days advance
written notice.

Pursuant to the Management Agreement,  the Manager has undertaken to maintain an
office in  Barbados  to  perform  its  duties.  Further,  during the term of the
Management  Agreement  and generally  for a period of one year  thereafter,  the
Manager has agreed not to provide  management  or  accounting  services  for any
other company which, by the nature of its operations,  is offering,  insuring or
reinsuring motor vehicle  mechanical  service agreements or extended warranty or
related  coverages on a  multi-state  basis in the United  States or Canada with
respect to motor vehicles sold by franchised GM dealerships.  Under the terms of
the Management Agreement, the Company pays the Manager a fixed annual fee plus a
monthly variable fee based on the number of outstanding series of

<PAGE>

PAGE 21

Shares at each  calendar  month end. For the year ended  December 31, 1999,  the
Company incurred fees payable to the Manager in the amount of $237,360.

The Manager is  responsible  for the payment of the salaries of its officers and
employees and all office and staff overhead and other costs  attributable to its
services on the  Company's  behalf.  However,  out-of-pocket  expenses,  such as
telephone,  facsimile,  postage,  courier  delivery,  travel and other items are
borne by the Company on an expense reimbursement basis.

The Manager  performs  services  similar to those  performed for the Company for
several other entities.  The Manager has fourteen  employees.  In addition,  the
Manager may draw upon the  resources of its  affiliates as needed to provide the
services contemplated under the Management Agreement. No employee of the Manager
devotes all of his or her time to the  business  of the  Company.  However,  the
Manager  is  obligated  to devote  all  employee  time  necessary  to ensure the
performance of the Manager's duties under the Management Agreement.  The Manager
is subject to the control and direction of the Board.

The Manager has served in that capacity since 1986. The Manager was incorporated
in Barbados in 1984, and is an affiliate of the Aon Group of Companies  ("Aon"),
an international insurance brokerage and insurance consulting firm. Aon, through
its  subsidiaries,   offers  and  insures  motor  vehicle   mechanical   service
agreements,  extended  warranty and related  coverages  with respect to vehicles
sold by  automobile  dealerships  in the United  States.  Under the terms of the
Management  Agreement  the Manager  will treat all  information  concerning  the
business of the Company as confidential  and will not disclose such  information
to Aon or any Aon affiliate without consent of the Company.

<PAGE>

PAGE 22

BARBADOS REGULATION AND TAXES

The  Company's  business  is subject to  regulation  under the  Barbados  Exempt
Insurance  Act,  1983, as amended (the "Exempt  Insurance  Act").  The principal
requirements  of the Exempt  Insurance  Act require the Company to maintain  its
principal office in Barbados, appoint various professional advisors, and to meet
certain  capitalization  and annual reporting  requirements  with respect to its
operating activities and solvency requirements.

Under the Exempt Insurance Act, no income tax, capital gains tax or other direct
tax or impost is levied in Barbados on the results of the  Company's  operations
(except as noted below),  or on transfers of securities or assets of the Company
to any person who is not a resident of  Barbados.  The  Company  has  received a
guarantee  from the  Minister  of Finance of  Barbados  that such  benefits  and
exemptions  will be available  for a period  ending  December  31,  2031.  Until
December 31, 2016 the Company will be required to pay an annual  licencing  fee,
which is currently  $2,500,  to obtain such guarantee.  Thereafter,  the Company
will be subject to tax at a rate of 2% on its taxable  income  provided that the
amount of such tax will not exceed $2,500 per annum.

Item 2. PROPERTIES

The Company  neither owns nor maintains any office space or facilities.  Rather,
the business office for the Company is provided by the Manager and is located at
One Financial Place, Collymore Rock, St. Michael, Barbados. The Company believes
that these facilities are adequate for its current and anticipated future needs.
In addition, the Manager supplies all equipment for the Company.

<PAGE>

PAGE 23

Item 3. LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings.

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

There were no matters submitted to a vote of security holders during the quarter
ended December 31, 1999.


                                     PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) There is no public  market for the Shares or the other  capital stock of the
Company,  and none is expected to develop.  Transfer of the Shares is restricted
by the  terms  of a  Stock  Purchase  Agreement  and  requires  approval  by the
Supervisor of Insurance in Barbados.

(b) All of the common  stock of the  Company is held by MIC. As of March 1, 2000
there were 473 holders of Shares of record, representing 266 series of Shares.

(c) Under the Articles of  Incorporation,  the holders of Shares are entitled to
receive  minimum  dividends  equal to their  pro-rata share of 20% of net income
attributable  to the  associated  Subsidiary  Capital  Account  provided (i) the
Company meets the Barbados regulatory  requirements without regard to any letter
of credit or guarantee,  and (ii) the related  Subsidiary  Capital Account would
also meet those requirements after giving effect to the dividend. In February of
1999,  February of 1998 and March of 1997,  the Company  declared  dividends  of
$4,066,464,   $5,171,956  and  $4,196,730  respectively.  These  dividends  were
declared as a varying percentage of earned surplus attributable

<PAGE>

PAGE 24

to each series of Shares with the percentage  applicable depending on the amount
of earned surplus attributable to such series.

(d) The Board considers the minimum regulatory capital requirement,  a provision
for  fluctuations  in the  value of the  Company's  investment  portfolio  and a
provision for adverse development of loss experience to determine an appropriate
minimum  capital  level and  therefore  the amount of dividends to be paid.  The
Board's objective is to maintain adequate capital to provide capacity for growth
in premium so that  dividends  may be paid  annually.  There can be no assurance
that a prior dividend amount will be paid in the future.

Item 6. SELECTED FINANCIAL DATA

The following  selected  financial  data for the years ended  December 31, 1999,
1998, 1997, 1996 and 1995 have been derived from financial statements audited by
Deloitte & Touche, independent chartered accountants,  whose report with respect
to their audits of the financial statements as of December 31, 1999 and 1998 and
for each of the three years in the period  ended  December  31, 1999 is included
elsewhere herein.

<TABLE>
<CAPTION>
                                                             December 31
                        ----------------------------------------------------------------------------------
                            1999              1998              1997             1996             1995
                            ----              ----              ----             ----             ----
<S>                     <C>               <C>               <C>              <C>              <C>
Premiums Assumed        $ 67,104,475      $ 72,634,160      $ 57,071,313     $ 47,410,037     $ 44,084,952
Premiums Returned       $ 24,934,234      $          0      $          0     $          0     $          0
                        ============      ============      ============     ============     ============
Premiums Earned         $ 58,471,950      $ 57,845,674      $ 45,701,595     $ 36,077,699     $ 28,800,689
Net Investment
 Income                      655,755        10,375,464         5,704,678        5,341,924        5,563,573
                        ------------      ------------      ------------     ------------     ------------
Total Income              59,127,705        68,221,138        51,406,273       41,419,623       34,364,262
Less Losses and
 Expenses                 62,662,673        61,027,782        43,503,363       33,965,100       27,462,338
                        ------------      ------------      ------------     ------------     ------------
Net (Loss) Income*       (3,534,968)       $ 7,193,356      $  7,902,910      $ 7,454,523     $  6,901,924
Dividends Per
 Common Share                      0                 0                 0                0                0
Total Assets            $132,504,762      $139,428,183      $123,065,286     $106,041,164     $ 91,526,976
Total Policy
 Reserves and
 Other Liabilities       117,281,645       115,902,615       100,999,317       88,479,590       76,350,313
Stockholders'
 Equity                   15,223,117        23,525,568        22,065,969       17,561,574       15,176,663
Dividends Paid on
 Participating
 Shares                    4,066,464         5,171,956         4,196,730        4,007,483        1,188,614
</TABLE>

*/ Information as to earnings per share is not provided  inasmuch as the results
for each series of stock will vary with the underwriting experience attributable
to each Subsidiary Capital Account  established with respect to that series. See
Note 2 to the financial statements.

