**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

 

| **(Mark One)**                                                                                                                            |                                                                                          |
|-------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------|
|                                                                                                                                      |
| **ý**                                                                                                                                | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|                                                                                                                                      |
| **For  the quarterly period ended June 30, 2002**                                                                                         |
|                                                                                                                                      |
| **OR**                                                                                                                                    |
|                                                                                                                                      |
| **o**                                                                                                                                     | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                      |                                                                                          |
| **For  the transition period from                    to** |

 

**              **

 

**Commissionfile number 001-14673**

 

**MEEMIC Holdings, Inc.**

(Exact name of registrantas specified in its charter)

 
| **Michigan**                                                    |   | **38-3436541**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                            |   |                                  |
| **691  North Squirrel Road, Suite 100  Auburn Hills, Michigan** |   | **48321**                             |
| (Address of principal  executive offices)                       |   | (Zip Code)                            |

 

Registrant’s telephone number, including area code:  **(888)463-3642**

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.   Yes ý No  o

 

The number of shares outstanding of the registrant’s common stock, nopar value per share, as of August 9, 2002 was 6,683,563.

 

 

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TABLE OF CONTENTS

 

 
| PART I.  | FINANCIAL INFORMATION |                                                                                                                                      |
|----------|-----------------------|-------------------------------------------------------------------------------------------------------------------------------------------|
|     |                  |                                                                                                                                      |
|     | Item 1.               | Financial Statements                                                                                                                      |   |
|     |                  |                                                                                                                                      |   |
|     |                  | Condensed  Consolidated Balance Sheets at June 30, 2002 (Unaudited) and December 31,  2001                                                |   |
|     |                  |                                                                                                                                      |   |
|     |                  | Condensed  Consolidated Statements of Income for the  Three Months and Six Months Ended June 30, 2002 and 2001 (Unaudited)                |   |
|     |                  |                                                                                                                                      |   |
|     |                  | Condensed  Consolidated Statements of Comprehensive  Income for the Three Months and Six Months Ended June 30, 2002 and 2001  (Unaudited) |   |
|     |                  |                                                                                                                                      |   |
|     |                  | Condensed  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002  and 2001 (Unaudited)                             |   |
|     |                  |                                                                                                                                      |   |
|     |                  | Notes  to Condensed Consolidated Financial Statements (Unaudited)                                                                         |   |
|     |                  |                                                                                                                                      |   |
|     | Item  2.              | Management’s  Discussion and Analysis of  Financial  Condition and Results of Operations                                        |   |
|     |                  |                                                                                                                                      |   |
|     | Item  3.              | Quantitative  and Qualitative Disclosures About Market Risk                                                                               |   |
|     |                  |                                                                                                                                      |   |
| Part II. | OTHER INFORMATION     |                                                                                                                                      |
|     |                  |                                                                                                                                      |
|     | Item 6.               | Exhibits and  Reports on Form 8-K                                                                                                         |
|     |                  |                                                                                                                                      |
|     | Signatures            |                                                                                                                                      |

 

2

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**PART I.         FINANCIAL INFORMATION**

**Item 1.  Financial Statements**

 

