UNITED STATES
                       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, 2002

                                       or

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

                        Commission file number 033-06534

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

         Barbados                                      Not Applicable
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                      Identification No.)
One Financial Place                                    Not Applicable
Collymore Rock                                           (Zip Code)
St. Michael, Barbados, W.I.
(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:  None

Title of each class                                         Name of each
                                                    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

          Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).  YES     No   X
                                             ----    -----

          Aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of June 28, 2002, was $1,830,000.*

          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 31, 2003
       Common Stock, no-par value                                  2,000
       Participating Stock, no-par value                          23,300




* Based on current offering price of $75.00 per share.


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                                TABLE OF CONTENTS

                                                                            Page

ITEM 1.    BUSINESS............................................................4
ITEM 2.    PROPERTIES.........................................................12
ITEM 3.    LEGAL PROCEEDINGS..................................................12
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................12
ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS................................................12
ITEM 6.    SELECTED FINANCIAL DATA............................................13
ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS..........................................13
ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK..........23
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................25
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE...........................................39
ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................39
ITEM 11.   EXECUTIVE COMPENSATION.............................................40
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....40
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................40
ITEM 14.   CONTROLS AND PROCEDURES............................................41
ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K...41


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                         CAUTIONARY STATEMENT REGARDING
                           FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements" that anticipate results
based on management's plans that are subject to uncertainty. These statements
are made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995.

Forward-looking statements do not relate strictly to historical or current facts
and may be identified by their use of words like "plans," "will," "anticipates,"
"estimates," "intends," "believes" and other words with similar meanings. These
statements may address, among other things, our strategy for growth, product
development, regulatory approvals, market position, expenses, financial results
and reserves. Forward-looking statements are based on management's current
expectations of future events. We cannot guarantee that any forward-looking
statement will be accurate. However, we believe that our forward-looking
statements are based on reasonable, current expectations and assumptions.
Whether or not actual results differ materially from forward-looking statements
may depend on numerous foreseeable and unforeseeable risks and uncertainties,
some of which relate particularly to our business, such as our ability to set
adequate premium rates and maintain adequate reserves, our ability to compete
effectively and our ability to grow our business through internal growth as well
as though acquisitions. Other risks and uncertainties may be related to the
insurance industry generally or the overall economy, such as regulatory
developments, industry consolidation and general economic conditions and
interest rates. We assume no obligation to update any forward-looking statements
as a result of new information or future events or developments.

If the expectations or assumptions underlying our forward-looking statements
prove inaccurate or if risks or uncertainties arise, actual results could differ
materially from those predicted in our forward-looking statements.

                                     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 risk relating to mechanical
motor vehicle service agreements arising under insurance policies reinsured by
Motors Insurance Corporation ("MIC"). Such policies are written by owners of
motor vehicle franchises (with each MIC Mechanical Account being associated with
one or more vehicle franchises). The Company only assumes risk on policies that
are reinsured by MIC and are attributable to an MIC Mechanical Account (the
"Policies"). The Policies are issued by MIC Property and Casualty Corp., or
another subsidiary of MIC either to General Motors Corporation ("GM"), or
affiliates of GM, or to automobile dealers. The Policies are then 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 (each a "Franchise") with respect to which MIC maintains an MIC
Mechanical Account. A separate series of Shares is created for each MIC
Mechanical Account and a separate "Subsidiary Capital Account" is maintained for
each series. The financial results of the Company reflect both underwriting and
investment experience, which is allocated among the Subsidiary Capital Accounts.
See "Business--Allocations To Subsidiary Capital Accounts."

                                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 the
Common Stock of the Company and all of MIC's outstanding stock is owned by GMAC
Insurance Holdings, Inc., which, in turn, is the parent company of MIC and an
indirect


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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 in the Asia-Pacific region. MIC 's
A.M. Best Company's insurance financial rating is currently 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 with respect to 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 100% of the original gross
premium, reduced by ceding commissions, and cancellations, in a two-step
process. At the time the policies are written, the Company assumes 100% of the
risk with respect to these policies and MIC pays 75% of the net premium to the
Company. The remaining 25% of the net premium is paid to the Company as the
underlying premiums are earned. The Company pays MIC a ceding commission in an
amount equal to (i) 20% of net premium ceded to the Company that is attributable
to policies sold on or after October 1, 2001 and (ii) 25% of net premium ceded
to the Company that is attributable to policies sold prior to October 1, 2001.
Net settlements between the Company and MIC are made quarterly and 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 Retrocession 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, the unexpired liability with respect to 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

Risks assumed under the Agreement and the Supplemental Retrocession Agreement
are limited to coverages under insurance policies insured or reinsured by MIC
that provide indemnification against specific motor vehicle mechanical repairs
not covered by manufacturer's new vehicle warranties set forth in a service
contract. Such service contracts often provide additional coverages, such as
towing and rental allowances. Coverages with respect to routine vehicle
maintenance are not assumed under the Agreement or the Supplemental Retrocession
Agreement.

                                INVESTMENT INCOME

A major source of income to an insurance company is income earned on the
investment of amounts not currently required for the payment of 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,
operating expenses, and dividends paid.

The Company's investment portfolio consists of U.S. dollar denominated fixed
income securities and shares of a U.S. dollar denominated international equity
fund. At December 31, 2002, 2001 and 2000, 86%, 82% and 81%,


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respectively, of the Company's investment portfolio, based on fair market value,
consisted of fixed income securities with the balance of the portfolio
consisting of shares of the international equity fund.

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 $ 273 billion of assets
under management as of December 31, 2002. BlackRock, Inc. manages assets on
behalf of more than 400 institutions through a variety of equity, fixed income,
liquidity and 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 it
manages. 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 on the first $50 million of assets under
management on behalf of the foregoing entities is higher than the percentage
that is applicable on assets in excess of $50 million.

The Company's funds are invested in a manner consistent with investment
guidelines that are proposed by the Investment Committee and adopted by the
Company's Board of Directors (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
of domestic and foreign corporations, asset-backed securities, taxable municipal
securities, and money market instruments. 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 certificates of
deposit issued by foreign banks and foreign branches of U.S. banks, and, in
certain situations, non-U.S. dollar denominated bonds, on a fully
currency-hedged basis. The Company's fixed income investment portfolio was
completely converted to investments permitted under the new guidelines in the
latter half of 2000.

In addition to 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% of the overall investment
portfolio, based on fair market value. In June 1999, the Company invested $10
million in equity securities by purchasing shares in the Capital International
Fund (the "Fund"), an investment company incorporated under the laws of
Luxembourg. The Company invested an additional $6 million in the Fund during
November 2000. The market value of the Company's equity portfolio at December
31, 2002, 2001, and 2000 was approximately $12.6 million, $16.0 million and
$17.1 million, respectively.

During 2002, upon review of the Company's investment portfolio, certain fixed
income securities were in an unrealized loss position that was deemed to be
other than temporary in nature. As a result, the Company reported an impairment
charge of $0.2 million in 2002. In order to determine whether any other than
temporary losses needed to be recognized for any of the Company's individual
securities held, the Company evaluated, among other things, the length of time
and the extent that the underlying security has been valued at less than cost;
the financial health of the issuer of the underlying security, including any
specific events which may influence the issuer; the Company's intent and ability
to hold the investment; and the underlying security's rating as determined by an
independent rating agency.

At December 31, 2002, the cost of the Fund was $16.4 million with a fair market
value of $12.6 million. The net unrealized gain/(loss) position of the Fund at
December 31, 2002, 2001, and 2000 was ($3.8 million), ($0.3 million), and $1.0
million, respectively. The Company's investment in the Fund was reviewed using
the applicable criteria described above. In addition, the review entailed the
following procedures to determine whether any charge for other than temporary
impairment was necessary:

     o    Reviewed the relationship between the Fund's market value compared to
          its historical cost since its purchase. This included examining the
          period of time that the Fund was consecutively in an unrecognized loss
          position.


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     o    Reviewed the volatility of the Fund to determine if there has been a
          demonstrated ability for it to recover from an unrealized loss
          position.

     o    Examined the concentration of the Fund from a geographical, industry,
          and individual security standpoint.

Based on this review, no charge for other than temporary impairment was recorded
in 2002 for the Company's investment in the Fund. This conclusion was based on
the procedures described above, the volatility of the Fund over the last year,
and the ability of the Fund to be able to recover from its unrealized loss
position in a reasonable period of time.

The Fund's investment objective is capital appreciation and it aims to achieve
this objective through the continuous management of a diversified portfolio of
transferable securities consisting primarily of common stocks, researched and
selected on a world-wide basis. Shares of the Fund are denominated in United
States Dollars and are all of the same class and have like rights and
liabilities. Shares of the Fund are listed on the Luxembourg and Amsterdam Stock
Exchanges. The Fund had $1.6 billion in total net assets (based on fair market
value) as of December 31, 2002.

The Investment Committee of the Company 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, will be achieved or that adverse factors will 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 particular
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 Shares and the Common Stock, are
determined and allocated to the Subsidiary Capital Accounts as of the end of
each quarter.

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% 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 (the "Risk Fund").

     (b)  With respect to any agents' or brokers' commissions, ceding
          commissions, any ceding commissions or 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, 100% shall
          be allocated to the related Subsidiary Capital Account. For the
          purpose of this paragraph, losses incurred includes both paid and
          unpaid (reported and unreported) losses.


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     (d)  With respect to return premiums, 99% to the related Subsidiary Capital
          Account and 1% to the Subsidiary Capital Account for the Common Stock.

(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, GMAC Insurance Holdings, Inc. 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 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 fiscal 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
          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 term "Restricted Earned
               Surplus" means the portion of the earned surplus, if any, in the
               Subsidiary Capital Account for the Common Stock equal to the
               portion 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


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               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 fiscal 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 fiscal 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 7(a) above, a deficit is
          created in one 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 under paragraph 7(a) above with respect to the
          series of shares from which the reallocation is being made, which have
          not been previously restored, 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, are allocated among the
          Subsidiary Capital Accounts of the other Shares. 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
          repaid from the Subsidiary Capital Account that drew the funds if at
          any time it returns to a positive balance.