<PAGE>

PAGE 25

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

Liquidity.  The Company expects to generate  sufficient funds from operations to
cover current liquidity needs. The Company's liquidity  requirements are related
to payment of insurance losses, administrative expenses, and dividends. Premiums
generated  by the  Company's  reinsurance  business,  combined  with  investment
earnings  plus  proceeds  from  the  sale of  Shares,  will  continue  to be the
principal  sources of funds for the  Company.  Although  losses are  expected to
increase due to the increased  level of premiums  assumed in each preceding year
and  the   anticipated   incidence  of  claims   following  the   expiration  of
manufacturers'  warranties,  available funds from the sources  identified  above
have also grown. The Company believes that such funds will be sufficient to meet
its liquidity  requirements in 2000 and in future years to which its reinsurance
liabilities  extend.  No capital  expenditures  are expected during the next few
years.

<PAGE>

PAGE 26

The Company had  unearned  premium  reserves of  $93,941,365  as of December 31,
1999, and  $110,243,074 as of December 31, 1998.  These amounts are attributable
to the long-term  nature of the contracts sold. Such contracts may extend for up
to 72 months from date of issue.  In  addition,  the risk of loss to the Company
under the contract arises primarily after the underlying manufacturer's warranty
expires.  For new vehicles,  the warranty  generally  covers 36 months or 36,000
miles.  For  used  vehicles,  the  applicable  warranty  period  depends  on the
unexpired  portion  of the  original  manufacturer's  warranty  at the  time  of
purchase of the  vehicle.  Because  the Company has limited  exposure to risk of
loss prior to expiration of the underlying manufacturer's warranty, most premium
is not recognized as earned until such expiration.  Since very little premium is
recognized as earned until the  expiration of the underlying  warranty,  most of
the premium  written in any year is recorded as  unearned.  The  decrease in the
amount of the unearned  premium  reserves in 1999  compared to 1998 is primarily
attributable  to the  Recapture  which is  discussed  in more detail below under
"Results of Operations."

Capital Resources.  Capitalization of the Company,  as of December 31, 1999, was
comprised  of paid-in  capital  with  respect to the Common  Stock of  $200,000,
paid-in  capital  with  respect  to the  Shares  of  $1,995,000  (compared  with
$2,362,500 and $2,115,000 as of December 31, 1998 and 1997,  respectively),  and
earnings  retained for use in the business of $13,190,576.  The reduction in the
amount of paid-in  capital  with  respect to the Shares as of December  31, 1999
compared  with  December  31,  1998 and 1997 is  primarily  attributable  to the
Redemption and Recapture discussed below under "Results of Operations."

Barbados law requires that the Company's net assets equal at least the aggregate
of  $1,000,000  and 10% of the  amount  by which  the  earned  premium  exceeded
$5,000,000 in the previous year. If the Company's net assets are

<PAGE>

PAGE 27

less than  mandated  by  Barbados  law,  the Company has the right to reduce the
business  related to a Subsidiary  Capital  Account by retrocession or any other
means to the extent  necessary to permit the Subsidiary  Capital Account to meet
its pro rata share of the Company's required capital and surplus.  At January 1,
2000,  the Company's  required  minimum net assets  computed in accordance  with
Barbados  law was  approximately  $6,347,195,  compared  to  total  capital  and
retained earnings computed for purpose of Barbados law of $15,385,576.

Results of Operations.  During the year ended December 31, 1999, the Company had
net losses of $3,534,968 compared to net income of $7,193,356 and $7,902,910 for
the years ended December 31, 1998 and 1997,  respectively.  As described  below,
the  decrease  in net income  during  1999  compared  to the  previous  year was
primarily as a result of increases in underwriting losses incurred and decreases
in investment  income. The decrease in net income in 1998 compared to 1997 arose
from increases in underwriting  losses  incurred which were partially  offset by
increases in investment income.

The Company had a net  underwriting  loss of  $4,190,723 in 1999 compared to net
underwriting  loss  of  $3,182,108  in  1998  and  net  underwriting  income  of
$2,198,232 in 1997.  During 1999,  the Company  earned  premiums of  $58,471,950
compared to  $57,845,674  and  $45,701,595  during 1998 and 1997,  respectively.
Premium  income  increased as a result of the issuance of  additional  series of
Shares  during the year ended  December 31,  1999,  and the  continuing  flow of
reinsurance  premiums from series issued in prior years,  although this increase
was offset,  in part,  by the  Recapture as discussed  below.  During 1999,  the
Company issued 2 new series of Shares and redeemed 51 series of Shares (of which
37 were  attributable  to the Recapture) for a net decrease of 49 series.  There
were a total of 266 series outstanding at December 31, 1999 compared to

<PAGE>

PAGE 28

315 and 282  series  of  Shares  outstanding  at  December  31,  1998 and  1997,
respectively.

The Company  incurred losses and  administrative  expenses during the year ended
December 31, 1999 of $62,662,673  compared with  $61,027,782 and $43,503,363 for
the years ended December 31, 1998 and 1997, respectively.  Expenses in 1999 were
comprised  of losses paid and  provisions  for losses  incurred of  $46,784,152,
ceding  commissions  and excise taxes of $15,206,934  and operating  expenses of
$671,587.  Losses incurred in 1998 and 1997 were  $45,552,545  and  $31,118,622,
respectively.  The loss  ratio  for the year  ended  December  31,  1999 was 80%
compared  to 78.8% and 68.1% for the years  ended  December  31,  1998 and 1997,
respectively.

As a result of its adverse underwriting results, the Company,  working with MIC,
took steps during 1999 to improve its underwriting performance. During 1999, the
Company's  Board of  Directors  voted to redeem  37  series  of Shares  that had
consistently  experienced  adverse  underwriting  results  and  that  the  Board
determined were unlikely to experience  favourable  underwriting  results in the
future (the  "Redemption").  Because the  subsidiary  capital  account for these
series had a balance of zero, the redemption price for the Shares was zero.

In addition to the  Redemption,  MIC agreed to commute the unearned  premium and
all  unpaid  losses  as of the  end of the  second  quarter  of 1999  that  were
attributable to 37 series of Shares that, as discussed below, the Board voted to
redeem (the  "Recapture").  In exchange for assuming these unearned  premium and
unpaid loss reserves, the Company agreed to pay $19,660,649 to MIC, which amount
represented the unearned premium and unpaid losses as of June 30, 1999 that were
attributable to the commuted business (after offset by the 25%

<PAGE>

PAGE 29

ceding  commission  and 1% federal excise taxes  previously  paid by the Company
with  respect  to the  recaptured  business).  If MIC  had not  recaptured  this
business from the Company, the Company would have experienced  materially larger
underwriting  losses and a higher  loss ratio for the year  ended  December  31,
1999.

Notwithstanding  the Redemption  and the  Recapture,  there can be no assurances
that  the  Company  will  not  continue  to   experience   significant   adverse
underwriting  results.  In addition,  there can be no assurances  that MIC would
recapture  additional  business from the Company if the Company does  experience
significant adverse underwriting results in the future.

In addition to the Redemption and Recapture,  the Company continues to work with
MIC to evaluate ways for improving its underwriting  performance.  MIC continues
to contact unprofitable  accounts and implement procedures to discontinue ceding
new business into the Company with respect to such accounts.  Additionally,  MIC
continues to place claims adjusters at some unprofitable accounts.  Furthermore,
claim approval empowerment levels have been significantly reduced or eliminated.

The Company incurred  operating expenses during the year ended December 31, 1999
of $671,587  compared to $555,321 and $503,020 for the years ended  December 31,
1998 and 1997, respectively, which amounts do not include expenses paid directly
by  MIC.  MIC  has  agreed  to pay  directly  certain  such  costs  relating  to
registering  and  issuing  shares  if such  costs  can not be  allocated  to the
Subsidiary  Capital Account for the Common Stock. In 1999 $141,697 of such costs
were paid  directly  by MIC  compared to $69,280 and $77,329 for the years ended
December 31, 1998 and 1997, respectively.

<PAGE>

PAGE 30

Investment  income in 1999 was $655,755  compared to $10,375,464  and $5,704,678
for the years ended  December 31, 1998 and 1997,  respectively.  The decrease in
investment  income during 1999 arose primarily as a result of realized losses on
sales of investment  securities as  Rothschild,  the prior  investment  manager,
attempted to minimize the impact of increasing interest rates.

The increase in investment  income during 1998 compared to 1997 arose  primarily
as a result of increased  sales of investment  securities  to take  advantage of
market  opportunities  presented by uncertainty in the U.S.  dollar  denominated
international equity markets.