**MEEMIC Holdings, Inc.**

**and Subsidiaries**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

 
|                                                                                                                                                                                |   | **June  30, 2002**                     | ** ** |                   | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|------------|------------------------|------------|
|                                                                                                                                                                                |   | **(Unaudited)**                        | ** ** | **December  31, 2001** | ** ** |
|                                                                                                                                                                                |   | **(In  thousands, except share data)** |       |
| **ASSETS**                                                                                                                                                                          |   |                                   |       |                   |       |
| Investments:                                                                                                                                                                        |   |                                   |       |                   |       |
| Fixed  maturities available for sale, at fair value (amortized cost of $178,269 and  $181,989 in 2002 and 2001, respectively)                                                       |   | $                                      | 186,028    |                   | $          | 187,497 |   |
| Equity securities available for sale, at fair value                                                                                                                                 |   | 4,530                                  |       | —                 |       |
| Short-term investments, at cost, which approximates fair value                                                                                                                      |   | 2,985                                  |       | 2,922                  |       |
| Real estate, at cost                                                                                                                                                                |   | 2,300                                  |       | 2,300                  |       |
| Total investments                                                                                                                                                                   |   | 195,843                                |       | 192,719                |       |
| Cash and cash equivalents                                                                                                                                                           |   | 43,780                                 |       | 29,948                 |       |
| Premiums due from policyholders                                                                                                                                                     |   | 10,139                                 |       | 7,789                  |       |
| Amounts recoverable from reinsurers                                                                                                                                                 |   | 64,848                                 |       | 62,423                 |       |
| Amounts recoverable from reinsurers, related party                                                                                                                                  |   | 3,985                                  |       | 5,326                  |       |
| Accrued investment income                                                                                                                                                           |   | 2,591                                  |       | 2,647                  |       |
| Deferred federal income taxes                                                                                                                                                       |   | 2,683                                  |       | 3,181                  |       |
| Property and equipment, at cost, net of accumulated depreciation                                                                                                                    |   | 2,418                                  |       | 3,011                  |       |
| Deferred policy acquisition costs                                                                                                                                                   |   | 3,939                                  |       | 3,356                  |       |
| Intangible assets, net of amortization                                                                                                                                              |   | 30,434                                 |       | 30,496                 |       |
| Other assets                                                                                                                                                                        |   | 1,461                                  |       | 787                    |       |
| Total assets                                                                                                                                                                        |   | $                                      | 362,121    |                   | $          | 341,683 |   |
|                                                                                                                                                                                |   |                                   |       |                   |       |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                                                       |   |                                   |       |                   |       |
| Liabilities:                                                                                                                                                                        |   |                                   |       |                   |       |
| Loss and loss adjustment expense reserves                                                                                                                                           |   | $                                      | 125,973    |                   | $          | 124,361 |   |
| Unearned premiums                                                                                                                                                                   |   | 48,192                                 |       | 41,310                 |       |
| Accrued expenses and other liabilities                                                                                                                                              |   | 11,175                                 |       | 9,734                  |       |
| Accrued expenses and other liabilities, related party                                                                                                                               |   | 136                                    |       | 79                     |       |
| Premiums ceded payable                                                                                                                                                              |   | 2,301                                  |       | 4,479                  |       |
| Federal income taxes payable                                                                                                                                                        |   | 2,794                                  |       | 602                    |       |
| Total liabilities                                                                                                                                                                   |   | 190,571                                |       | 180,565                |       |
| Shareholders’ equity:                                                                                                                                                          |   |                                   |       |                   |       |
| Common stock, no par value; 10,000,000 shares authorized; 6,683,563  and 6,674,335 shares issued and outstanding in 2002 and 2001, respectively                                     |   | 66,135                                 |       | 66,043                 |       |
| Additional paid-in capital                                                                                                                                                          |   | —                                 |       | 46                     |       |
| Retained earnings                                                                                                                                                                   |   | 100,685                                |       | 91,449                 |       |
| Accumulated other comprehensive income:  Net unrealized appreciation on investments, net of deferred  federal income taxes of $2,547 and $1,928 in 2002 and 2001, respectively |   | 4,730                                  |       | 3,580                  |       |
| Total shareholders’ equity                                                                                                                                                     |   | 171,550                                |       | 161,118                |       |
| Total liabilities and shareholders’ equity                                                                                                                                     |   | $                                      | 362,121    |                   | $          | 341,683 |   |

 

See the accompanying notes to the unauditedcondensed consolidated financial statements.

 