(8)  (a)  Dividends, payments upon redemption or liquidation (described below),
          and any other distributions with respect to the Shares and the Common
          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 as of the last day of the fiscal quarter
          in which the unearned portion of premiums that have been ceded to the
          Company and allocated to such Account becomes zero. Subsequent to the
          effective date of the redemption or repurchase, as the case may be,
          any positive balance as of the last day of any calendar quarter for
          the Subsidiary Capital Account of any repurchased or redeemed series
          of Shares, after application of the provisions of paragraph 7(c)
          above, will be allocated among the Subsidiary Capital Accounts of the
          existing series of Shares


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          pro rata based upon relative earned premium attributable to such
          Accounts for the calendar quarter then ending and any net deficit will
          be allocated in accordance with the provisions of paragraph 7(a)
          above.

Using the procedures described above, the Company allocates items of gain and
loss to the Subsidiary Capital Account for each series. Initially each
Subsidiary Capital Account had a balance of $7,500 representing the amount paid
for the Shares of a particular series of Shares. During the year ended December
31, 2002, $1,632,583 of net income from underwriting activities (which excludes
investment income and administrative expenses) and $675,818 of administrative
expenses were allocated among the series of Shares outstanding during the year
ended December 31, 2002, and $6,368,353 of net investment income was allocated
among such series of Shares and the Common Stock.

As of December 31, 2002, 161 series of Shares outstanding had Subsidiary Capital
Account balances greater than or equal to $7,500 (ranging from $8,180 to
$720,959) and 77 series had Subsidiary Capital Account balances less than $7,500
(ranging from $7,038 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, 2002, an aggregate of $5,672,812 had been
advanced from the Restricted Earned Surplus (the "Risk Fund"), which forms a
portion of the Account established for the Common Stock owned by GMAC Insurance
Holdings, Inc. (the "Common Shareholder"), to 121 Subsidiary Capital Accounts
and remained outstanding at that date, including net deficits of $3,948,664
associated with 61 series of Shares that have been redeemed. As of December 31,
2002, $8,988,619 of aggregate deficits had been reallocated among the Subsidiary
Capital Accounts of the Shares and remained outstanding. Of this amount,
$4,135,770 could be recovered from deficit accounts should they return to
profitability and to the extent that the Risk Fund is repaid in full. However,
there can be no assurances that such deficit accounts will return to
profitability or, if they return to profitability, that they will generate
sufficient profits to repay any portion of deficits previously allocated to the
Subsidiary Capital Account for the other series of Shares.

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 the Common Shareholder for the 2,000 shares of the Common Stock issued to
it. During 2002, 2000 shares of the Common Stock of the Company were purchased
from MIC by GMAC Insurance Holdings, Inc. The Subsidiary Capital Account for the
Common Stock 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.

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 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 management of the business and affairs of the Company.


                                       10

<PAGE>


                                   COMPETITION

The insurance business is extremely competitive. Management of the Company
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 insurance companies offering similar coverage. Because the
insurance business of the Company is limited to the assumption of Policies
covering certain mechanical motor vehicle 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.

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 to operate 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 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
mechanical motor vehicle 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 Shares at each
calendar month end. For the year ended December 31, 2002, the Company incurred
fees payable to the Manager in the amount of $252,358. Beginning in 2003, the
Company will pay the Manager a fixed annual fee, payable in monthly
installments.

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 the
services it provides 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 thirteen 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 this 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 the prior consent of the Company.


                                       11

<PAGE>


                          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 until at least December 31, 2016. Until December
31, 2001, the Company paid an annual licencing fee of $2,500 to obtain such
guarantee. Commencing January 1, 2002, the Company became subject to tax at a
rate of 2% on its taxable income provided that the amount of such tax does not
exceed $2,500 per annum.

                  FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

During the last three fiscal years, we have depended entirely on revenue from
sources located in the United States.

ITEM 2.  PROPERTIES

The Company does not own 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.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not currently 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, 2002.

                                    PART II

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

There is no public market for the Shares or the other shares of Common 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.

During 2002, 2,000 shares of Common Stock of the Company were purchased by GMAC
Insurance Holdings, Inc. from MIC. As a result, all of the outstanding Common
Stock of the Company is held by GMAC Insurance Holdings, Inc. As of March 1,
2003, there were 416 holders of Shares of record, representing 233 series of
Shares.

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 their 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 March of
2002, March of 2001, and May of 2000, the Company declared dividends of
$4,318,225, $3,083,096, and $673,134, respectively. These dividends were
declared as a varying percentage of earned surplus attributable to each series
of Shares with the percentage applicable depending on the amount of earned
surplus attributable to such series.


                                       12

<PAGE>


In determining the amount of dividends to pay, the Board considers the minimum
regulatory capital requirement, fluctuations in the value of the Company's
investment portfolio and the adverse development of loss experience to determine
an appropriate minimum capital level. 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, 2002,
2001, 2000, 1999 and 1998 have been derived from the Company's audited financial
statements.

<TABLE>
<CAPTION>
                                                         Fiscal Year Ended December 31
                          -----------------------------------------------------------------------------------------
                                 2002               2001              2000             1999**              1998
                                 ----               ----              ----             ----                ----
<S>                       <C>                <C>               <C>               <C>                <C>
Premiums
   Assumed                 $   45,296,200     $  51,131,226     $  52,352,900     $   67,104,475     $  72,634,160
                           ==============     =============     =============     ==============     =============
Premiums
   Returned                $    1,635,656     $           0     $           0     $   24,934,234     $           0
                           ==============     =============     =============     ==============     =============
Premiums Earned            $   49,812,496     $  53,412,569     $  54,378,800     $   58,471,950     $  57,845,674
Net Investment
   Income                       6,368,353         6,150,764         4,808,908            655,755        10,375,464
                           --------------     -------------     -------------     --------------     -------------
Total Income                   56,180,849        59,563,333        59,187,708         59,127,705        68,221,138
Less Losses and
   Expenses                    48,855,731        53,832,415        55,509,335         62,662,673        61,027,782
Net Income
   (Loss)*                 $    7,325,118     $   5,730,918     $   3,678,373     $   (3,534,968)    $   7,193,356
                           ==============     =============     =============     ==============     =============
Dividends Per
   Common Share                         0                 0                 0                 0                  0
Total Assets                  108,379,496     $ 116,131,055     $ 118,886,919     $ 132,504,762      $ 139,428,183
Total Policy
   Reserves and
   Other
   Liabilities              $  87,313,016        93,765,033        97,764,992       117,281,645        115,902,615
Stockholders'
   Equity                      21,066,480        22,366,022        21,121,927        15,223,117         23,525,568
Dividends Paid on
   Participating Shares         4,318,225         3,083,096           673,134         4,066,464          5,171,956
</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.

** In 2002 and 1999, MIC recaptured certain insurance business that had been
previously ceded to the Company. See Note 9 to the Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations."

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

Critical Accounting Policies

The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States ("GAAP"). The
preparation of our financial statements in conformity with GAAP requires us to
make estimates and assumptions that affect the amounts of assets and liabilities
and disclosures of


                                       13

<PAGE>


assets and liabilities reported by us at the date of the financial statements
and the revenues and expenses reported during the reporting period. As
additional information becomes available or actual amounts become determinable,
the recorded estimates may be revised and reflected in operating results. Actual
results could differ from those estimates. Accounts that, in our judgment, are
most critical to the preparation of our financial statements include policy
liabilities and accruals, deferred policy acquisition costs and valuation of
certain investments.

Investments, all of which are available for sale, are comprised of
interest-bearing marketable securities and an investment in an international
equity fund, and 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.
Unrealized appreciation (depreciation) is included in other comprehensive
income.

Realized gains and losses on the sale of investments and losses from other than
temporary impairment are included as investment income and are calculated based
on amortized costs. To evaluate whether any investments require provision for
other than temporary impairment, the Company evaluated, among other things, the
length of time and the extent that a security's market value was below cost; the
financial strength of the issuer, including any specific events that may
influence the issuer; the Company's intent to hold the investment; the
geographical and industry concentration of securities held; and the security's
rating as determined by an independent rating agency. In addition, the Company
evaluated whether the underlying security has demonstrated an ability to recover
from unrealized loss positions in the past.

Reinsurance premiums are based on the Company assuming (after ceding commission)
75% of the original policy premiums written by the direct insurer prior to
October 1, 2001 and 80% for policy premiums written by the direct insurer on and
after October 1, 2001. Of these premiums, 75% is retroceded to the Company when
written and the remaining 25% is retroceded when such premiums are earned (net
of ceding commissions and excise taxes).

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.

The Company received an undertaking from the Barbados Government exempting it
from all local income, profits and capital gains taxes (which expired on
December 31, 2001). Beginning January 1, 2002, the Company is 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 until December 31, 2016.

The liability for unpaid losses and loss expenses represents the accumulation of
estimates for reported losses and a provision for losses incurred but not
reported, including claim adjustment expenses. For purposes of establishing
reserves for unpaid losses, the Company relies upon the advice of MIC. Loss
reserve projections are used to estimate loss reporting patterns, loss payment
patterns, and ultimate claim costs. An inherent assumption in such projections
is that historical patterns can be used to predict future patterns with
reasonable accuracy. Because many variables can affect past and future loss
patterns, the effect of changes in such variables on the results of loss
projections must be carefully evaluated. The evaluation of these factors
involves complex, subjective judgments, which may significantly impact the
financial statements. Insurance liabilities are, therefore, necessarily based on
estimates, and the ultimate liability may vary from such estimates. Establishing
reserves is an uncertain process, and it is possible that actual claims will
materially exceed reserves and have a material adverse effect on our results of
operations and financial condition. These estimates are regularly reviewed by
management and adjustments to such estimates are included in income on a current
basis. See Note 4 to the Financial Statements.

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, redemptions of Shares, 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. The Company believes that
such funds will be sufficient to meet its liquidity requirements in 2003 and in
future years to which its reinsurance liabilities extend. No significant capital
expenditures are expected in the foreseeable future.