The sale of investment  securities for the year ended December 31, 1999 resulted
in realized  losses of $5,255,474  compared to realized  gains of $4,404,651 and
$750,923 for the years ended December 31, 1998 and 1997, respectively.  Interest
earned  for the  year  ended  December  31,  1999  was  $5,911,229  compared  to
$5,970,813  and  $4,953,755  for the years  ended  December  31,  1998 and 1997,
respectively. Interest earned during 1999 compared to 1998 was largely unchanged
as a result of very little  change in the amount of assets under  management  or
their coupon rates. The increase in interest earned during 1998 compared to 1997
was  largely a result of an increase  in the amount of assets  under  management
combined with a slight increase in the overall rate of return.

Unrealized  losses  on  investment  securities  held at  December  31,  1999 was
$162,459  compared to  unrealized  gains at December 31, 1998 of  $334,059.  The
decrease in  unrealized  gains as of December 31, 1999  compared to December 31,
1998 resulted  primarily from the continued poor performance of the fixed income
markets and the related decline in market value of the fixed income

<PAGE>

PAGE 31

portfolio  which was offset,  in part,  by the  increase in market  value of the
Company's investment in the equity fund.

At December 31, 1999 approximately 10% of the Company's investment portfolio was
in a U.S. dollar denominated international equity fund and the remaining 90% was
invested in U.S. dollar  denominated  fixed-income  securities.  At December 31,
1998, 100% of the Company's investment portfolio was in U.S.
dollar denominated fixed income securities.

As a result of the investment  return  experienced by the Company,  during 1999,
the Company's Board of Directors  appointed  BlackRock to replace  Rothschild as
the  investment  manager of the Company's  fixed income  portfolio and the Board
adopted new  investment  guidelines  for the  portfolio.  (See "Item 1. BUSINESS
INVESTMENT INCOME.")

Pursuant  to  the  Retrocession  Agreement,  the  Company  must  furnish  to MIC
collateral in the form of an irrevocable  letter of credit of at least 12 months
duration equal in amount to the unearned  premium in respect of risks retroceded
and  unpaid  loss  reserves  (including  reserves  for losses  incurred  but not
reported) otherwise required to be maintained by MIC in respect of the Policies.
As of December 31, 1999,  the Company had  furnished  such a letter of credit in
the amount of $90,000,000.

Year 2000

The  Company  does not  separately  own or license  any  computers  or  computer
software  applications.  Accordingly,  the  Company had  minimal  exposure  with
respect  to the  transition  to  Year  2000  on  its  computerized  systems  and
microprocessors.   During  1999  the  Company   completed   communications   and
assessments with the Manager and other service and technology providers,

<PAGE>

PAGE 32

including  those on which the Company is dependent,  to ensure adequacy with the
transition  to Year 2000.  Also during  1999,  MIC  successfully  completed  its
assessment and remediation project to address the Year 2000.

To date, the Company has not  experienced  any material  adverse  effects on its
business,  results of operations or financial  condition as a result of the Year
2000  Issue.  Furthermore,  because  the  Company  does not own or  licence  any
computers or computer software applications,  it did not incur any expenses with
respect to remediation of Year 2000.

The Company will continue to monitor its own  operations,  and the operations of
third parties that are critical to the Company's operations,  for potential year
2000-related  problems.  However,  the Company does not anticipate  that it will
discover  any future Year 2000  issues  that will have a material  effect on its
business, results of operations, or financial condition.

Forward Looking Statements

The  foregoing  Management  Discussion  and Analysis  contains  various  forward
looking  statements within the meaning of applicable federal securities laws and
are based upon Company's current expectations and assumptions  concerning future
events,  which are  subject  to a number of risks and  uncertainties  that could
cause actual results to differ materially from those anticipated.

Accounting Standards

In June  1997,  the  Financial  Accounting  Standards  Board  ("FASB")  issued a
Statement  of  Financial   Accounting  Standards  ("FASB")  No.  130,  Reporting
Comprehensive  Income,  effective for fiscal years  beginning after December 15,
1997.  Under this statement all items required to be recognized under accounting
standards as components of comprehensive income must be reported in

<PAGE>

PAGE 33

a  financial  statement  that is  displayed  with the same  prominence  as other
financial statements.  The Company has adopted this accounting standard in 1998.
Adopting  the  accounting  standard  has no impact on reported net income of the
Company.

In  June  1998,  the  FASB  issued  SFAS  No.  133,  Accounting  for  Derivative
Instruments and Hedging  Activities,  effective for fiscal years beginning after
June 15, 1999. In the second quarter of 1999, the FASB delayed implementation of
SFAS No. 133 until  fiscal years  beginning  on or after June 15, 2000.  The new
standard requires that all companies record  derivatives on the balance sheet as
assets or liabilities,  measured at fair value.  Gains or losses  resulting from
changes in the values of those  derivatives  would be accounted for depending on
the use of the  derivative  and  whether  it  qualifies  for  hedge  accounting.
Management is currently assessing the impact of SFAS No. 133 on the consolidated
financial  statements  of the Company.  The Company  will adopt this  accounting
standard on January 1, 2001, as required.

Market Risk

The Company is exposed to market risk from  changes in interest  rates,  foreign
currency  exchange  rates,  and certain equity security  prices.  Market risk is
inherent  to all  financial  instruments.  Active  management  of market risk is
integral  to the  Company's  operations  which  seeks to manage its  exposure to
market risk  generally  by  monitoring  the  character of  investments  that are
purchased or sold.

A discussion of the Company's accounting policies for derivative  instruments is
included in Note 3 to the consolidated financial statements included herein.

<PAGE>

PAGE 34

The  following  analyses  are based on  sensitivity  analysis  tests that assume
instantaneous,  parallel shifts in exchange rates,  interest rates, and interest
rate yield curves.  There are shortcomings  inherent to the sensitivity analyses
presented.  The model assumes interest rate changes are instantaneous,  parallel
shifts in the yield  curve.  In  reality,  changes are rarely  instantaneous  or
parallel.  Although  certain  assets may have similar  maturities  or periods to
repricing,  they may not react  correspondingly  to changes  in market  interest
rates.  Also,  the interest  rates on certain types of assets may fluctuate with
changes in market interest rates,  while interest rates on other types of assets
may lag behind changes in market rates.  The Company does not hold any financial
instruments for trading purposes.

Interest Rate Risk. The Company has exposure to economic  losses due to interest
rate risk arising from changes in the level or volatility of interest  rates and
attempts to mitigate that exposure  through  active  portfolio  management.  The
Company's investment guidelines do not permit the use of derivatives in managing
interest rate risk.  As of December 31, 1999 and 1998,  the net fair value asset
exposure  to  interest  rate  risk was  approximately  $93.9  million  and $89.5
million,  respectively.  As of December 31, 1999 and 1998, the potential loss in
fair value resulting from a hypothetical 10% increase in interest rates would be
approximately $2.1 million and $2.1 million, respectively.

Foreign  Exchange Risk.  Foreign  exchange rate risk arises from the possibility
that  changes  in  foreign  currency  exchange  rates  will  impact the value of
financial  instruments.  At December 31, 1999 and 1998, 100% of investments were
denominated in U.S. dollars.

<PAGE>

PAGE 35

Equity  Price  Risk.  Equity  price risk  results  from  changes in the level or
volatility  of equity  prices  which affect the value of equity  securities.  At
December 31, 1999, the Company had approximately  10% of its portfolio  invested
in an  international  equity fund. Prior to 1999, the Company had no investments
in equity securities. As of December 31, 1999, the net fair value asset exposure
to equity price risk was approximately $11.8 million,  and the potential gain in
fair value resulting from a hypothetical  10% increase in the underlying  equity
prices would be approximately $1.2 million.

Overall Limitations and Forward-Looking Statements

The Company has  developed  fair value  estimates  by  utilization  of available
market  information  or  other  appropriate  valuation  methodologies.  However,
considerable  judgement  is  required  in  interpreting  market  data to develop
estimates of fair value; therefore, the estimates are not necessarily indicative
of the  amounts  that  could be  realized  or would be paid in a current  market
exchange.  The effect of using different market  assumptions  and/or  estimation
methodologies  may be material to the estimated  fair market value  amounts.  In
addition,  the above  discussion  and the estimated  amounts  generated from the
sensitivity  analyses  referred to above include forward- looking  statements of
market risk which assume, for analytical  purposes,  that certain adverse market
conditions may occur. Actual future market conditions may differ materially from
such assumptions because the amounts noted previously are the result of analyses
used for the purpose of assessing  possible  risks and the  mitigation  thereof.
Accordingly,  the forward-looking statements should be considered projections of
future events or losses.