3

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**MEEMIC Holdings, Inc.**

**and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF INCOME**

**For the Three and Six Months Ended June 30, 2002 and 2001(Unaudited)**

 
|                                                               |   | **Three  Months Ended  June 30**       | ** ** | **Six  Months Ended  June 30,** | ** ** |
|--------------------------------------------------------------------|--------|----------------------------------------|------------|---------------------------------|------------|
|                                                               |   | **2002**                               | ** ** | **2001**                        | ** ** | **2002** | ** ** | **2001** | ** ** |
|                                                               |   | **(In  thousands, except share data)** | ** ** |
| Revenues and other income:                                         |   |                                   |       |                            |       |   |   |   |   |
| Premiums written                                                   |   | $                                      | 44,575     |                            | $          | 36,569 |   | $ | 83,847 |   | $ | 69,026 |   |
| Premiums ceded                                                     |   | (3,792                                 | )          | (1,299                          | )          | (6,064 | ) | (2,708 | ) |
| Net premiums written                                               |   | 40,783                                 |       | 35,270                          |       | 77,783 |   | 66,318 |   |
| Increase in unearned premiums, net of prepaid reinsurance premiums |   | (4,370                                 | )          | (2,621                          | )          | (6,864 | ) | (2,496 | ) |
| Net premiums earned                                                |   | 36,413                                 |       | 32,649                          |       | 70,919 |   | 63,822 |   |
| Net investment income                                              |   | 2,795                                  |       | 2,682                           |       | 5,651 |   | 5,568 |   |
| Net realized investment gains (losses) on fixed maturities         |   | 629                                    |       | (1,536                          | )          | 629 |   | (1,562 | ) |
| Other income                                                       |   | 445                                    |       | 524                             |       | 910 |   | 870 |   |
| Total revenues and other income                                    |   | 40,282                                 |       | 34,319                          |       | 78,109 |   | 68,698 |   |
|                                                               |   |                                   |       |                            |       |   |   |   |   |
| Expenses:                                                          |   |                                   |       |                            |       |   |   |   |   |
| Loss and loss adjustment expenses incurred, net                    |   | 22,040                                 |       | 22,736                          |       | 48,589 |   | 45,400 |   |
| Policy acquisition and other underwriting expenses:                |   |                                   |       |                            |       |   |   |   |   |
| Policy acquisition and underwriting expenses                       |   | 8,440                                  |       | 8,804                           |       | 15,906 |   | 16,094 |   |
| Management fees, related party                                     |   | 25                                     |       | 173                             |       | 108 |   | 334 |   |
|                                                               |   | 8,465                                  |       | 8,977                           |       | 16,014 |   | 16,428 |   |
|                                                               |   |                                   |       |                            |       |   |   |   |   |
| Amortization expense                                               |   | 31                                     |       | 731                             |       | 62 |   | 1,462 |   |
| Other expenses                                                     |   | 81                                     |       | 9                               |       | 139 |   | 47 |   |
| Total expenses                                                     |   | 30,617                                 |       | 32,453                          |       | 64,804 |   | 63,337 |   |
| Income from operations before federal income taxes                 |   | 9,665                                  |       | 1,866                           |       | 13,305 |   | 5,361 |   |
| Federal income taxes                                               |   | 3,105                                  |       | 310                             |       | 4,044 |   | 1,342 |   |
| Net income                                                         |   | $                                      | 6,560      |                            | $          | 1,556 |   | $ | 9,261 |   | $ | 4,019 |   |
|                                                               |   |                                   |       |                            |       |   |   |   |   |
| **Earnings per common share - basic**                              |   |                                   |       |                            |       |   |   |   |   |
| Net income per common share - basic                                |   | $                                      | 0.98       |                            | $          | 0.23 |   | $ | 1.39 |   | $ | 0.60 |   |
|                                                               |   |                                   |       |                            |       |   |   |   |   |
| **Earnings per common share - assuming dilution**                  |   |                                   |       |                            |       |   |   |   |   |
| Net income per common share - assuming dilution                    |   | $                                      | 0.97       |                            | $          | 0.23 |   | $ | 1.37 |   | $ | 0.59 |   |
|                                                               |   |                                   |       |                            |       |   |   |   |   |
| Weighted average shares outstanding - basic                        |   | 6,681,231                              |       | 6,653,959                       |       | 6,677,802 |   | 6,654,725 |   |
|                                                               |   |                                   |       |                            |       |   |   |   |   |
| Weighted average shares outstanding - assuming dilution            |   | 6,762,045                              |       | 6,787,844                       |       | 6,758,325 |   | 6,786,206 |   |

 

See the accompanying notes to the unauditedcondensed consolidated financial statements.