                                       14

<PAGE>


In 2002, the Board of Directors authorized the payment of dividends aggregating
$4,318,225 to eligible holders of Shares. The Board of Directors expects to
authorize the payment of dividends during the first half of 2003. See "Market
for Registrant's Common Equity and Related Stockholders Matters" for a
discussion of dividends paid and legal restrictions on the payment of dividends.

The Company had unearned premium reserves of $83,482,170 as of December 31,
2002, compared to $89,634,122 as of December 31, 2001. Unearned premium amounts
are attributable to the long-term nature of the service contracts sold. Such
contracts may extend for up to 84 months from the 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 from the date that the vehicle is
initially placed into service. 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 after such expiration. Since very
little premium is recognized as earned until after the expiration of the
underlying warranty, most of the premium written in any year is recorded as
unearned.

The decrease in unearned premium reserves as of December 31, 2002 compared to
December 31, 2001 is primarily attributable to the Company placing certain
series of Shares into "run-off" and their subsequent redemption after the
underlying policies reach a fully-earned status. When a series of Shares is
placed into run-off, the Company discontinues assuming any additional risk or
receiving any premiums with respect to mechanical motor vehicle service
contracts that are sold after the date that the series is placed into run-off by
the Franchise(s) with respect to which the series of Shares is issued. When a
series is placed into run-off, the premium that had been previously ceded to the
Company that is attributable to such series of Shares continues to earn out and
the unearned premium reserve decreases. As of December 31, 2002, 117 series of
Shares were in run-off compared to 132 series as of December 31, 2001.

Capital Resources

Capitalization of the Company, as of December 31, 2002, was comprised of paid-in
capital with respect to the Common Stock of $200,000 (compared to $200,000 at
both December 31, 2001 and 2000), paid-in capital with respect to the Shares of
$1,747,500 (compared with $1,875,000 and $1,942,500 as of December 31, 2001 and
2000, respectively), and earnings retained for use in the business of
$20,276,888 (compared with $18,521,974 and $16,247,004 as of December 31, 2001
and 2000, respectively). The reduction in the amount of paid-in capital with
respect to the Shares as of December 31, 2002 compared with December 31, 2001 is
primarily attributable to the redemption of Shares in run-off that have reached
a fully earned status. There were a total of 233 series outstanding at December
31, 2002 compared to 250 and 259 series of Shares outstanding at December 31,
2001 and 2000, respectively. During 2002, the Company issued 2 new series of
Shares and redeemed 19 series of Shares for a net decrease of 17 series. During
2001, the Company issued 1 new series of Shares and redeemed 10 series for a net
decrease of 9 series.

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 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, 2003,
the Company's required minimum net assets computed in accordance with Barbados
law was $5,481,250 compared to total capital and retained earnings computed for
purpose of Barbados law of $22,224,388.

Results of Operations

During the year ended December 31, 2002, the Company had net income of
$7,325,118 compared to $5,730,918 for the year ended December 31, 2001 and of
$3,678,373 for the year ended December 31, 2000. The increase in net income in
2002 compared to 2001 is attributable to an improvement in underwriting results
combined with a $217,589 increase in investment income. The increase in net
income in 2001 compared to 2000 is also attributable to an improvement in
underwriting results combined with a $1,341,856 increase in investment income.


                                       15

<PAGE>


The Company had net underwriting income of $956,765 in 2002 compared to net
underwriting losses of $419,846 and $1,130,535 in 2001 and 2000, respectively.
This gain was largely due to the absence of the earnings drag due to the
earn-out and redemption of unprofitable series and due to efforts undertaken by
the ceding company to control losses with respect to Shares. During 2002, the
Company earned premiums of $49,812,496 compared to $53,412,569 and $54,378,800
during 2001 and 2000, respectively. Premium income decreased in both 2002 and
2001 compared to the prior year primarily as a result of the redemption of
additional series of Shares during the years ended December 31, 2002 and 2001,
and the placement of certain series of Shares into run-off as previously
discussed. This resulted in the Company assuming less business.

The Company incurred losses and administrative expenses during the year ended
December 31, 2002 of $48,855,731 compared with $53,832,415 and $55,509,335 for
the years ended December 31, 2001 and 2000, respectively. Expenses in 2002 were
comprised of losses paid and provisions for losses incurred, ceding commissions
and excise taxes totaling $48,179,913 and operating expenses of $675,818. Losses
incurred in 2002 were $35,671,233 compared to $39,224,574 and $40,702,668 in
2001 and 2000, respectively. The incurred loss ratio for the year ended December
31, 2002 was 71.6% compared to 73.4% and 74.9% for the years ended December 31,
2001 and 2000, respectively. These decreases in losses incurred and loss ratios
are primarily attributable to the ongoing efforts by MIC to improve underwriting
results and the earn-out and redemption of Shares that have produced
unprofitable business. Despite efforts by MIC to identify ways to improve
underwriting results, there can be no assurances that the Company will not
experience significant adverse underwriting results in the future and there can
be no assurances that MIC would recapture additional business from the Company
if the Company does experience significant adverse underwriting results.

During 2002, the Company entered a recapture agreement with MIC for one series
of Participating Stock. Under the agreement MIC recaptured premiums of
$1,635,656, which represents unearned premiums and an amount equal to $57,426
for losses incurred, but unpaid in respect to the recaptured business as of June
30, 2002. Additionally, MIC paid the Company a recapture commission of $391,954
and a refund of U.S. Federal Excise Tax of $16,357, which represents the
deferred portion of the ceding commission and taxes previously paid by the
Company.

The Company incurred operating expenses during the year ended December 31, 2002
of $675,818 compared to $749,181 and $663,358 for the years ended December 31,
2001 and 2000, respectively. Such amounts do not include expenses reimbursed by
MIC as noted below. The decrease in operating expenses for the year ended
December 31, 2002 compared to the year ended December 31, 2001 was primarily
attributable to a decrease in legal fees and a decrease in the costs associated
with the annual general meeting of the shareholders. The increase in operating
expenses for the year ended December 31, 2001 compared to the year ended
December 31, 2000 is largely attributable to special reviews of certain
operations of the Manager that were performed by the Company's auditors during
2001 and increased legal fees. MIC has agreed to pay directly certain costs
relating to registering and issuing Shares if such costs cannot be allocated to
the Subsidiary Capital Account for the Common Stock. For the year ended December
31, 2002, $90,753 of such costs were paid directly by MIC compared to $106,751
and $98,992 for the years ended December 31, 2001 and 2000, respectively. The
decrease in such costs for the year ended December 31, 2002 compared to the year
ended December 31, 2001 is largely attributable to a reduction in fees
associated with the issuance of Participating Stock.

Investment income in 2002 was $6,368,353 compared to $6,150,764 and $4,808,908
for the years ended December 31, 2001 and 2000, respectively. The small increase
in investment income during 2002 compared to 2001 is primarily attributable to
gains realized on the sale of investment securities, which was attributable to
the positive impact of lower interest rates on the value of the Company's fixed
income securities. The increase in investment income during 2001 compared to
2000 arose primarily as a result of gains realized on the sale of investment
securities. Such gains were largely attributable to the positive impact of lower
interest rates on the value of the Company's fixed income securities.

The sale of investment securities for the year ended December 31, 2002 resulted
in realized gains of $2,099,677, compared to realized gains of $1,632,053 and
realized losses of $313,531 for the years ended December 31, 2001 and 2000,
respectively. Interest earned for the year ended December 31, 2002 was
$4,268,676 compared to $4,518,711 and $5,122,439 for the years ended December
31, 2001 and 2000, respectively. Interest earned in 2002 compared to 2001
decreased slightly as a result of a decrease in interest rates in 2002 and the
reduction in invested assets arising from premiums paid to MIC on quarterly
reinsurance cessions. Interest earned in 2001 compared to


                                       16

<PAGE>


2000 decreased primarily as a result of the combination of (i) repayment during
the first quarter of 2000 of premiums paid to MIC with respect to the 37
unprofitable series of Shares that the Board voted to redeem (the "Recapture"),
which represented approximately 20% of the invested assets of the Company, (ii)
the movement of investment funds into the equity fund, and (iii) lower interest
rates in 2001.

Based on market values at December 31, 2002 approximately 14%
(2001-18%/2000-19%) of the Company's investment portfolio was invested in a U.S.
dollar denominated international equity fund and the remaining 86%
(2001-82%/2000-81%) was invested in U.S. dollar denominated fixed-income
securities.

Net unrealized losses on investment securities held at December 31, 2002 were
$1,157,908 compared to unrealized gains at December 31, 2001 of $1,769,048. This
decrease resulted primarily from a significant change in the unrealized position
on the Company's equity portfolio, which was largely attributable to overall
negative performance of the equity markets during 2002.

During 2002, the Company recorded a realized loss for other than temporary
impairment of $0.2 million and $0.0 for its fixed income and equity investments
held, respectively. These impairment charges did not have a material impact on
other investments held. To determine the amounts recorded for other than
temporary impairment for its fixed income investments held, the Company
evaluated, among other things, the length of time and the extent that the
security's market value has been valued at less than cost; the financial health
of the issuer, including any specific events which may influence the issuer; the
Company's intent and ability to hold the investment; and the security's rating
as determined by an independent rating agency. If an investment's unrealized
loss position was determined to be other than temporary in nature, the
underlying security's cost basis was written down to the market value at the
time that the impairment charge was recorded.

The Company's investment in the Fund was reviewed using the applicable criteria
described above and such review also included the following procedures to
determine whether any charge for other than temporary impairment was necessary:

     o    Reviewed the relationship between the Fund's market value compared to
          its historical cost since its purchase. This included examining the
          period of time that the Fund was consecutively in an unrecognized loss
          position.

     o    Reviewed the volatility of the Fund to determine if there has been a
          demonstrated ability for it to recover from an unrealized loss
          position.

     o    Examined the concentration of the Fund from a geographical, industry,
          and individual security standpoint.