<PAGE>

PAGE 36

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                       Page

1.   Independent Auditors' Report...................     38

2.   Balance Sheets, December 31, 1999 and 1998.....     39

3.   Statements of Income and Retained Earnings
       for the years ended December 31, 1999,
       1998 and 1997 ...............................     40

4.   Statements of Cash Flows for the years ended
       December 31, 1999, 1998 and 1997 ............     41

5.   Statement of Changes in Shareholders Equity
         for the years ended December 31, 1999,
         1998 and 1997 .............................   42 - 43

6.   Notes to Financial Statements..................   44 - 52

<PAGE>

PAGE 37

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Motors Mechanical Reinsurance Company, Limited
One Financial Place
Collymore Rock
St. Michael, Barbados


We have audited the accompanying balance sheets of Motors Mechanical Reinsurance
Company,  Limited as of December 31, 1999 and 1998 and the related statements of
(loss)\income and retained earnings,  changes in shareholders'  equity, and cash
flows for each of the three years in the period ended  December 31, 1999.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of Motors  Mechanical  Reinsurance  Company,
Limited as of December 31, 1999 and 1998 and the results of its  operations  and
its cash flows for each of the three years in the period ended December 31, 1999
in conformity with accounting principles generally accepted in the United States
of America.


                                         s/DELOITTE & TOUCHE
                                         CHARTERED ACCOUNTANTS


Bridgetown, Barbados
February 22, 2000

<PAGE>

PAGE 38

<TABLE>
<CAPTION>
                      MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                                      BALANCE SHEETS
                                DECEMBER 31, 1999 AND 1998

                                (Expressed in U.S. Dollars)

                                                   Notes         1999             1998
                                                   -----     ------------     ------------
<S>                                                 <C>      <C>              <C>
ASSETS

   Investments                                      3,7        79,184,187       89,474,377
   Cash & cash equivalents                          7          26,602,226       19,504,563
   Accrued investment income                                    2,253,779        1,788,490
   Deferred acquisition costs                                  24,418,570       28,660,753
   Prepaid expenses                                                46,000                0
                                                             ------------     ------------
   Total Assets                                               132,504,762      139,428,183
                                                             ============     ============
LIABILITIES & STOCKHOLDERS' EQUITY

LIABILITIES
      Unearned premiums                                        93,941,365      110,243,074
      Reserves for unpaid losses                    4           4,725,239        5,393,818
      Accrued liabilities                                         276,116          150,056
      Due to Motors Insurance Corporation                      18,338,925          115,667
                                                             ------------     ------------
   Total Liabilities                                          117,281,645      115,902,615
                                                             ------------     ------------
COMMITMENTS AND CONTINGENCIES                       7

STOCKHOLDERS' EQUITY                                5
   Share Capital
      Common stock - no par value;
        Authorised - 2,000 shares;
          Issued and outstanding -
          2000 shares                                             200,000          200,000

       Participating stock - no par value;
         Authorised - 100,000 shares;
          Issued and outstanding -
          26,600 shares at December 31, 1999
          And 31,500 shares at December 31,
          1998                                                  1,995,000        2,362,500
                                                             ------------     ------------
                                                                2,195,000        2,562,500

   Retained earnings                                           13,190,576       20,629,009
   Accumulated other comprehensive (loss)/income                 (162,459)         334,059
                                                             ------------     ------------
Total Stockholders' Equity                                     15,223,117       23,525,568
                                                             ------------     ------------
Total Liabilities and
   Stockholders' Equity                                      $132,504,762     $139,428,183
                                                             ============     ============
</TABLE>


The accompanying notes form an integral part of these financial statements.

<PAGE>

PAGE 39

<TABLE>
<CAPTION>
                        MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                       STATEMENTS OF (LOSS)/INCOME AND RETAINED EARNINGS
                     FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                                  (Expressed in U.S. Dollars)

                                                           Years Ended December 31
                                               ----------------------------------------------
                                       Notes       1999             1998             1997
                                       -----   ------------     ------------     ------------
<S>                                      <C>   <C>              <C>              <C>
INCOME

   Reinsurance premiums
      assumed                            6     $ 67,104,475     $ 72,634,160     $ 57,071,313
   Recapture of unearned reinsurance
      premiums                           9      (24,934,234)               0                0
   Decrease/(Increase) in unearned
      premiums                                   16,301,709      (14,788,486)     (11,369,718)
                                               ------------     ------------     ------------
   Premiums earned                               58,471,950       57,845,674       45,701,595
                                               ------------     ------------     ------------
   Investment income
      Interest earned                             5,911,229        5,970,813        4,953,755
      Realized (losses)/gains
        on investments - net                     (5,255,474)       4,404,651          750,923
                                               ------------     ------------     ------------
   Investment income                                655,755       10,375,464        5,704,678
                                               ------------     ------------     ------------
TOTAL INCOME                                     59,127,705       68,221,138       51,406,273
                                               ------------     ------------     ------------
EXPENSES

   Acquisition costs                             15,206,934       14,919,916       11,881,721
   Losses paid                                   47,452,731       45,579,887       29,981,766
   (Decrease)/Increase in loss
     reserves                                      (668,579)         (27,342)       1,136,856
   Administrative expenses
      Related Parties                               252,299          225,922          219,760
      Other                                         419,288          329,399          283,260
                                               ------------     ------------     ------------
TOTAL EXPENSES                                   62,662,673       61,027,782       43,503,363
                                               ------------     ------------     ------------
NET (LOSS)/INCOME FOR THE YEAR                   (3,534,968)       7,193,356        7,902,910
RETAINED EARNINGS,
   beginning of year                             20,629,009       18,615,768       14,913,053

LESS: DIVIDENDS                                  (4,066,464)      (5,171,956)      (4,196,730)

ADD/(DEDUCT) REDEMPTION OF
PARTICIPATING STOCK                                 162,999           (8,159)          (3,465)
                                               ------------     ------------     ------------
RETAINED EARNINGS, end of year                 $ 13,190,576     $ 20,629,009     $ 18,615,768
                                               ============     ============     ============
</TABLE>


The accompanying notes form an integral part of these financial statements.

<PAGE>

PAGE 40

<TABLE>
<CAPTION>
                        MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                                   STATEMENTS OF CASH FLOWS
                     FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

                                  (Expressed in U.S. dollars)

                                                           Years Ended December 31
                                               ----------------------------------------------
                                                   1999             1998             1997
                                               ------------     ------------     ------------
<S>                                            <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Reinsurance premiums collected               $ 54,936,354     $ 67,293,382     $ 57,014,145
  Losses and acquisition expenses paid          (52,963,826)     (58,004,044)     (42,436,530)
  Administrative expenses paid                     (672,060)        (581,648)        (502,230)
  Investment income received                      5,529,962        7,369,361        3,229,000
                                               ------------     ------------     ------------
Net cash provided by operating
 activities                                       6,830,430       16,077,051       17,304,385
                                               ------------     ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of investments                     (396,939,849)    (324,678,378)    (318,139,315)
  Sales and maturities of investments           401,478,047      327,393,023      297,544,335
                                               ------------     ------------     ------------
Net cash from/(used in) investing
  activities                                      4,538,198        2,714,645      (20,594,980)
                                               ------------     ------------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of
    Participating Stock                              15,000          277,500          217,500
  Redemption of Participating Stock                (219,501)         (38,159)         (10,965)
  Dividends paid                                 (4,066,464)      (5,171,956)      (4,196,730)
                                               ------------     ------------     ------------
Net cash used in financing activities            (4,270,965)      (4,932,615)      (3,990,195)
                                               ------------     ------------     ------------

INCREASE/(DECREASE) IN CASH AND CASH
  EQUIVALENTS                                     7,097,663       13,859,081       (7,280,790)

CASH AND CASH EQUIVALENTS, beginning
  of year                                        19,504,563        5,645,482       12,926,272
                                               ------------     ------------     ------------
CASH AND CASH EQUIVALENTS, end of
  year                                         $ 26,602,226     $ 19,504,563     $  5,645,482
                                               ============     ============     ============
RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES:
  Net (loss)/income                            $ (3,534,968)    $  7,193,356     $  7,902,910
  Realised losses/(gains) on
    investments                                   5,255,474       (4,404,651)        (750,923)
  Change in:
     Accrued investment income                     (465,289)       1,389,956       (1,724,755)
     Deferred acquisition costs                   4,242,183       (3,846,835)      (2,958,711)
     Prepaid expenses                               (46,000)               0                0
     Unearned premiums                          (16,301,709)      14,788,486       11,369,718
     Loss reserves                                 (668,579)         (27,342)       1,136,856
     Accrued liabilities                            126,060           26,487           13,153
     Due to Motors Insurance
       Corporation                               18,223,258          957,594        2,316,137
                                               ------------     ------------     ------------
NET CASH PROVIDED BY OPERATING
 ACTIVITIES                                    $  6,830,430     $ 16,077,051     $ 17,304,385
                                               ============     ============     ============
</TABLE>


The accompanying notes form an integral part of these financial statements.