 

4

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**MEEMIC Holdings, Inc.**

**and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**For the Three and Six Months Ended June 30, 2002 and 2001(Unaudited)**

 
|                                                                                                                                                                                                                                                                          |   | **Three  Months Ended  June 30,** |       | **Six  Months Ended  June 30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                          |   | **2002**                          |       | **2001**                        |   | **2002** |   | **2001** |   |
|                                                                                                                                                                                                                                                                          |   | **(In  thousands)**               | ** ** |
| Comprehensive income:                                                                                                                                                                                                                                                         |   |                              |       |                            |   |   |   |   |   |
| Net income                                                                                                                                                                                                                                                                    |   | $                                 | 6,560      |                            | $      | 1,556 |   | $ | 9,261 |   | $ | 4,019 |   |
| Net unrealized appreciation (depreciation) on investments, net of  reclassification adjustment and net of deferred federal income taxes of  $1,001 and ($22) for three months in 2002 and 2001, respectively and $619 and  $577 for six months in 2002 and 2001, respectively |   | 1,859                             |       | (42                             | )      | 1,150 |   | 1,069 |   |
| Comprehensive income                                                                                                                                                                                                                                                          |   | $                                 | 8,419      |                            | $      | 1,514 |   | $ | 10,411 |   | $ | 5,088 |   |

 

See the accompanying notes to the unauditedcondensed consolidated financial statements.

 

5

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**MEEMIC Holdings, Inc.**

**and Subsidiaries**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the Six Months Ended June 30, 2002 and 2001 (Unaudited)**

 
|                                                                               |   | **2002**           |   | **2001** |   |
|------------------------------------------------------------------------------------|--------|--------------------|--------|----------|--------|
|                                                                               |   | **(In thousands)** |   |
| Cash flows from operating activities:                                              |   |               |   |     |   |
| Net income                                                                         |   | $                  | 9,261  |     | $      | 4,019 |   |
| Adjustments to reconcile net income to net cash provided by operating  activities: |   |               |   |     |   |
| Depreciation and amortization                                                      |   | 1,058              |   | 2,385    |   |
| Realized (gains) losses on investments                                             |   | (629               | )      | 1,562    |   |
| Net accretion of discount on investments                                           |   | (50                | )      | (15      | )      |
| Deferred federal income taxes                                                      |   | (121               | )      | (693     | )      |
| Changes in assets and liabilities:                                                 |   |               |   |     |   |
| Premiums due from policyholders                                                    |   | (2,350             | )      | (1,647   | )      |
| Amounts due from reinsurers                                                        |   | (3,262             | )      | 472      |   |
| Accrued investment income                                                          |   | 56                 |   | (82      | )      |
| Deferred policy acquisition costs                                                  |   | (583               | )      | (368     | )      |
| Other assets                                                                       |   | (674               | )      | (110     | )      |
| Loss and loss adjustment expense reserves                                          |   | 1,612              |   | 654      |   |
| Unearned premiums                                                                  |   | 6,882              |   | 2,496    |   |
| Accrued expenses and other liabilities                                             |   | 1,387              |   | 1,268    |   |
| Federal income taxes payable                                                       |   | 2,324              |   | 2,365    |   |
|                                                                               |   |               |   |     |   |
| Net cash provided by operating activities                                          |   | 14,911             |   | 12,306   |   |
|                                                                               |   |               |   |     |   |
| Cash flows from investing activities:                                              |   |               |   |     |   |
| Purchases of short-term investments                                                |   | (2,985             | )      | (10,855  | )      |
| Proceeds from sale or maturity of short-term investments                           |   | 2,922              |   | 15,757   |   |
| Purchases of securities available for sale                                         |   | (1,990             | )      | (26,344  | )      |
| Proceeds from maturity of securities available for sale                            |   | 6,388              |   | 14,335   |   |
| Purchases of equities available for sale                                           |   | (5,011             | )      | —   |   |
| Proceeds from sales of property and equipment                                      |   | 82                 |   | 47       |   |
| Purchases of property and equipment                                                |   | (485               | )      | (743     | )      |
|                                                                               |   |               |   |     |   |
| Net cash used in investing activities                                              |   | (1,079             | )      | (7,803   | )      |
|                                                                               |   |               |   |     |   |
| Cash flows from financing activities:                                              |   |               |   |     |   |
| Payment on payable related to acquisition                                          |   | —             |   | (1,040   | )      |
|                                                                               |   |               |   |     |   |
| Net cash used in financing activities                                              |   | —             |   | (1,040   | )      |
|                                                                               |   |               |   |     |   |
| Net increase in cash and cash equivalents                                          |   | 13,832             |   | 3,463    |   |
| Cash and cash equivalents, beginning of year                                       |   | 29,948             |   | 21,093   |   |
|                                                                               |   |               |   |     |   |
| Cash and cash equivalents, end of period                                           |   | $                  | 43,780 |     | $      | 24,556 |   |
|                                                                               |   |               |   |     |   |
| Supplemental disclosure of cash flow information:                                  |   |               |   |     |   |
| Federal income taxes paid                                                          |   | $                  | 1,840  |     | $      | 2,116 |   |
|                                                                               |   |               |   |     |   |
| Supplemental disclosure of noncash financing activities:                           |   |               |   |     |   |
| Common stock issued in cashless exercise of employee stock options                 |   | $                  | 92     |     | $      | 283 |   |