As of December 31, 2002, the Company's fixed income portfolio was in an
unrealized gain position of $2.6 million and its equity investment in the Fund
was in an unrealized loss position of $3.8 million. Utilizing the procedures
described above, no charge for other than temporary impairment was recorded in
2002 for the Company's investment in the Fund. This conclusion was based on the
procedures described above, the volatility of the Fund over the last year and
the ability to be able to recover from unrealized loss positions in a reasonable
period of time. As of February 28, 2003, the net unrealized loss position of the
Fund was $4.4 million or 27% of its historical cost. Management will continue to
monitor the unrealized loss position of this investment and, if necessary,
record an impairment charge.

There are inherent uncertainties in applying methodology and procedures
described above with the primary uncertainty being the continued instability in
most international economies, geographic regions, and industries in which the
Fund invests. Should management determine in the future that a decline in the
value of any of its investment portfolio is other than temporary, the overall
impact on the Company's holdings of fixed income investments and its investment
in the Fund is estimated to be a gross loss of $0.03 million and $3.8 million,
respectively. This represents the gross unrealized loss position at December 31,
2002 of the Company's fixed income and equity portfolio, respectively.


                                       17

<PAGE>


The fair value of the Company's investments that are in an unrealized loss
position and the duration that they have been continuously in an unrealized loss
position at December 31, 2002 are as follows:

<TABLE>
<CAPTION>

                                                                                       Unrealized
                     ($000s)                                              Unrealized    Loss As %
                  Security Type                  Cost          Market        Loss        of Cost
<S>                                           <C>            <C>         <C>            <C>
Equity Securities
     Capital International Fund                $16,368.7      $12,597.4   ($3,771.3)      23.0%
                                               ---------      ---------   ---------
Fixed Income Securities
     U.S. Government Agencies & Asset Backed
     Federal Home Loan Bank Disc. Note           8,299.7        8,299.1        (0.6)      0.0%
     All other                                   1,121.7        1,115.7        (6.0)      0.5%

Corporate                                           40.9           40.4        (0.5)      1.3%

Corporate Asset Backed                           2,601.7        2,575.8       (25.9)      1.0%
                                               ---------      ---------   ---------
Subtotal-Fixed Income Securities               $12,064.0      $12,031.0   $   (33.0)
                                               ---------      ---------   ---------
         TOTAL                                 $28,432.7      $24,628.4   ($3,804.3)
                                               =========      =========   =========
</TABLE>


All of the fixed income securities included in the above table are considered
investment grade and have maturity dates ranging from January 2003 to June 2031.
Excluding the securities shown in detail, the Company held positions in ten
fixed income securities with an unrealized loss ranging from approximately
$1,000 to $11,300 (or between 0.0% and 2.2% of cost) at December 31, 2002. Of
the above, only one security was in an unrealized loss position for over 12
consecutive months; however, its unrealized loss position was $11,400 or 2.2% of
its cost at December 31, 2002. All of the other securities in an unrealized loss
position at December 31, 2002 were in such a position for nine consecutive
months or less.


                                       18

<PAGE>


At December 31, 2002, the Company's investments are concentrated in the
following industries:
<TABLE>
<CAPTION>

                                                                                 % of Total Mkt.
                                               Number of      % of Mkt. Value       Value of
                                               Holdings           of Fund           Portfolio
<S>                                         <C>               <C>               <C>
Equity Securities:
     CIF Mutual Fund (1):
         Information Technology                                    21.0%
         Financial Services                                        16.3%
         Consumer Discretionary                                    14.6%
         Health Care                                               11.6%
         Energy                                                     8.6%
         Telecommunications                                         7.6%
         Cash & Equivalents                                         6.2%
         Industrials                                                6.1%
         Materials                                                  5.1%
         Consumer Staples                                           2.1%
         Utilities                                                  0.8%
                                              ----                ------
         Subtotal - Equity Securities            1                100.0%             18.0%
                                              ----                ------
Fixed Income Securities:
   U.S. Government Agencies & Asset Backed      39                 58.9%             48.3%
   Corporate Asset Backed                       29                 17.7%             14.5%
   Corporate                                    71                 17.3%             14.2%
   U.S. Government Securities                    9                  5.4%              4.4%
   State & Municipal                             1                  0.7%              0.6%
   Other                                         1                  0.0%              0.0%
                                              ----                ------            ------
     Subtotal - Fixed Income Securities        150                100.0%             82.0%
                                              ----                ------            ------
TOTAL INVESTMENT PORTFOLIO                                                          100.0%
                                                                                    ======
</TABLE>


(1) Represents a mutual fund called the Capital International Fund comprised of
numerous securities. The Company does not own individual positions in the
securities comprising the Capital International Fund. At December 31, 2002 there
were 199 different securities comprising the Capital International Fund.

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
in duration and for an amount equal to the unearned premium with respect to
risks retroceded and unpaid loss reserves (including reserves for losses
incurred, but not reported) otherwise required to be maintained by MIC with
respect to the Policies.

Reserves for Unpaid Losses

Reserves for unpaid losses are balance sheet liabilities representing estimates
of amounts needed in the future to pay claims under Policies with respect to
insured events, which have occurred as of the balance sheet dates.

For purposes of establishing reserves for unpaid losses, the Company relies upon
the advice of MIC. At December 31, 2002 and 2001, the Company's reserves for
unpaid losses were calculated as a percentage of earned premiums for the
corresponding quarter. This calculation is compared to an acceptable range for
the reserves developed by actuaries of the ceding company. At December 31, 2002,
and 2001, the reserves for unpaid losses were $3,650,641 and $3,949,590,
respectively. At December 31, 2002, the estimated range of reserves for unpaid
losses prepared for MMRC by the ceding company's actuaries was as follows:

Low end of range:   $2.4 million
High end of range:  $3.5 million


                                       19

<PAGE>


Although the recorded reserves are slightly higher than the high-end of the
range of estimated reserves, it is not considered material.

Key assumptions made in determining the actuarial range of reserves for unpaid
losses include the following:

     o    Loss development factors for the direct business of the ceding company
          were utilized due to the larger volume and greater stability.

     o    The loss development factors were weighted based on the mix of new and
          used vehicle business in the latest calendar year.

     o    Loss development factors were set equal to the weighted 12 month
          averages in order to smooth the effects of seasonality, while still
          reflecting the reductions due to efficiencies gained in the claims
          payment process that have been realized over the past several years.
          Such efficiencies resulted in the quicker payment of claims, resulting
          in less open claims at a given point in time.

Reserves for unpaid losses are established after periodic actuarial reviews,
based on judgments of the effects of technological change, manufacturers'
warranties, and MIC's historical experience with mechanical motor vehicle
service agreements. Consequently, the determination of reserves for unpaid
losses is an estimate and a process inherently subject to a number of highly
variable factors. Ultimate losses could exceed reserves for unpaid losses and
cause us to have to adjust such reserves. Any adjustments to reserves for unpaid
losses are reflected in the operating results for the periods in which they
become known.

Prior to the 4th Quarter of 2001, reserves for unpaid losses were recorded based
on a higher percentage of earned premiums for the corresponding quarter.
Utilizing this percentage of the corresponding quarterly earned premiums was
appropriate at that time as the carried reserves for unpaid losses fell within
the acceptable minimum and maximum range for such reserves developed by the
ceding company's actuaries. Taking into consideration the efficiencies that were
achieved in the claim payment processes of the ceding company, it was determined
appropriate to reduce this factor. Such efficiencies included, among other
things, the greater utilization of electronic claim settlement processes
(including the ability to submit many types of claims electronically and the
empowerment of eligible dealers to submit the payment of claims without
requiring pre-approval by an adjuster). As improvements occurred in the claims
payment processes of the ceding company, such efficiencies were reflected in the
loss reserve factor utilized. Since the last reporting date, there have been no
significant changes in the key assumptions made to estimate the reserves for
unpaid losses. In addition, there have been no changes in the nature and timing
of the change in estimate, including new events that occurred since the last
reporting date.

Had the current percentage of quarterly earned premiums been used for
determining reserves for unpaid losses at December 31, 2000, the estimated
reserve would have been $4.1 million, or $0.7 million lower than actually
recorded. There have been no changes to the key assumptions made to estimate the
reserves for unpaid losses nor has there been any changes as to the nature and
timing of the changes, including new events that occurred since the last
reporting date (December 31, 2001).

The Company's incurred loss ratios (losses incurred as a percentage of net
premium earned) on all business for the years ended December 31, 2002, 2001 and
2000 were 71.6%, 73.4% and 74.9%, respectively.


                                       20

<PAGE>


The following table sets forth an analysis of changes in the reserves for unpaid
losses for the years ended December 31, 2002, 2001 and 2000.

<TABLE>
<CAPTION>

                                                            Year Ended
                                      --------------------------------------------------------
                                           12/31/02          12/31/01            12/31/00
<S>                                  <C>                  <C>                <C>
Beginning balance in reserves for
unpaid losses......................       $3,949,590         $4,754,710         $4,725,239
                                      -----------------    --------------     ---------------
Add-provision for losses
incurred related to:

   Current claim year..............       36,929,150         40,529,340         41,579,713

   Prior claim years...............       (1,347,207)        (1,304,766)          (877,045)
                                      -----------------    --------------     ---------------

              Total................       35,581,943         39,224,574         40,702,668
                                      -----------------    --------------     ---------------

Deduct-paid losses
attributable to:

   Current claim year..............       33,288,213         36,590,250         36,837,642

   Prior claim years...............        2,592,679          3,439,444          3,835,555
                                      -----------------    --------------     ---------------

              Total................       35,880,892         40,029,694         40,673,197

Ending balance in reserves
for unpaid losses..................       $3,650,641          3,949,590         $4,754,710
                                      =================    ==============     ===============
</TABLE>


As a result of change in estimates of losses incurred in prior years, the
provisions for losses incurred in 2002, 2001 and 2000 decreased by $1,347,207,
$1,304,766 and $877,045, respectively. The decreases are largely due to the
efficiencies realized in the claims payment processes previously discussed and
due to the decreasing number of policies in force as a result of fewer Shares
outstanding.