<PAGE>

PAGE 41

<TABLE>
<CAPTION>
                                  MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                                   STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                               FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
                                            (Expressed in U.S. Dollars)

                                                                        December 31, 1999
                                     -------------------------------------------------------------------------------------
                                         Total                                    Accumulated
                                      Shareholders'                                  Other
                                      Participating  Comprehensive   Retained    Comprehensive     Common    Participating
                                         Equity          Loss        Earnings    (Loss)\Income     Stock         Stock
                                      -------------  -------------  -----------  -------------  -----------  -------------
<S>                                    <C>            <C>           <C>           <C>           <C>           <C>
Balance at December 31, 1998           $23,525,568    $         -   $20,629,009   $   334,059   $   200,000   $2,362,500
Comprehensive Income:
  Net income                            (3,534,968)    (3,534,968)   (3,534,968)            -             -            -
  Other comprehensive income,
    net of tax:
      Unrealized loss on securities       (496,518)      (496,518)            -      (496,518)            -            -
                                                      -----------
      Comprehensive income                       -    $(4,031,486)            -             -             -            -
                                                      ===========
Dividends declared on participating
  stock                                 (4,066,464)                  (4,066,464)            -             -            -
Participating Stock
  Issued                                    15,000                            -             -             -       15,000
  Redeemed                                (219,501)                     162,999             -             -     (382,500)
                                       -----------                  -----------   -----------   -----------   ----------
Balance at December 31, 1999           $15,223,117                  $13,190,576   $  (162,459)  $   200,000   $1,995,000
                                       ===========                  ===========   ===========   ===========   ==========
Disclosure of reclassification amount
  Unrealised holding losses arising
    during period                       (5,751,992)
  Add:  reclassification adjustment
    for losses included in net income    5,255,474
                                       -----------
   Net unrealised loss on securities      (496,518)
                                       ===========


                                                                        December 31, 1998
                                     -------------------------------------------------------------------------------------
                                         Total                                    Accumulated
                                      Shareholders'                                  Other
                                      Participating  Comprehensive   Retained    Comprehensive     Common    Participating
                                         Equity          Loss        Earnings    (Loss)\Income     Stock         Stock
                                      -------------  -------------  -----------  -------------  -----------  -------------

Balance at December 31, 1997           $22,065,969    $         -   $18,615,768   $ 1,135,201   $   200,000   $2,115,000
Comprehensive Income:

<PAGE>

PAGE 42

  Net income                             7,193,356      7,193,356     7,193,356             -             -            -
  Other comprehensive income,
    net of tax:
      Unrealized loss on securities       (801,142)      (801,142)            -      (801,142)            -            -
                                                      -----------
      Comprehensive income                       -    $(6,392,214)            -             -             -            -
                                                      ===========
Dividends declared on participating
  stock                                 (5,171,956)                  (5,171,956)            -             -            -
Participating Stock
  Issued                                   285,000                            -             -             -      285,000
  Redeemed                                 (45,659)                      (8,159)            -             -      (37,500)
                                       -----------                  -----------   -----------   -----------   ----------
Balance at December 31, 1998           $23,525,568                  $20,629,009   $   334,059   $   200,000   $2,362,500
                                       ===========                  ===========   ===========   ===========   ==========
Disclosure of reclassification amount
  Unrealised holding losses arising
    during period                        3,603,509
  Add:  reclassification adjustment
    for losses included in net income   (4,404,651)
                                       -----------
   Net unrealised loss on securities      (801,142)
                                       ===========
</TABLE>

The accompanying notes form an integral part of these financial statements.

<PAGE>

PAGE 43

<TABLE>
<CAPTION>
                                  MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                                   STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                               FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
                                            (Expressed in U.S. Dollars)

                                                                        December 31, 1997
                                     -------------------------------------------------------------------------------------
                                         Total                                    Accumulated
                                      Shareholders'                                  Other
                                      Participating  Comprehensive   Retained    Comprehensive     Common    Participating
                                         Equity          Loss        Earnings    (Loss)\Income     Stock         Stock
                                      -------------  -------------  -----------  -------------  -----------  -------------
<S>                                    <C>            <C>           <C>           <C>           <C>           <C>
Balance at December 31, 1996           $17,561,574    $         -   $14,913,053   $   543,521   $   200,000   $1,905,000
Comprehensive Income:
  Net income                             7,902,910      7,902,910     7,902,910             -             -            -
  Other comprehensive income,
    net of tax:
      Unrealized loss on securities        591,680        591,680             -       591,680             -            -
                                                      -----------
      Comprehensive income                       -    $ 8,494,590             -             -             -            -
                                                      ===========
Dividends declared on participating
  stock                                 (4,196,730)                  (4,196,730)            -             -            -
Participating Stock
  Issued                                   225,000                            -             -             -      225,000
  Redeemed                                 (18,465)                      (3,465)            -             -      (15,000)
                                       -----------                  -----------   -----------   -----------   ----------
Balance at December 31, 1997           $22,065,969                  $18,615,768   $ 1,135,201   $   200,000   $2,115,000
                                       ===========                  ===========   ===========   ===========   ==========
Disclosure of reclassification amount
  Unrealised holding losses arising
    during period                        1,342,603
  Add:  reclassification adjustment
    for losses included in net income     (750,923)
                                       -----------
   Net unrealised loss on securities       591,680
                                       ===========
</TABLE>

The accompanying notes form an integral part of these financial statements.

<PAGE>

PAGE 44

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

                           (Expressed in U.S. Dollars)

Note 1.  OPERATIONS

     The Company is  incorporated  under the laws of Barbados  and is a licensed
     insurer under the Exempt Insurance Act, 1983, and amendments thereto.

     All of the  common  stock  of the  Company  is owned  by  Motors  Insurance
     Corporation  ("MIC"),  a member  of the  GMAC  Insurance  Group.  MIC is an
     indirect  wholly-owned  subsidiary  of  General  Motors  Corporation.   The
     principal  activity  of the  Company  is the  assumption  of motor  vehicle
     mechanical service agreements arising under insurance policies reinsured by
     MIC and  attributable  to an MIC  Mechanical  Account  in  respect of which
     shares of  Participating  Stock are issued and  outstanding.  All  premiums
     received were assumed from MIC.

Note 2.  SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation

     The  financial  statements  are  stated in United  States  dollars  and are
     prepared in conformity with accounting principles generally accepted within
     the United States of America.

     Use of Estimates

     The  preparation  of  financial  statements  requires  management  to  make
     estimates and  assumptions  that affect the reported  amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the  financial  statements  and the  reported  amounts of  revenues  and
     expenses  during the  reporting  period.  Actual  results could differ from
     those estimates.

     Premium Income and Acquisition Costs

     Reinsurance  premiums  are  based on the  Company  assuming  (after  ceding
     commission)  75% of the  original  policy  premium  written  by the  direct
     insurer.  Of these reinsurance  premiums,  75% is retroceded to the Company
     when written and 25% when earned.

     Premiums are written on the basis of quarterly cessions and earned relative
     to anticipated  loss  exposures.  Acquisition  costs,  consisting of ceding
     commissions  and  excise  taxes,  are  taken  into  income  on the basis of
     premiums earned.