 

See the accompanying notes to the unauditedcondensed consolidated financial statements.

 

6

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**MEEMIC Holdings, Inc.**

**and Subsidiaries**

**Notes to Condensed Consolidated Financial Statements(Unaudited)**

 

**(1)****           Description of Business**

 

MEEMIC Holdings, Inc. (“Holdings”) is an insurance holding companyincorporated under Michigan law in October 1998.  Holdings owns all of the issued and outstanding common stock ofMEEMIC Insurance Company (“MEEMIC”) and MEEMIC Insurance Services Corp.  MEEMIC is a property and casualty insurancecompany that operates as a single segment writing full coverage privatepassenger automobile, homeowner, boat and umbrella insurance products primarilyfor educational employees and their immediate families exclusively in the Stateof Michigan. MEEMIC sells its insurance contracts through MEEMIC InsuranceServices Corp., d/b/a MEIA Insurance Agency, which is the exclusive distributorof MEEMIC’s products.  Holdings and itssubsidiaries are sometimes referred to collectively as the “Company”.

 

# **(2)**           Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statementsinclude the accounts of Holdings and its wholly-owned subsidiaries, and havebeen prepared in accordance with accounting principles generally accepted inthe United States for Form 10-Q and Rule 10-01 of Regulation S-Xfinancial information.  Accordingly,they have not been audited and they do not include all of the information and footnotesrequired by generally accepted accounting principles for complete financialstatements. All significant intercompany transactions have been eliminated inconsolidation.

 

In the opinion of management, all adjustments (consisting of normalrecurring adjustments) considered necessary for a fair presentation offinancial position and results of operations have been included.  The operating results for the three and sixmonth periods ended June 30, 2002 are not necessarily indicative of the resultsto be expected for the year ending December 31, 2002.

 

In preparing the financial statements, management is required to makeestimates and assumptions that affect the reported amounts of assets andliabilities as of the dates of the balance sheets and revenues and expenses forthe periods then ended.  Actual resultsmay differ from those estimates.

 

The most significant estimates that are susceptible to significantchange in the near term relate to the determination of the loss and lossadjustment expense reserves.  Althoughconsiderable variability is inherent in these estimates, management believesthat the reserves are adequate.  Theestimates are reviewed regularly and adjusted as necessary.  Such adjustments are reflected in currentoperations.

 

7

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# **(3)**           Related PartyTransactions

 

ProNational Insurance Company (“ProNational”), a wholly-ownedsubsidiary of Professionals Group, Inc., owns 83.9% of the issued andoutstanding shares of Holdings.  TheCompany has an Expense Allocation Agreement with ProNational covering indirectexpenses and salaries of key company personnel.  Expenses related to this agreement were $25,000 and $108,000 forthe three and six months ended June 30, 2002 compared to $173,000 and $334,000for the same periods in 2001.