                                       21

<PAGE>



The following table sets forth the development of losses and loss adjustment
expenses from January 1, 1998 through December 31, 2002.
<TABLE>
<CAPTION>

                                                                        Years Ended
                                      ---------------------------------------------------------------------------------
                                      12/31/98         12/31/99         12/31/00          12/31/01          12/31/02
                                      --------         --------         --------          --------          --------
<S>                                 <C>              <C>              <C>               <C>                <C>
Liability for unpaid claims and
claims adjustment expense.....       $5,393,818       $4,725,239       $ 4,754,710       $3,949,590         $3,650,641
                                     ----------       ----------       -----------       ----------         ----------

Paid (cumulative) in
subsequent year(s)............        3,938,576        3,835,555         3,439,444        2,592,679

Estimated unpaid
liability as of
year end*.....................        1,027,852           12,639            10,500            9,704
                                     ----------       ----------       -----------       ----------
Cumulative Redundancy.........         $427,390        $ 877,045        $1,304,766       $1,347,207
                                     ----------       ----------       -----------       ----------
</TABLE>


* Mechanical breakdown claims are generally paid within 90 days of when they are
incurred. Accordingly, the liability for unpaid claims incurred in all prior
years has been combined at each year end. At December 31, 1998, the estimated
unpaid liability was significantly higher due to a claim cycle prior to December
31 not being processed as scheduled.


                                       22

<PAGE>


The table above shows initial estimated reserves at December 31, 2002, 2001,
2000, 1999 and 1998 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
seven years) and losses do not occur equally over the period for which the
Policies are 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.

Recently Issued Accounting Standards

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities", issued in July 2002, addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies EITF Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." The principal difference between Statement 146 and Issue 94-3
relates to Statement 146's requirements for recognition of a liability for a
cost associated with an exit or disposal activity. Statement 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized
when the liability is incurred. A liability for an exit costs as generally
defined in Issue 94-3 was recognized at the date of an entity's commitment to an
exit plan. Therefore, this Statement eliminates the definition and requirements
for recognition of exit costs in Issue 94-3. This Statement also established
that fair value is the objective for initial measurement of the liability. The
provisions of this Statement are effective for exit or disposal activities that
are initiated after December 31, 2002, with early application encouraged. We do
not believe the adoption of this statement will have a material impact on the
Company's results of operations or financial position.

FASB Interpretation No. 45, "Guarantor Accounting," will significantly change
current practice in the accounting for, and disclosure of, guarantees. Most
guarantees are to be recognized and initially measured at fair value, which is a
change from current practice. In addition, guarantors will be required to make
significant new disclosures, even when the likelihood of the guarantor making
payments under the guarantee is remote. In general, the Interpretation applies
to contracts or indemnification agreements that contingently require the
guarantor to make payments to the guaranteed party based on changes in an
underlying agreement that is related to an asset, liability, or an equity
security of the guaranteed party. The Interpretation's disclosure requirements
are effective for financial statements of interim or annual periods ending after
December 15, 2002, while the initial recognition and initial measurement
provisions are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. We do not believe the adoption of this
statement will have a material impact on the Company's results of operations or
financial position. Guarantees issued by reinsurance companies accounted for
under SFAS No. 113 are not within the scope of FASB Interpretation No. 45, which
reduces the potential impact this could have on the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest 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. The
Company seeks to manage its exposure to market risk generally by monitoring the
character of investments that are purchased or sold.

The Company does not hold derivative instruments.

The following analyses are based on sensitivity analysis tests that assume
instantaneous, parallel shifts in exchange rates, interest rates, and interest
rate yield curves. As with any similar analysis, there are shortcomings inherent
to the sensitivity analyses presented here. 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.


                                       23

<PAGE>


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, 2002 and 2001, the net fair value asset exposure
to interest rate risk was approximately $66.1 and $72.7 million, respectively.
As of both December 31, 2002 and 2001, the potential loss in fair value
resulting from a hypothetical 10% increase in interest rates would be
approximately $0.9 million and $1.5 million, respectively. Conversely, the
potential gain in fair value resulting from a hypothetical 10% decrease in
interest rates would be approximately $0.9 million and $1.5 million at December
31, 2002 and 2001, 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, 2002 and 2001, 100% of investments were denominated in U.S.
dollars.

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, 2002 and
December 31, 2001, the Company had approximately 14% and 18%, respectively, of
its portfolio invested in an international equity fund. As of December 31, 2002
and 2001, the net fair value asset exposure to equity price risk was
approximately $12.6 million and $16.0 million, respectively, and the potential
gain in fair value resulting from a hypothetical 10% increase in the underlying
equity prices would be approximately $1.3 million and $1.6 million,
respectively. Conversely, the potential loss in fair value resulting from a
hypothetical 10% decrease in the underlying equity prices would be approximately
$1.3 million and $1.6 million at December 31, 2002 and 2001, respectively.

For a discussion of the Company's investment in the Fund, see "Management's
Discussion and Analysis of Financial Condition and Results of Operation --
Results of Operations."


                                       24

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                        Page No.

             Independent Auditors' Report                                 26

             Balance Sheets December 31, 2002 and 2001                    27

             Statements of Operations and Retained Earnings for the
             years ended December 31, 2002, 2001 and 2000                 28

             Statements of Changes in Stockholders' Equity for the
             years ended December 31, 2002, 2001 and 2000                 29

             Statements of Cash Flows for the years ended December
             31, 2002, 2001 and 2000                                      31

             Notes to the Financial Statements                            32


                                       25

<PAGE>


                          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 (the "Company") as of December 31, 2002 and 2001 and the
related statements of operations and retained earnings, changes in stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2002. 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, 2002 and 2001 and the results of its operations,
changes in stockholders' equity and its cash flows for each of the three years
in the period ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.





                                                           CHARTERED ACCOUNTANTS

Deloitte & Touche LLP
Bridgetown, Barbados
February 24, 2003


                                       26

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                                 BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001

                      (Expressed in United States dollars)

<TABLE>
<CAPTION>

                                                         Notes               2002               2001
                                                    -------------    -----------------  -----------------
<S>                                              <C>                <C>                <C>
ASSETS
Investments
   Debt securities                                                    $     74,393,966   $     74,444,312
   Equity securities                                                        12,597,450         15,989,057
                                                                      -----------------  -----------------
     Total Investments                                    3,7               86,991,416         90,433,369
                                                                      =================  =================

Cash and cash equivalents                                  7                   257,303            142,992
Accrued investment income                                                      572,241            789,199
Due from Motors Insurance Corporation                                          379,634          1,390,278
Deferred acquisition costs                                                  19,810,917         22,810,217
Advances to shareholders                                                       323,206            527,500
Prepayments                                                                     44,779             37,500
                                                                      -----------------  -----------------
     Total Assets                                                          108,379,496        116,131,055
                                                                      =================  =================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
    Unearned premiums                                                       83,482,170         89,634,122
    Reserves for unpaid losses                             4                 3,650,641          3,949,590
    Accrued liabilities                                                        180,205            181,321
                                                                      -----------------  -----------------
       Total Liabilities                                                    87,313,016         93,765,033
                                                                      -----------------  -----------------

COMMITMENTS AND CONTINGENCIES                              7                        --                 --
-----------------------------

STOCKHOLDERS' EQUITY                                       5
Share capital
- Common stock - no par value;
     Authorized - 2,000 shares;
     Issued and outstanding - 2,000 shares                                     200,000            200,000
- Participating stock - no par value;
     Authorized - 100,000 shares;
     Issued and outstanding -
     23,300 shares at December 31, 2002 and 25,000
     shares at December 31, 2001                                             1,747,500          1,875,000
                                                                      -----------------  -----------------
                                                                             1,947,500          2,075,000
Retained earnings                                          8                20,276,888         18,521,974
Accumulated other comprehensive (loss)/income                               (1,157,908)         1,769,048
                                                                      -----------------  -----------------
     Total Stockholders' Equity                                             21,066,480         22,366,022
                                                                      -----------------  -----------------

Total Liabilities and Stockholders' Equity                            $    108,379,496   $    116,131,055
                                                                      =================  =================
</TABLE>

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


                                       27

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)

<TABLE>
<CAPTION>

                                                                             Years Ended December 31,
                                                                -----------------------------------------------------
                                                     Notes            2002                2001               2000
                                                    ------      ----------------    ---------------     -------------
<S>                                               <C>          <C>                 <C>                 <C>
INCOME
   Reinsurance premiums assumed                        6        $   45,296,200      $  51,131,226       $  52,352,900
   Recapture of unearned reinsurance premiums          9            (1,635,656)                --                  --
   Decrease in unearned premiums                                     6,151,952          2,281,343           2,025,900
                                                                ---------------     --------------      -------------
   Premiums earned                                                  49,812,496         53,412,569          54,378,800
                                                                ---------------     --------------      -------------

   Investment Income
     Interest earned                                                 4,268,676          4,518,711           5,122,439
     Realized gains/(losses) on investments - net                    2,099,677          1,632,053            (313,531)
                                                                ---------------     --------------      -------------
   Investment income                                                 6,368,353          6,150,764           4,808,908
                                                                ---------------     --------------      -------------

TOTAL INCOME                                                        56,180,849         59,563,333          59,187,708
                                                                ---------------     --------------      -------------

EXPENSES
   Acquisition costs                                                12,508,680         13,858,660          14,143,309
   Losses paid                                                      35,970,182         40,029,694          40,673,197
   (Decrease)/increase in loss reserves                               (298,949)          (805,120)             29,471
   Administrative expenses
     Related parties                                                   273,361            273,592             245,953
     Other                                                             402,457            475,589             417,405
                                                                ---------------     --------------      -------------

TOTAL EXPENSES                                                      48,855,731         53,832,415          55,509,335
                                                                ---------------     --------------      -------------

NET INCOME, for the year                                             7,325,118          5,730,918           3,678,373

RETAINED EARNINGS, beginning of year                                18,521,974         16,247,004          13,190,576

LESS: DIVIDENDS                                                     (4,318,225)        (3,083,096)           (673,134)