<PAGE>

PAGE 45

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

                           (Expressed in U.S. Dollars)

Note 2.  SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

     Investments

     Investments,  all of  which  are  available  for  sale,  are  comprised  of
     interest-bearing   marketable   securities   and   an   investment   in  an
     international  equity fund, which are carried at fair value based on quoted
     market prices and dealer quotes obtained from an external  pricing service.
     Investments with original maturities of less than 90 days are classified as
     cash  equivalents.  Unrealised  appreciation  (depreciation) is included in
     accumulated other comprehensive income.

     Realized  gains  and  losses on the sale of  investments  are  included  as
     investment income and are calculated based on average costs.

     Loss Reserves

     The Company  provides for unsettled,  reported losses based on estimates of
     the final settlement, with an experience factor added to provide for losses
     incurred but not reported. The final settlement may be greater or less than
     the amounts  provided.  Any such  differences,  when they become known, are
     recognized in current  operations and can potentially be significant to the
     financial statements.

     Derivatives

     In June 1998,  the  Financial  Standards  Board issued  Statement  No. 133,
     Accounting  for  Derivative   Instruments  and  Hedging  Activities.   This
     statement  establishes  accounting  and reporting  standards for derivative
     instruments,  including certain  derivative  instruments  embedded in other
     contracts.  It requires that all derivatives be recognized as either assets
     or liabilities in the balance sheet and measured at fair value.  If certain
     conditions are  satisfied,  a derivative may be designated as a hedge of an
     exposure to changes in the value of an asset or  liability,  variable  cash
     flows for forecasted  transactions,  or certain foreign currency exposures.
     For  derivatives  designated  as hedging  instruments,  net income  will be
     affected by the extent to which the  derivative is not effective as a hedge
     of the underlying instrument. For derivatives not designated as hedges, the
     gain or loss  would be  recognized  in  income  in the  period  of  change.
     Pursuant to Statement No. 137, the effective  date of Statement No. 133 was
     delayed for one year to fiscal years  beginning  after June 15,  2000.  The
     Company has not completed its evaluation of the impact of this statement on
     its financial statements upon adoption.

<PAGE>

PAGE 46

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

                           (Expressed in U.S. Dollars)

Note 2.  SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

     Taxation

     The  Company has  received  an  undertaking  from the  Barbados  Government
     exempting it from all local  income,  profits and capital gains taxes for a
     period ending  December 31, 2016.  Thereafter  and until December 31, 2031,
     the Company  will be subject to tax at a rate of 2% on its  taxable  income
     provided that the amount of such tax will not exceed $2,500 per annum.

     Stockholders who are United States residents are taxed in the United States
     on their share of the Company's income on a deemed distribution basis.

     Earnings Per Share

     No  amount  has  been  reported  as  earnings  per  share  as the  earnings
     applicable to the  Participating  Stockholders  vary with the  underwriting
     results  of  each  series.  Retained  earnings  applicable  to  the  Common
     Stockholder include allocated  investment income and operating expenses and
     amounts restricted for advances to Participating Stockholders (see Note 8).

Note 3.  INVESTMENTS

     The cost and fair value of investments in debt securities and equity are as
     follows:

<TABLE>
<CAPTION>
                                                  Gross         Gross
                                               Unrealised     Unrealised       Fair
                                    Cost      Appreciation   Depreciation      Value
                                -----------   ------------   ------------   -----------
<S>                             <C>            <C>           <C>            <C>
December 31, 1999

Foreign governments and
 their agencies                 $18,175,335    $        -    $  (799,400)   $17,375,935

Corporations                     22,951,967             -       (637,687)    22,314,280

Supranationals                   28,205,097             -       (559,927)    27,645,170
                                -----------    -----------   -----------    -----------
Sub Total Debt Securities        69,332,399             -     (1,997,014)    67,335,385

Capital International Fund       10,014,247      1,834,555            -      11,848,802
                                -----------    -----------   -----------    -----------
  Total                         $79,346,646    $ 1,834,555   $(1,997,014)   $79,184,187
                                ===========    ===========   ===========    ===========
</TABLE>

<PAGE>

PAGE 47

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                           (Expressed in U.S. Dollars)

Note 3.  INVESTMENTS (Cont'd)

<TABLE>
<CAPTION>
                                                  Gross         Gross
                                               Unrealised     Unrealised       Fair
                                    Cost      Appreciation   Depreciation      Value
                                -----------   ------------   ------------   -----------
<S>                             <C>            <C>            <C>           <C>
December 31, 1998

Foreign governments and
  their agencies                $27,522,957    $   43,649     $(290,075)    $27,276,531

Corporations                     25,150,984       538,236        (2,142)     25,687,078

Supranationals                   36,466,377       154,367      (109,976)     36,510,768
                                -----------    ----------     ---------     -----------
  Total                         $89,140,318    $  736,252     $(402,193)    $89,474,377
                                ===========    ==========     =========     ===========
</TABLE>

     The  cost and fair  value of debt  securities  at  December  31,  1999,  by
     contractual maturity, are shown below. Expected maturities will differ from
     contractual  maturities  because  borrowers  may have the  right to call or
     prepay obligations with or without call or prepayment penalties.

                                                   Cost         Fair Value
                                                -----------     -----------
     Due after one year through five years      $49,386,022     $47,665,100

     Due after five years through ten years      19,946,377      19,670,285
                                                -----------     -----------
                                                $69,332,399     $67,335,385
                                                ===========     ===========

     In 1999,  gross gains of  $1,571,947  and gross losses of  $6,827,421  were
     realized. In 1998, gross gains of $6,253,358 and gross losses of $1,848,707
     were  realized.  In 1997,  gross gains of  $1,494,878  and gross  losses of
     $743,955 were realized.

     The following  summarizes net  unrealized  appreciation  (depreciation)  on
     investments:

               Balance, December 31, 1996            $   543,521
               Net appreciation                          591,680
                                                     -----------
               Balance, December 31, 1997            $ 1,135,201
               Net depreciation                         (801,142)
                                                     -----------
               Balance, December 31, 1998            $   334,059
               Net depreciation                         (496,518)
                                                     -----------
               Balance, December 31, 1999            $  (162,459)
                                                     ===========

<PAGE>

PAGE 48

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                           (Expressed in U.S. Dollars)

Note 3.  INVESTMENTS (Cont'd)

     The investment  portfolio is comprised of approximately 90% in diverse debt
     securities which do not result in any  concentration of credit risk and 10%
     in an  international  equity  fund.  At  December  31,  1999,  100%  of the
     Company's investments are denominated in U.S. dollars.

     The  Company  uses  forward  currency  contracts  to hedge its  exposure to
     changes in currency exchange rates relating to its investments  denominated
     in  currencies  other  than the U.S.  dollar.  The  contracts  provide  for
     settlement in U.S. dollars in the future. Credit risk is managed by dealing
     with  financially-sound  counter parties.  Market risk is mitigated because
     the forward  contracts hedge  corresponding  non-U.S.  dollar  investments.
     There were no forward contracts outstanding at December 31, 1999 and 1998.

Note 4.  RESERVES FOR UNPAID LOSSES

     The following  table sets forth an analysis of changes in the loss reserves
     for the years ended December 31, 1999, 1998 and 1997:

                                     1999            1998            1997
                                    ------          ------          ------
Beginning balance in
reserves for losses              $ 5,393,818     $ 5,421,160     $ 4,284,304
                                 -----------     -----------     -----------
Add/(deduct)-provision for
losses incurred related to:

    Current claim year            47,211,542      45,843,093      31,904,950
    Prior claim years               (427,390)       (290,547)       (746,024)
                                 -----------     -----------     -----------
       Total                      46,784,152      45,552,546      31,158,926
                                 -----------     -----------     -----------
Deduct paid losses
attributable to:

    Current claim year            43,514,155      40,767,738      27,024,981
    Prior claim years              3,938,576       4,812,150       2,997,089
                                 -----------     -----------     -----------
       Total                      47,452,731      45,579,888      30,022,070
                                 -----------     -----------     -----------
Ending balance in
reserves for losses              $ 4,725,239     $ 5,393,818     $ 5,421,160
                                 ===========     ===========     ===========

<PAGE>

PAGE 49

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                           (Expressed in U.S. Dollars)

Note 4.  RESERVES FOR UNPAID LOSSES  (Cont'd)

     As a result of change in estimates of losses  incurred in prior years,  the
     provisions for losses incurred in 1999, 1998 and 1997 decreased by 427,390,
     $290,547 and $746,024 respectively.