 

On June 27, 2001, Professionals Group, Inc. and Medical Assurance, Inc.formed a new holding company, ProAssurance Corporation, that owns all of thestock of Medical Assurance, Inc. and Professionals Group, Inc.  Medical Assurance, Inc., ProNational andMEEMIC continue to serve policyholders under the umbrella of the newProAssurance holding company.

 

On March 18, 2002, Holdings announced that it intends to acquire all ofits outstanding shares of stock not currently owned by ProAssuranceCorporation, for $29 per share in cash (a total of 1,193,518 fully dilutedshares) and, on July 9, 2002, Holdings announced that it had entered into adefinitive agreement pursuant to which shareholders other than ProAssuranceCorporation (which owns the shares through its ProNational Insurance Companysubsidiary) will have the opportunity to sell their shares to Holdings in atender offer at a price per share of $29.00, net to the shareholders incash.  If certain conditions aresatisfied, the agreement contemplates that the remaining shares would beacquired through a merger at the same price. The committee of independent directors has received a written opinion ofits financial advisor that, from a financial point of view, the considerationto be paid to the independent shareholders is fair to such shareholders. Thetender offer and merger are subject to prior approval by the independentshareholders of Holdings and to various other conditions. There can be noassurance that the transaction will be completed. The proposed transaction andfinal terms of the definitive agreement have been unanimously approved byHoldings’ Board of Directors, including its committee of independent directorsnot affiliated with ProAssurance Corporation. As a result of the completion ofthe offer, Holdings’ stock could be delisted from the Nasdaq Stock Market and its registration under the SecuritiesExchange Act of 1934, as amended, could be terminated.  Holdings intends to use primarily its ownexisting cash resources to fund the purchase of the shares.

 

On March 18, 2002, a complaint was filed against Holdings, itsdirectors and its parent company, ProAssurance Corporation, in the 6thCircuit Court in Oakland County, Michigan by a purported shareholder ofHoldings seeking to enjoin the transaction described above.  The suit, which purports to be a classaction on behalf of the minority

shareholders,alleges, among other things that the transaction has been timed to freeze outthe minority shareholders, that the proposed transaction is unfair and thatProAssurance and the directors have violated their fiduciary duties.  The complaint also seeks damages

 

8

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in an undeterminedamount.  The suit may delay or preventprogress towards the completion of the proposed transaction as the dismissal orsettlement of the lawsuit is a condition to closing the merger.

 

Holdings has responded to the complaint and is vigorously defendingitself against these claims.  Holdingsbelieves that it has meritorious defenses to the claims made by the plaintiff,including without limitation, the fact that it has taken several steps toprotect the rights of the minority shareholders in the proposed transaction andto ensure its fairness.  These steps includepermitting a committee of two independent directors who have no otheraffiliation with Holdings or ProAssurance Corporation to negotiate and approvethe proposed transaction, and making the completion of the transaction subjectto the approval of the holders of a majority of the shares not owned byProAssurance or its affiliates and the receipt of fairness opinions fromindependent financial advisors.  Therecan be no assurance, however, as to the outcome of this litigation and, ifHoldings is not able to successfully defend against the claims made by theplaintiff, the outcome of this litigation could have a material adverse impacton the proposed transaction and on the Company’s financial position, liquidityand results of operations.

 

# **(4)**           Revenue Information

 

The Company operates as a single segment where private passengerautomobile is the primary line, and homeowners, boat and umbrella coverages areoffered as accommodation products. Revenue is from unaffiliated customers. Net premiums written and net premiums earned from each of these productsis as follows:

 