(DEDUCT)/ADD SURPLUS AMOUNTS ON REDEMPTION OF
   PARTICIPATING STOCK                                              (1,251,979)          (372,852)             51,189
                                                                ---------------     --------------      -------------

RETAINED EARNINGS, end of year                                  $   20,276,888      $  18,521,974       $  16,247,004
                                                                ===============     ==============      =============
</TABLE>

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


                                       28

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)
<TABLE>
<CAPTION>

                                                                      December 31, 2002
                                        -------------------------------------------------------------------------------
                                                                                Accumulated
                                           Total                                   Other
                                        Shareholders'Comprehensive  Retained   Comprehensive              Participating
                                           Equity       Income      Earnings   (Loss)/Income Common Stock    Stock
                                        ------------ ------------- ----------- ------------- ------------ ------------
<S>                                    <C>           <C>          <C>         <C>           <C>          <C>
Balance at December 31, 2001            $ 22,366,022  $       --   $18,521,974 $   1,769,048 $    200,000 $  1,875,000
Comprehensive income:
Net income                                 7,325,118    7,325,118    7,325,118            --           --           --
Other comprehensive income, net of tax:
     Unrealized loss on securities,
       net of reclassification            (2,926,956)  (2,926,956)          --    (2,926,956)          --           --
                                                      ------------
     Comprehensive income                         --  $ 4,398,162           --            --           --           --
                                                      ============
Dividends declared and paid
   on participating stock                 (4,318,225)               (4,318,225)           --           --           --
Participating stock
   Issued                                     15,000                        --            --           --       15,000
   Redeemed                               (1,394,479)               (1,251,979)           --           --     (142,500)
                                        ------------               ----------- ------------- ------------ ------------
Balance at December 31, 2002            $ 21,066,480               $20,276,888 $  (1,157,908)$    200,000 $  1,747,500
                                        ============               =========== ============= ============ ============

Disclosure of reclassification amount
     Unrealized holding losses arising
     during period                        (5,026,633)
     Add: reclassification adjustment
     for gains included in net income      2,099,677
                                        ------------
     Net unrealized loss on securities  $ (2,926,956)
                                        ============

                                                                      December 31, 2001
                                        -------------------------------------------------------------------------------
                                                                                Accumulated
                                           Total                                   Other
                                        Shareholders'Comprehensive  Retained   Comprehensive              Participating
                                           Equity       Income      Earnings   (Loss)/Income Common Stock    Stock
                                        ------------ ------------- ----------- ------------- ------------ ------------
Balance at December 31, 2000            $ 21,121,927 $        --   $16,247,004 $   2,732,423 $    200,000 $  1,942,500
Comprehensive income:                                                                     --           --           --
Net income                                 5,730,918    5,730,918    5,730,918
Other comprehensive income, net of tax:
     Unrealized loss on securities,
       net of reclassification              (963,375)    (963,375)          --      (963,375)          --           --
                                                      ------------
     Comprehensive income                         --  $ 4,767,543           --            --           --           --
                                                      ============

Dividends declared and paid
   on participating stock                 (3,083,096)               (3,083,096)           --                        --
Participating stock
   Issued                                      7,500                        --            --           --        7,500
   Redeemed                                 (447,852)                 (372,852)           --           --      (75,000)
                                        ------------               ----------- ------------- ------------ ------------
Balance at December 31, 2001            $ 22,366,022              $ 18,521,974 $   1,769,048 $    200,000 $  1,875,000
                                        ============               =========== ============= ============ ============

Disclosure of reclassification amount
     Unrealized holding losses arising
     during period                        (2,595,428)
     Add: reclassification adjustment
     for gains included in net income      1,632,053
                                        ------------
     Net unrealized loss on securities  $   (963,375)
                                        ============
</TABLE>

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


                                       29

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

        FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 (CONTINUED)

                      (Expressed in United States dollars)
<TABLE>
<CAPTION>

                                                                      December 31, 2000
                                        -------------------------------------------------------------------------------
                                                                                Accumulated
                                           Total                                   Other
                                        Shareholders'Comprehensive  Retained   Comprehensive              Participating
                                           Equity       Income      Earnings   (Loss)/Income Common Stock    Stock
                                        ------------ ------------- ----------- ------------- ------------ ------------
<S>                                    <C>           <C>         <C>          <C>           <C>          <C>
Balance at December 31, 1999            $ 15,223,117  $        -- $ 13,190,576 $    (162,459)$    200,000 $  1,995,000
Comprehensive income:
Net income                                 3,678,373    3,678,373    3,678,373            --           --           --
Other comprehensive income, net of tax:
     Unrealized loss on securities,
       net of reclassification             2,894,882    2,894,882           --     2,894,882           --           --
                                                      ------------
     Comprehensive income                         --  $ 6,573,255           --            --           --           --
                                                      ============

Dividends declared and paid
   on participating stock                   (673,134)                 (673,134)           --           --           --
Participating stock
   Issued                                      7,500                        --            --           --        7,500
   Redeemed                                   (8,811)                   51,189            --           --      (60,000)
                                        ------------               ----------- ------------- ------------ ------------
Balance at December 31, 2000            $ 21,121,927              $ 16,247,004 $   2,732,423 $    200,000 $  1,942,500
                                        ============               =========== ============= ============ ============

Disclosure of reclassification amount
     Unrealized holding gains arising
     during period                         3,208,413
     Add: reclassification adjustment
     for losses included in net income      (313,531)
                                        ------------
     Net unrealized loss on securities  $  2,894,882
                                        ============
</TABLE>

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


                                       30

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)
<TABLE>
<CAPTION>

                                                                                Years Ended December 31,
                                                                    --------------------------------------------------
                                                                          2002              2001             2000
                                                                    ---------------   ---------------   --------------
<S>                                                                <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Reinsurance premiums collected                                   $   48,171,023    $   48,312,795    $  64,624,446
   Reinsurance premiums returned                                        (1,635,656)               --      (24,934,234)
   Losses and acquisition expenses paid                                (47,168,004)      (52,571,957)     (59,203,627)
   Administrative expenses paid                                           (667,237)         (791,054)        (698,452)
   Investment income received                                            4,497,215         4,623,433        6,376,462
                                                                    ---------------   ---------------   --------------
Net cash provided by/(used in) operating activities                      3,197,341          (426,783)     (13,835,405)
                                                                    ---------------   ---------------   --------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of investments                                           (248,329,909)      (71,853,926)    (173,786,271)
   Sales and maturities of investments                                 250,944,583        74,210,913      163,430,130
                                                                    ---------------   ---------------   --------------
Net cash provided by/(used in) investing activities                      2,614,674         2,356,987      (10,356,141)
                                                                    ---------------   ---------------   --------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of participating stock                            15,000             7,500            7,500
   Redemption of participating stock                                    (1,394,479)         (447,851)          (8,811)
   Dividends paid                                                       (4,318,225)       (3,083,096)        (673,134)
                                                                    ---------------   ---------------   --------------
Net cash used in financing activities                                   (5,697,704)       (3,523,447)        (674,445)
                                                                    ---------------   ---------------   --------------

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                           114,311        (1,593,243)     (24,865,991)
CASH AND CASH EQUIVALENTS, beginning of year                               142,992         1,736,235       26,602,226
                                                                    ---------------   ---------------   --------------
CASH AND CASH EQUIVALENTS, end of year                              $      257,303    $      142,992    $   1,736,235
                                                                    ===============   ===============   ==============


                                                                                Years Ended December 31,
                                                                    --------------------------------------------------
                                                                         2002              2001             2000
                                                                    ---------------   ---------------   --------------
RECONCILIATION OF NET INCOME TO NET CASH
   PROVIDED BY/(USED IN) OPERATING ACTIVITIES
   Net income                                                      $    7,325,118    $    5,730,918    $     3,678,373
   Realized (gains)/losses on investments                              (2,099,677)       (1,632,053)           313,531
   Change in:
   Accrued investment income                                              216,958           114,535          1,350,045
   Deferred acquisition costs                                           2,999,300         1,087,804            520,549
   Advances to shareholders                                               204,294          (337,500)                --
   Prepayments                                                             (7,279)             (250)          (181,250)
   Unearned premiums                                                   (6,151,952)       (2,281,343)        (2,025,900)
   Reserves for unpaid losses                                            (298,949)         (805,120)            29,471
   Accrued liabilities                                                     (1,116)           55,368           (150,163)
   Due from/to Motors Insurance Corporation                             1,010,644        (2,359,142)       (17,370,061)
                                                                    ---------------   ---------------   --------------
NET CASH PROVIDED BY/(USED IN)
   OPERATING ACTIVITIES                                             $   3,197,341     $    (426,783)    $  (13,835,405)
                                                                    ===============   ===============   ==============
</TABLE>

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


                                       31

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States 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.

          As of December 2002, all of the common stock of the Company is owned
          by GMAC Insurance Holdings, Inc. ("GMACI"). Prior to that date, all of
          the common stock of the Company was owned by Motors Insurance
          Corporation ("MIC"), a wholly-owned subsidiary of GMACI. GMACI (the
          "common stockholder") is an indirect wholly-owned subsidiary of
          General Motors Corporation. The principal activity of the Company is
          the assumption of mechanical motor vehicle 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
          prepared in conformity with accounting principles generally accepted
          within the United States of America.

          Reclassifications

          Certain amounts from 2000 and 2001 have been reclassified to conform
          with 2002 classification.

          Use of Estimates

          The preparation of financial statements requires management to make
          estimates and assumptions that affect the reported amounts of assets
          and liabilities, the 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 premiums written by the direct
          insurer prior to October 1, 2001 and 80% for policy premiums written
          by the direct insurer, on and after October 1, 2001. Of these
          reinsurance premiums, 75% is retroceded to the Company when written
          and the remaining 25% when such premiums are earned (net of ceding
          commissions and excise taxes).

          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.


                                       32

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)


Note 2.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

          Investments

          Investments, all of which are available for sale, are comprised of
          interest-bearing marketable securities, and an investment in an
          international equity fund (the "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. Unrealized
          appreciation (depreciation) is included in accumulated other
          comprehensive income (loss).