Note 5.  STOCKHOLDERS' EQUITY

     All of the Company's  Common Stock is held by MIC. The Company is preparing
     to file a prospectus  offering a further 90 series of 100 shares at a price
     of $75 per share.

     During 1999, 2 additional series of 100 shares of Participating  Stock were
     issued  as  compared  with 37 for the year  ended  December  31,  1998.  In
     addition,  in 1999 the Board of Directors  redeemed 14 series of 100 shares
     of which 7 series had been  previously  placed in run off and had reached a
     fully earned  position  during 1999 and 7 were redeemed for nil value.  The
     Board of Directors  also redeemed 37 series of 100 shares for nil value and
     thereafter, MIC recaptured the unearned premium and loss reserves for those
     series. (See Note 9).

     In the years ended December 31, 1999, 1998 and 1997, costs in the amount of
     $141,696,  $69,280 and $77,239  respectively,  were incurred in the sale of
     Participating Stock. The Common Stockholder reimbursed the Company directly
     for these expenses.

     The holder of Common  Stock is entitled to elect five  directors,  at least
     one of whom must be a resident of Barbados.  The holder of Common Stock has
     no right to vote with respect to  liquidation  of the  Company.  The holder
     generally has the sole right to vote on matters not  specifically  reserved
     to Participating Stock.

     The  holders of  Participating  Stock as a class are  entitled to elect one
     director.  Generally,  liquidation of the Company  requires  approval by at
     least 75% of the  outstanding  shares of this class.  Any  redemption  of a
     series of shares  requires a vote of the Board  provided  that the director
     representing  holders  of the  Participating  Stock  votes  in favor of the
     redemption.  Any  changes in the  Company's  Articles of  Incorporation  or
     By-Laws  require the approval of a majority of the shares of  Participating
     Stock  present and voting  together with a majority of the shares of Common
     Stock.

<PAGE>

PAGE 50

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                           (Expressed in U.S. Dollars)

Note 5.  STOCKHOLDERS' EQUITY (Cont'd)

     From time to time,  funds are held in escrow on  account  of  Participating
     Stock  applications.  Such  amounts  are  not  included  in cash  and  cash
     equivalents in the accompanying financial statements. At December 31, 1999,
     there were $7,500 in funds held in escrow.

Note 6.  REINSURANCE PREMIUMS

     Under the provisions of the retrocession agreement, the Company will assume
     additional  cessions of  $31,313,788  ($36,747,691  at December  31,  1998)
     relating to premiums written by Motors  Insurance  Corporation but unearned
     at the respective period ends. The amounts will be received as the premiums
     are earned, net of related acquisition costs.

Note 7.  LETTER OF CREDIT

     The Company has  provided  an  irrevocable  letter of credit to MIC, in the
     amount of $90,000,000 to  collateralize  the amounts  recoverable  from the
     Company  related to the business ceded to it. Cash  equivalents and certain
     investments are assigned to collateralize the letter of credit.

Note 8.  RETAINED EARNINGS

     Items of income or loss and premiums and expenses attributable to insurance
     underwriting  activities  are  determined  as of the end of  each  calendar
     quarter  and  are  allocated  to the  Participating  Stockholders'  capital
     accounts.

     An amount equal to 1-1/3 percent of assumed premiums (net of related ceding
     commissions) is allocated to the capital account of the Common Stockholder.
     Such allocations accumulate as restricted retained earnings and may be used
     to advance capital to any Participating Stockholders who incur a deficit in
     their  capital  accounts;  any such  advances are  repayable  out of future
     profitable operations of the respective Participating Stockholder.  Amounts
     allocated  to the Common  Stockholder,  net of  advances  to  Participating
     Stockholders, are presented in the table below as "net transfers."

     Dividends may be declared and paid at the discretion of the Company's Board
     of  Directors  subject to the right of holders  of  participating  stock to
     receive  minimum  dividends.  The minimum annual  dividend  payable on each
     share shall be such  share's pro rata  portion of an amount equal to twenty
     percent of the net income,  if any, for the preceding year  attributable to
     the subsidiary  capital  account  associated  with the series of which that
     share is part.

<PAGE>

PAGE 51

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                           (Expressed in U.S. Dollars)

Note 8.  RETAINED EARNINGS (Cont'd)

     Barbados  law  requires  that the  Company  maintain  a  minimum  margin of
     solvency based  generally on the amount of premiums earned in the preceding
     year. At January 1, 2000,  the  Company's  required  minimum  stockholders'
     equity  computed  in  accordance   with  Barbados  law  was   approximately
     $6,347,195.

     Retained earnings  applicable to the Common and Participating  Stockholders
     are comprised of the following:

                                   Common      Participating       Total
                                   ------      -------------       -----
Balance,
    December 31, 1996           $     9,417     $14,903,636     $14,913,053

Net income for the year              12,304       7,890,606       7,902,910
Net transfers                       (29,879)         29,879               0
Dividends paid                            0      (4,196,730)     (4,196,730)
Redemption of participating
 stock                                    0          (3,465)         (3,465)
                                -----------     -----------     -----------
Balance (Deficit),
    December 31, 1997           $    (8,158)    $18,623,926     $18,615,768

Net income for the year              20,970       7,172,386       7,193,356
Dividends paid                            0      (5,171,956)     (5,171,956)
Redemption of participating
 stock                                    0          (8,159)         (8,159)
                                -----------     -----------     -----------
Balance,
    December 31, 1998           $    12,812     $20,616,197     $20,629,009

Net income\(loss) for the year        1,422      (3,536,390)     (3,534,968)
Dividends paid                            0      (4,066,464)     (4,066,464)
Redemption of participating
 stock                                    0         162,999         162,999
                                -----------     -----------     -----------
Balance,
    December 31, 1999           $    14,234     $13,176,342     $13,190,576
                                ===========     ===========     ===========

<PAGE>

PAGE 52

                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                        NOTES TO THE FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                           (Expressed in U.S. Dollars)

Note 9.  RECAPTURE OF UNEARNED REINSURANCE PREMIUMS

     During 1999, The Company entered into a recapture agreement with MIC for 37
     series of  Participating  Shares,  and to pay MIC a  recapture  premium  of
     $24,934,234,  which  represents  unearned  premiums  and an amount equal to
     $1,209,316  for losses  incurred  but  unpaid in  respect to the  recapture
     business  as of June 30,  1999.  Additionally,  MIC has  agreed  to pay the
     Company a recapture  commission of $6,482,901 which represents the deferred
     portion of the ceding commission previously paid by the Company.

<PAGE>

PAGE 53

                                    PART III

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

None.


Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Five of the current  directors  of the Company  were  elected by MIC through its
ownership of the Common Stock at the Annual Shareholders'  Meeting held on April
22,  1999 and one  director  was  elected  by the  holders of the Shares at such
meeting. The directors and officers of the Company are as follows:

                                      POSITION WITH THE COMPANY
                                      (AND OTHER EMPLOYMENT DURING
    NAME                    AGE       PAST FIVE YEARS)

William B. Noll............  57    Chairman, Chief Executive Officer, President
                                   and Director (President, Motors Insurance
                                   Corporation ("MIC"), 1999; Executive Vice-
                                   President & Chief Financial Officer, MIC,
                                   1993-1999).

                                   Mr. Noll became President and Director in
                                   1995.

Thomas D. Callahan ........  47    Executive Vice-President and Director
                                   (Senior Vice-President, MIC, 1998; Vice-
                                   President, MIC, 1994-1998).

                                   Mr. Callahan became Executive Vice-President
                                   and Director in April of 1999.

John J. Dunn, Jr...........  41    Vice-President and Director (Vice-President
                                   and Treasurer, MIC, 1998; Assistant
                                   Treasurer, MIC, 1995-1998; manager, Coopers
                                   & Lybrand, L.L.P.).

                                   Mr. Dunn became Vice-President and
                                   Director in 1996.