|                   |   | **Three  Months Ended  June 30,** | ** ** | **Six Months  Ended  June 30,** | ** ** |
|------------------------|--------|-----------------------------------|------------|---------------------------------|------------|
|                   |   | **2002**                          |       | **2001**                        |       | **2002** |   | **2001** | ** ** |
|                   |   | **(In  thousands)**               | ** ** |
| Net premiums  written: |   |                              |       |                            |       |   |   |   |   |
| Personal  automobile   |   | $                                 | 33,893     |                            | $          | 30,132 |   | $ | 66,734 |   | $ | 58,142 |   |
| Homeowners             |   | 6,660                             |       | 4,969                           |       | 10,777 |   | 7,977 |   |
| Boat                   |   | 228                               |       | 167                             |       | 269 |   | 196 |   |
| Umbrella               |   | 2                                 |       | 2                               |       | 3 |   | 3 |   |
| Total                  |   | $                                 | 40,783     |                            | $          | 35,270 |   | $ | 77,783 |   | $ | 66,318 |   |
|                   |   |                              |       |                            |       |   |   |   |   |
| Net premiums  earned:  |   |                              |       |                            |       |   |   |   |   |
| Personal  automobile   |   | $                                 | 31,292     |                            | $          | 28,676 |   | $ | 61,093 |   | $ | 56,142 |   |
| Homeowners             |   | 5,024                             |       | 3,911                           |       | 9,641 |   | 7,570 |   |
| Boat                   |   | 96                                |       | 60                              |       | 183 |   | 108 |   |
| Umbrella               |   | 1                                 |       | 2                               |       | 2 |   | 2 |   |
| Total                  |   | $                                 | 36,413     |                            | $          | 32,649 |   | $ | 70,919 |   | $ | 63,822 |   |

 

9

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# **(5)**           Effects of NewAccounting Pronouncements

 

In June 2001, the Financial Accounting Standards Board issued SFAS No.141 “Business Combinations”.  SFAS No.141 requires that the purchase method of accounting be used for all businesscombinations with a closing date after June 30, 2001.  This statement eliminates the pooling-of-interest method ofaccounting for business combinations. SFAS No. 141 also includes guidance on the initial recognition andmeasurement of goodwill and other intangible assets in a business combination.  As the Company has not had a businesscombination after June 30, 2001, the adoption of SFAS No. 141 did not affectthe results of operations or financial position of the Company.

 

The Financial Accounting Standards Board has also issued SFAS No. 142“Goodwill and Other Intangible Assets” which supersedes APB Opinion 17“Intangible Assets,” and is effective for fiscal years beginning after December15, 2001.  SFAS No. 142 addresses howgoodwill and other intangible assetsshouldbe accounted for in financial statements upon acquisition and how these itemsshould be accounted for subsequent to acquisition.  Contrary to APB Opinion 17, SFAS No. 142 does not presume thatgoodwill and all other intangible assets are wasting assets requiringamortization.  Instead, goodwill andintangible assets that have indefinite useful lives will be tested at leastannually for impairment.  If goodwilland intangible assets are deemed to be impaired, the change will be chargedthrough the Statement of Operations. SFAS No. 142 requires additional disclosure of information aboutgoodwill and other intangible assets in the years subsequent to theiracquisition.  Intangible assets net ofaccumulated amortization were $30.4 million at June 30, 2002 and the Companydetermined there are currently no impaired intangible assets which have anindefinite useful life.  Thus, adoptingSFAS No. 142 did not affect the current results of operations with anyadditional charges for impairment, but has eliminated current annual amortizationexpense of approximately $2.9 million. The Company applied SFAS No. 142 on January 1, 2002.  The amortization expense, net income andearnings per share of the Company as adjusted for this change for the period ofinitial application and prior period are as follows:

 