          Realized gains and losses on the sale of investments and losses from
          other than temporary impairment are included as investment income and
          are calculated based on amortized costs. To determine the amounts
          recorded as other than temporary impairment for its fixed income
          investment held, the Company evaluated, among other things, the length
          of time and the extent that the security's market value has been
          valued at less than cost; the financial health of the issuer,
          including any specific events which may influence the issuer; the
          Company's intent to hold the investment; and the security's rating as
          determined by an independent rating agency. If an investment's
          unrealized loss position was determined to be other than temporary in
          nature, the underlying security's cost basis was written down to the
          market value at the time that the impairment charge was recorded.

          The Company's investment in the Fund was reviewed using the applicable
          criteria described above and such review also included the following
          procedures to determine whether any charge for other than temporary
          impairment was necessary:

          1.   Reviewing the relationship between the Fund's market value
               compared to its historical cost since its purchase. This included
               examining the period of time that the Fund was consecutively in
               an unrecognized loss position.
          2.   Reviewing the volatility of the Fund to determine if there has
               been a demonstrated ability for it to recover from an unrealized
               loss position.
          3.   Examining the concentration of the Fund from a geographical,
               industry, and individual security standpoint.

          Reserves for Unpaid Losses

          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.

          Taxation

          The Company received an undertaking from the Barbados Government
          exempting it from all local income, profits and capital gains taxes
          which expired on December 31, 2001. Beginning January 1, 2002, the
          Company is 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
          until December 31, 2016.

          Stockholders who are United States residents are taxed in the United
          States on their share of the Company's income on an imputed basis.


                                       33

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)


          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 equities
          are as follows:
<TABLE>
<CAPTION>

                                                                        Gross            Gross
                                                                     Unrealized       Unrealized           Fair
                                                       Cost         Appreciation     Depreciation         Value
                                                 --------------    --------------   ---------------  --------------
<S>                                             <C>               <C>              <C>              <C>
            December 31, 2002:
            Governments and their agencies       $   46,895,064    $    1,486,701   $       (6,610)  $   48,375,155
            Corporations                             24,387,615         1,121,565          (26,394)      25,482,786
            Supranationals                              497,900            38,125               --          536,025
                 Sub-total debt securities           71,780,579         2,646,391          (33,004)      74,393,966
            Capital International Fund               16,368,745                --       (3,771,295)      12,597,450
                                                 --------------    --------------   ---------------  --------------
                 Total                           $   88,149,324    $    2,646,391   $   (3,804,299)  $   86,991,416
                                                 ==============    ==============   ===============  ==============


                                                                        Gross            Gross
                                                                     Unrealized       Unrealized           Fair
                                                       Cost         Appreciation     Depreciation         Value
                                                 --------------    --------------   ---------------  --------------
            December 31, 2001:
            Governments and their agencies       $   45,182,051    $    1,221,744   $           --   $   46,403,795
            Corporations                             18,886,693           401,564               --       19,288,257
            Supranationals                            8,347,098           405,162               --        8,752,260
                                                 --------------    --------------   ---------------  --------------
                 Sub-total debt securities           72,415,842         2,028,470               --       74,444,312
            Capital International Fund               16,248,479                --         (259,422)      15,989,057
                                                 --------------    --------------   ---------------  --------------
                 Total                           $   88,664,321    $    2,028,470   $     (259,422)  $   90,433,369
                                                 ==============    ==============   ===============  ==============

              The cost and fair value of debt securities at December 31, 2002,
              by contractual maturity, are shown below. Expected maturities will
              differ from contractual maturities because borrowers may have the
              right to call or prepayment obligations with or without call or
              prepayment penalties.

                                                                                 Fair
                                                                Cost             Value
                                                        ---------------   ---------------
            Due after one year through five years       $    25,506,618   $    26,232,434
            Due after five years through ten years           17,894,580        18,956,911
            Due after ten years through thirty years         28,379,381        29,204,621
                                                        ---------------   ---------------
                                                        $    71,780,579   $    74,393,966
                                                        ===============   ===============
</TABLE>


                                       34

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)


Note 3.   INVESTMENTS (CONTINUED)

          In 2002, gross gains of $3,516,788 and gross losses of $1,417,111 were
          realized. In 2001, gross gains of $2,067,143 and gross losses of
          $435,090 were realized. In 2000, gross gains of $1,735,049 and gross
          losses of $2,048,580 were realized. For the years ended December 31,
          2002 and 2001, of the realized loss recorded, $159,632 and nil,
          respectively was recorded for investments whose losses were determined
          to be other than temporary.

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

            Balance, December 31, 1999                 $    (162,459)
                 Net appreciation                          2,894,882
                                                       ---------------
            Balance at December 31, 2000               $   2,732,423
                 Net depreciation                           (963,375)
                                                       ---------------
            Balance at December 31, 2001               $   1,769,048
                 Net depreciation                         (2,926,956)
                                                       ---------------
            Balance at December 31, 2002               $  (1,157,908)
                                                       ===============

          At December 31, 2002, the investment portfolio is comprised of
          approximately 86% (2001 - 82%) in diverse debt securities, which do
          not result in any concentration of credit risk and 14% (2001 - 18%) in
          an international equity fund based on market value. At December 31,
          2002 and 2001, 100% of the Company's investments are denominated in
          United States dollars.

Note 4.   RESERVES FOR UNPAID LOSSES

          The following table sets forth an analysis of changes in the reserves
          for unpaid losses for the years ended December 31, 2002, 2001, and
          2000:
<TABLE>
<CAPTION>

                                                            2002               2001                2000
                                                        ------------        ------------       -------------
         <S>                                          <C>                  <C>                <C>
            Beginning balance in reserves for
               losses                                   $  3,949,590        $  4,754,710       $  4,725,239
                                                        ------------        ------------       -------------

            Add/(deduct) provision for losses
               incurred related to:
               Current claim year                         36,929,150          40,529,340         41,579,713
               Prior claim years                          (1,347,207)         (1,304,766)          (877,045)
                                                        ------------        ------------       -------------
            Total                                         35,581,943          39,224,574         40,702,668
                                                        ------------        ------------       -------------

            Deduct paid losses attributable to:
               Current claim year                         33,288,213          36,590,250         36,837,642
               Prior claim years                           2,592,679           3,439,444          3,835,555
                                                        ------------        ------------       -------------

            Total                                         35,880,892          40,029,694         40,673,197
                                                        ------------        ------------       -------------

            Ending balance in reserves for losses       $  3,650,641        $  3,949,590       $  4,754,710
                                                        ============        ============       =============
</TABLE>


                                       35

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)


Note 4.   RESERVES FOR UNPAID LOSSES (CONTINUED)

          As a result, of change in estimates of losses incurred in prior years,
          the provisions for losses incurred in 2002, 2001, and 2000 decreased
          by $1,347,207, $1,304,766, and $877,045, respectively.

          The Company utilizes a percentage of earned premiums for the
          corresponding quarter to calculate reserves for unpaid losses. The
          factor utilized is influenced by, among other things, the extent of
          utilizing electronic claim settlement processes and the ability of
          eligible participants to submit claim payments without requiring the
          pre-approval by an adjuster. At December 31, 2001 as a result of the
          increased utilization of such processes, the factor used to estimate
          reserves for unpaid losses was reduced. At December 31, 2002, the
          factor used was consistent with that used at December 31, 2001.

Note 5.   STOCKHOLDERS' EQUITY

          All of the Company's Common Stock is held by GMAC Insurance Holdings,
          Inc. Prior to December 2002, the Company's Common Stock was owned by
          MIC.

          During year 2002, two additional series of 100 shares of Participating
          Stock were issued as compared to one series of 100 shares for the year
          ended December 31, 2001. In addition, during 2002 the Board of
          Directors (the "Board") redeemed eighteen series of 100 shares, which
          had been previously placed in run-off and had reached fully earned
          position during 2002. In addition, the Board redeemed one series of
          100 shares for $230,538, which represents the balance in the capital
          and surplus account at July 1, 2002. Also, MIC recaptured the unearned
          premiums and loss reserves for the series (see Note 9). During 2001,
          the Board redeemed ten series of 100 shares, which had been previously
          placed in run-off which had reached a fully earned position during
          2001.

          In the years ended, December 31, 2002, 2001, and 2000 costs in the
          amount of $90,753, $106,751, and $98,992, respectively, were incurred
          in the sale of Participating Stock. MIC reimbursed the Company
          directly for these expenses. Such reimbursements are deducted from the
          gross administrative expenses of the Company.

          The Common Stockholder is entitled to elect five directors, at least
          one of whom must be a resident of Barbados. The Common Stockholder has
          no right to vote with respect to liquidation of the Company. The
          Common Stockholder 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 of
          Directors, 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.

          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, 2002 and 2001, there were no funds held in escrow.

Note 6.   REINSURANCE PREMIUMS

          Under the provisions of the retrocession agreement, the Company will
          assume future additional premiums of $27,827,390 ($29,878,041 at
          December 31, 2001) relating to premiums written by Motors


                                       36

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)


          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 $68,500,000 at December 31, 2002 ($72,350,000 at December
          31, 2001) to collateralize the amounts recoverable from the Company
          related to the business ceded to it. Cash equivalents and investments
          are assigned to collateralize the letter of credit. At December 31,
          2002 the fair value of such assets was $87,820,960 ($91,365,560 at
          December 2001).

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'
          subsidiary capital accounts.

          An amount equal to one percent of assumed premiums 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 subsidiary
          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.

          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, provided:

          i)   the Company meets Barbados' regulatory requirement without regard
               to any letter of credit or guarantee; and

          ii)  the related subsidiary capital account meets those requirements
               after giving effect to the dividend.

          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, 2003, the Company's required minimum
          margin of solvency computed in accordance with Barbados law was
          approximately $5,481,250.