Robert E. Capstack ........  59    Vice-President and Director (Section Manager,
                                   MIC, 1994; Vice-President, GMAC Securities
                                   Corporation, 1999).

                                   Mr. Capstack became Vice-President and
                                   Director in April of 1999.

<PAGE>

PAGE 54

Peter R. P. Evelyn .......   58    Director (Attorney, Evelyn, Gittens & Farmer,
                                   a Barbados law firm).

                                   Mr. Evelyn became a Director in 1986.

Diane Sauer ..............   45    Director (Martin Chevrolet, Warren, Ohio).

                                   Ms. Sauer became a Director in April of 1999.

Ronald W. Jones ..........   47    Vice-President, Finance (Managing Director,
                                   Aon Insurance Managers (Barbados) Ltd.).

                                   Mr. Jones has served as Vice-President,
                                   Finance since 1987.

Michael B. Boyce..........   60    Secretary (Principal, Colybrand Company
                                   Services, Limited, Barbados, since 1993;
                                   previously principal, Price Waterhouse,
                                   Eastern Caribbean).

                                   Mr. Boyce was elected Secretary in 1994.
                                   Mr. Boyce served previously as our Assistant
                                   Secretary.

The  directors  and  officers  named above serve in those  capacities  until the
annual meeting of shareholders next following their election.

Item 11. EXECUTIVE COMPENSATION

No director or officer of the Company is  compensated  directly  for services as
such.  However,  each  director  and  officer of the Company is  reimbursed  for
expenses incurred for attendance at Board, committee,  and shareholder meetings.
In addition,  Mr. Jones is an officer of the Manager,  which receives management
fees and compensation for financial and administrative services. Mr. Evelyn is a
member  of the law  firm of  Evelyn,  Gittens  &  Farmer,  which  serves  as the
Company's  Barbados counsel;  and Mr. Boyce is affiliated with Colybrand Company
Services  Limited,  St.  Michael,  Barbados,  which  receives  compensation  for
corporate secretarial services provided to the Company.

<PAGE>

PAGE 55

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

MIC owns all of the issued  and  outstanding  shares of the Common  Stock of the
Company,  which  consists of 2,000  shares.  Diane Sauer,  a director,  owns 100
shares of Participating Stock.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See  Item 1,  THE  RETROCESSION,  INSURANCE  MANAGEMENT  AGREEMENT  and Item 11,
EXECUTIVE COMPENSATION


                                     Part IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)  Index to Document List

          (1)  Financial Statements

               The following are included in Item 8:

               (i)  Independent Auditors' Report.

              (ii)  Balance Sheets, December 31, 1999 and 1998.

             (iii)  Statements  of Income and  Retained  Earnings  for the years
                    ended December 31, 1999, 1998 and 1997.

              (iv)  Statements  of Cash Flows for the years ended  December  31,
                    1999, 1998, and 1997.

               (v)  Statement of Changes in  Shareholders'  Equity for the years
                    ended December 31, 1999, 1998 and 1997.

              (vi)  Notes to Financial Statements.

          (2)  Financial Statement  Schedules.  Schedules are omitted because of
               the absence of the  conditions  under which they are  required or
               because the  information  required is presented in the  financial
               statements or related notes.

          (3)  Exhibits. The following exhibits are included in response to Item
               14(c):

<PAGE>

PAGE 56

               3(a) Restated  Articles of Incorporation  and amendments  thereto
                    filed by reference  to Exhibit  3(I) to Quarterly  Report on
                    Form 10Q File No.  33-6534 for the  quarterly  period  ended
                    June 30, 1996.

               3(b) By-laws of the Company dated June 6, 1986 filed by reference
                    to Exhibit 3(b) of the  Registration  Statement on Form S-1,
                    File No. 33-6534, dated June 18, 1986.

               4    Specimen  Participating Stock Certificate filed by reference
                    to Exhibit 4 of Amendment No. 1 to Registration Statement on
                    Form S-1, File No. 33-6534, dated February 12, 1987.

              10(a) Form of  Principal  Retrocession  Agreement  between  Motors
                    Insurance  Corporation and Registrant  filed by reference to
                    Exhibit  10(a) of the  Registration  Statement  on Form S-1,
                    File No. 33-6534, dated June 18, 1986.

              10(b) Form of Supplemental  Retrocession  Agreement between Motors
                    Insurance  Corporation and Registrant  filed by reference to
                    Exhibit  10(b) of the  Registration  Statement  on Form S-1,
                    File No. 33-6534 dated June 18, 1986.

              10(c) Specimen  Stock  Purchase  Agreement  filed by  reference to
                    Exhibit 10(c) to Amendment No. 2 to  Registration  Statement
                    on Form S-1, File No. 33-6534, dated May 22, 1987.

              10(d) Amended  and  Restated  Stock  Purchase   Agreement  between
                    Registrant  and  Motors  Insurance   Corporation   filed  by
                    reference   to  Exhibit   10(d)  to   Amendment   No.  1  to
                    Registration  Statement on Form S-1, File No. 33-6534, dated
                    February 12, 1987.

              10(e) Insurance  Management  Agreement between  Registrant and Aon
                    (formerly  Alexander)  Insurance  Managers  (Barbados) Ltd.,
                    effective  January  1, 1996  filed by  reference  to Exhibit
                    10(e) to Annual Report on Form 10K, File No. 33-6534 for the
                    year ended December 31, 1996.

              10(f) Investment   Management  Agreement  between  Registrant  and
                    BlackRock International, Ltd.

              20(a) Proxy   solicitation   materials  sent  to  shareholders  in
                    connection with annual meeting held on April 22, 1999, filed
                    by reference to Exhibit 20(b) to Annual Report on Form 10-K,
                    File No. 33-6534, for the year ended December 31, 1996.

              27    Financial Data Schedule.

              28(c) Certificate  of Barbados  Residency  filed by  reference  to
                    Exhibit 28(c) to Amendment No. 1 to  Registration  Statement
                    on Form S-1, File No. 33-6534, dated June 18, 1986.

              99(a) Certification  Form filed by reference  to Exhibit  28(a) to
                    Amendment No. 2 to Registration  Statement on Form S-1, File
                    No. 33-6534, dated June 18, 1986.

<PAGE>

PAGE 57

              99(b) Guarantee  issued by the  Minister  of Finance  of  Barbados
                    filed by  reference to Exhibit  99(b) to Amendment  No. 2 to
                    Registration Statement on Form S-2, File No. 33-60105, dated
                    April 23, 1996.

     (b)  Reports  on Form 8-K.  No reports  on Form 8-K for the  quarter  ended
          December 31, 1999 have been filed.


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

                                  MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
                                                  (Registrant)


                                         By s/Ronald W. Jones
                                            -----------------------
                                            Ronald W. Jones
                                            Vice-President, Finance

                                         Date:  March 29, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities indicated.

   Signature                      Title                           Date
   ---------                      -----                           ----

s/William B. Noll                 Chairman, Chief Executive       March 28, 2000
-------------------------         Officer, President and
  William B. Noll                 Director

s/Thomas D. Callahan              Executive Vice-President and    March 28, 2000
-------------------------         Director
  Thomas D. Callahan

s/John J. Dunn, Jr.               Vice-President and              March 28, 2000
-------------------------         Director
  John J. Dunn, Jr.

s/Robert E. Capstack              Vice-President and              March 28, 2000
-------------------------         Director
  Robert E. Capstack

                                  Director                                , 2000
-------------------------
  Diane Sauer

s/Peter R. P. Evelyn              Director                        March 29, 2000
-------------------------
  Peter R. P. Evelyn

s/Ronald W. Jones                 Vice-President                  March 29, 2000
-------------------------         Finance, Principal
  Ronald W. Jones                 Financial and
                                  Accounting Officer

<PAGE>

PAGE 58

     SUPPLEMENTAL  INFORMATION  TO BE FURNISHED  WITH REPORTS FILED  PURSUANT TO
SECTION  15(d) OF THE ACT BY  REGISTRANT  WHICH HAVE NOT  REGISTERED  SECURITIES
PURSUANT TO SECTION 12 OF THE ACT

     Proxy  solicitation  materials were sent to shareholders  subsequent to the
filing of this report, proxy solicitation materials will be sent to shareholders
in connection with an annual meeting to be held May 10th, 2000.