                                       37

<PAGE>


                 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED

                        NOTES TO THE FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                      (Expressed in United States dollars)


Note 8.   RETAINED EARNINGS (CONTINUED)

          Retained earnings applicable to the Common and Participating
          Stockholders are comprised of the following:
<TABLE>
<CAPTION>

                                                           Common          Participating           Total
                                                        -------------      -------------       -------------
          <S>                                          <C>                <C>                 <C>
            Balance, December 31, 1999                  $     14,234       $ 13,176,342        $ 13,190,576

            Net income for the year                           11,717          3,666,656           3,678,373
            Dividend paid                                         --           (673,134)           (673,134)
            Redemption of participating stock                     --             51,189              51,189
                                                        -------------      -------------       -------------

            Balance, December 31, 2000                        25,951         16,221,053          16,247,004

            Net income for the year                           19,868          5,711,050           5,730,918
            Dividend paid                                         --         (3,083,096)         (3,083,096)
            Redemption of participating stock                     --           (372,852)           (372,852)
                                                        -------------      -------------       -------------

            Balance, December 31, 2001                        45,819         18,476,155          18,521,974

            Net income for the year                           17,511          7,307,607           7,325,118
            Dividend paid                                         --         (4,318,225)         (4,318,225)
            Redemption of participating stock                     --         (1,251,979)         (1,251,979)
                                                        -------------      -------------       -------------
            Balance, December 31, 2002                      $ 63,330       $ 20,213,558        $ 20,276,888
                                                        =============      =============       =============
</TABLE>


Note 9.   RECAPTURE OF UNEARNED REINSURANCE PREMIUMS

          During 2002, the Company entered a recapture agreement with MIC for
          one series of Participating Stock. Under the agreement MIC recaptured
          premiums of $1,635,656, which represents unearned premiums and an
          amount equal to $57,426 for losses incurred, but unpaid with respect
          to the recaptured business as of June 30, 2002. Additionally, MIC has
          paid the Company a recapture commission of $391,954 and a refund of
          U.S. Federal Excise Tax of $16,357, which represents the deferred
          portion of the ceding commissions and taxes previously paid by the
          Company. Upon recapturing these shares, such amounts were transferred
          into a new series of Participating Stock of another mechanical service
          contract reinsurance company that assumes business from MIC.


                                       38

<PAGE>


                                    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 May 8,
2002. One director was elected by the holders of the Shares at such meeting. The
directors and officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                       AGE           POSITION WITH THE COMPANY
                                         AND OTHER EMPLOYMENT (DURING
                                         PAST FIVE YEARS)
<S>                     <C>              <C>
William B. Noll             60           Chairman, Chief Executive Officer, President and Director
                                         (President, GMAC Insurance Holdings, Inc., 1997 to present;
                                         President, Motors Insurance Corporation ("MIC"), 1999 to
                                         present; Executive Vice-President & Chief Financial Officer,
                                         MIC, 1993-1999)

                                         Mr. Noll became President and Director in 1995.

Thomas D. Callahan          50           Executive Vice-President and Director (Senior Vice President,
                                         MIC, 1998 to present; Vice-President, MIC, 1994-1998)

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

John J. Dunn, Jr.           44           Vice-President and Director (Treasurer, GMAC Insurance
                                         Holdings, Inc., 1997 to present; Vice-President and Treasurer,
                                         MIC, 1998 to present; Assistant Treasurer, MIC, 1995-1998;
                                         Manager, Coopers & Lybrand, L.L.P.)

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

Robert E. Capstack          62           Vice-President and Director (Section Manager, MIC, 1994 to present;
                                         Vice-President, GMAC Securities Corporation, 1999)

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

Peter R. P. Evelyn          61           Director (Attorney, 2002 to present; Partner, Evelyn, Gittens &
                                         Farmer, a Barbados law firm (1986-2002))

                                         Mr. Evelyn became a Director in 1986.


                                       39

<PAGE>


Harvey J. Koning            61           Director (President, Grand Oldsmobile Center, Inc., Grand
                                         Rapids, Michigan, 1983)

                                         Mr. Koning became a Director in 2002.

Ronald W. Jones             50           Vice-President, Principal Financial Officer and Principal
                                         Accounting Officer (Deputy Chairman, Aon Insurance Managers
                                         (Barbados), Ltd. (1986 to present))

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

Michael B. Boyce            63           Secretary (Principal, Colybrand Company Services, Limited,
                                         Barbados, 1993 to present; previously Principal, Price
                                         Waterhouse, Eastern Caribbean)

                                         Mr. Boyce was elected Secretary in 1994. Mr. Boyce served
                                         previously as our Assistant Secretary.
</TABLE>

The directors and officers named above serve in those capacities until the next
annual meeting of shareholders 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. The Manager receives
management fees and compensation for financial and administrative services that
it provides to the Company. Mr. Evelyn 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.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

<TABLE>
<CAPTION>
------------------------------- ---------------------------- ---------------------------- ----------------------------
                                    Name And Address Of         Amount And Nature Of
        Title Of Class               Beneficial Owner           Beneficial Ownership           Percent Of Class
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                            <C>                          <C>                           <C>
Common Stock                    GMAC Insurance Holdings,            2,000 shares                     100%
                                Inc.
                                300 Galleria Officentre
                                Suite 200
                                Southfeild, MI 48034
------------------------------- ---------------------------- ---------------------------- ----------------------------
Participating Stock             Harvey J. Koning                     100 shares                      0.4%
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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


                                       40

<PAGE>


PART IV

ITEM 14. CONTROLS AND PROCEDURES

We currently have in place systems relating to disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) of the Securities
Exchange Act of 1934). The Company's principal executive officer and its
principal financial officer evaluated the effectiveness of these disclosure
controls and procedures in connection with the preparation of this annual
report. They concluded that the controls and procedures are effective and
adequate at this time. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect the
controls subsequent to the date of their evaluation.

ITEM 15. 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, 2002 and 2001

               (iii) Statements of Operations and Retained Earnings for the
                    years ended December 31, 2002, 2001 and 2000

               (iv) Statements of Cash Flows for the years ended December 31,
                    2002, 2001 and 2000

               (v)  Statements of Changes in Stockholders' Equity for the years
                    ended December 31, 2002, 2001 and 2000

               (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
               15(c):

               3(a) Restated Articles of Incorporation and amendments thereto
                    filed by reference to Exhibit 3(I) to Quarterly Report on
                    Form 10Q File No. 033-06534 for the quarterly period ended
                    June 30, 1996.

               3(b) By-laws of the Company, as amended.*

               4    Specimen Participating Stock Certificate filed by reference
                    to Exhibit 4 of Amendment No. 1 to Registration Statement on
                    Form S-1, File No. 033-06534, dated February 12, 1987.


                                       41

<PAGE>


              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. 033-06534, 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. 033-06534, 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. 033-06534, dated May 22, 1987.

              10(d) 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 10-K, File No. 033-06534 for
                    the year ended December 31, 1996.

              10(e) Investment Management Agreement between Registrant and
                    BlackRock International, Ltd. filed by reference to Exhibit
                    10(f) to Annual Report on Form 10-K, File No. 033-06534 for
                    the year ended December 31, 2000.

              99(a) Certification Form filed by reference to Exhibit 28(a) to
                    Amendment No. 2 to Registration Statement on Form S-1, File
                    No. 033-06534, dated June 18, 1986.

              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. 033-060105,
                    dated April 23, 1996.

              99(c) Certification of the Company's CEO pursuant to 18 U.S.C.
                    1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.*

              99(d) Certification of the Company's CFO pursuant to 18 U.S.C.
                    1350, as adopted pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.*

          *    Filed as Exhibit herewith.

     (b)  Reports on Form 8-K. No reports on Form 8-K for the quarter ended
          December 31, 2002 have been filed.


                                       42

<PAGE>


                                   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 31, 2003

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 and on the dates indicated.

Signature                   Title                               Date

/s/ William B. Noll         Chairman, Chief Executive           March 31, 2003
-----------------------     Officer, President and
   William B. Noll          Director


/s/ Thomas D. Callahan      Executive Vice-President and        March 31, 2003
-----------------------     Director
  Thomas D. Callahan

/s/ John J. Dunn, Jr.       Vice-President and                  March 31, 2003
-----------------------     Director
   John J. Dunn, Jr.

/s/ Robert E. Capstack      Vice-President and                  March 31, 2003
-----------------------     Director
  Robert E. Capstack

/s/ Harvey J. Konig
-----------------------     Director                            March 31, 2003
   Harvey J. Koning

/s/ Peter R. P. Evelyn
-----------------------     Director                            March 31, 2003
   Peter R. P. Evelyn

/s/ Ronald W. Jones
-----------------------     Vice-President                      March 31, 2003
    Ronald W. Jones         Finance, Principal
                            Financial and
                            Accounting Officer


                                       43

<PAGE>


                                 CERTIFICATIONS

I, William B. Noll, certify that:

     1. I have reviewed this annual report on Form 10-K of Motors Mechanical
Reinsurance Company, Limited;

     2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any correction actions with
regard to significant deficiencies and material weaknesses.

Date:    March 31, 2003


                                            /s/  William B. Noll
                                            -------------------------
                                            William B. Noll
                                            Chief Executive Officer


                                       44

<PAGE>


                                 CERTIFICATIONS

I, Ronald W. Jones, certify that:

     1. I have reviewed this annual report on Form 10-K of Motors Mechanical
Reinsurance Company;

     2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

     3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

     4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c)   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls; and

     6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any correction actions with
regard to significant deficiencies and material weaknesses.

Date:    March 31, 2003


                                            /s/ Ronald W. Jones
                                            -------------------------
                                            Ronald W. Jones
                                            Principal Financial Officer


                                       45

<PAGE>


     SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, BY THE
REGISTRANT WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE
ACT.

     No annual report with respect to 2001 was distributed to shareholders. The
proxy solicitation materials that were sent to shareholders in connection with
the Registrant's annual meeting held May 8, 2002 have been previously filed with
the Commission. The Registrant does not intend to send an annual report with
respect to 2002 to shareholders and the Registrant has not sent proxy
solicitation materials with respect to the Registrant's annual meeting to be
held May 14, 2003, as of the filing of this report.



                                       46