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|                                                      |   | **For the  Three Months  Ended June 30,** | ** ** | **For the  Six Months  Ended June 30,** | ** ** |
|-----------------------------------------------------------|--------|-------------------------------------------|------------|-----------------------------------------|------------|
|                                                      |   | **2002**                                  |       | **2001**                                |       | **2002** |   | **2001** | ** ** |
| Reported net  income                                      |   | $                                         | 6,560      |                                    | $          | 1,556 |   | $ | 9,261 |   | $ | 4,019 |   |
| Add back:  Goodwill amortization                          |   | —                                    |       | 340                                     |       | — |   | 680 |   |
| Add back: Sales  Rep/Agency agreements amortization       |   | —                                    |       | 115                                     |       | — |   | 230 |   |
| Adjusted net  income                                      |   | $                                         | 6,560      |                                    | $          | 2,011 |   | $ | 9,261 |   | $ | 4,929 |   |
|                                                      |   |                                      |       |                                    |       |   |   |   |   |
|                                                      |   |                                      |       |                                    |       |   |   |   |   |
| Earnings per  common share - basic                        |   |                                      |       |                                    |       |   |   |   |   |
| Reported net  income                                      |   | $                                         | 0.98       |                                    | $          | 0.23 |   | $ | 1.39 |   | $ | 0.60 |   |
| Goodwill  amortization                                    |   | —                                    |       | 0.05                                    |       | — |   | 0.10 |   |
| Sales Rep/Agency  agreements amortization                 |   | —                                    |       | 0.02                                    |       | — |   | 0.03 |   |
| Adjusted net  income per common share - basic             |   | $                                         | 0.98       |                                    | $          | 0.30 |   | $ | 1.39 |   | $ | 0.73 |   |
|                                                      |   |                                      |       |                                    |       |   |   |   |   |
|                                                      |   |                                      |       |                                    |       |   |   |   |   |
| Earnings per  common share - assuming dilution            |   |                                      |       |                                    |       |   |   |   |   |
| Reported net  income                                      |   | $                                         | 0.97       |                                    | $          | 0.23 |   | $ | 1.37 |   | $ | 0.59 |   |
| Goodwill  amortization                                    |   | —                                    |       | 0.05                                    |       | — |   | 0.10 |   |
| Sales Rep/Agency  agreements amortization                 |   | —                                    |       | 0.02                                    |       | — |   | 0.03 |   |
| Adjusted net  income per common share - assuming dilution |   | $                                         | 0.97       |                                    | $          | 0.30 |   | $ | 1.37 |   | $ | 0.72 |   |

 

 

The Financial Accounting Standards Board also issued SFAS No. 144“Accounting for the Impairment or Disposal of Long-Lived Assets” whichsupercedes SFAS No. 121 “Accounting for the Impairment of Long-Lived Assets andfor Long-Lived Assets to Be Disposed Of,” and the accounting and reportingprovisions of APB Opinion No. 30 “Reporting the Results of Operations-Reportingthe Effects of Disposal of a Segment of a Business, and Extraordinary, Unusualand Infrequently Occurring Events and Transactions,” and is effective forfiscal years beginning after December 15, 2001.  SFAS No. 144 establishes a single accounting model for thedisposal of long-lived assets.  As theCompany does not hold long-lived assets, the adoption of SFAS No. 144 did notaffect the results of operations or financial position of the Company.

 

**Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations**

 

The following discussion and analysis should be readin conjunction with the condensed consolidated financial statements and thenotes thereto included elsewhere in this report and in the Company’s AnnualReport on Form 10-K for the year ended December 31, 2001.  The following discussion of our financialcondition and results of operations contains certain forward-looking statementsrelating to our anticipated future financial condition and operating resultsand our current business plans.  Theseforward-looking statements represent only our outlook as of the date of thisreport.  While we believe anyforward-looking statements we have made are reasonable, actual results coulddiffer materially since the statements are based on our current expectationsand are subject to risks and uncertainties. These risks and uncertainties are detailed from time to time in reportsfiled by the Company with the Securities and Exchange Commission.  See, for example, the disclosures in theCompany’s Annual Report on Form 10-K

 

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“Item 1 – Business – Forward-Looking Statements”.  Other factors not currently anticipated bymanagement may also materially and adversely affect the Company’s results ofoperations.  The Company does notundertake, and expressly disclaims any obligation, to update or alter itsforward-looking statements whether as a result of new information, futureevents or otherwise, except as required by applicable law.

 

# **Overview**

 

We provide private passenger automobile, homeowners,boat and umbrella insurance primarily to educational employees and theirimmediate families in the State of Michigan through our MEEMIC subsidiary.  We sell our insurance contracts through over95 sales representatives associated with our insurance agency subsidiary, whichis the exclusive distributor of our products. As of June 30, 2002, we had 149,755 policies in force, representing178,967 insured vehicles, 52,070 homes, 2,413 boats and 804 personal umbrellapolicies.

 

# **FinancialCondition- June 30, 2002 Compared to December 31, 2001**

 

Our total assets increased to $362.1 million at June30, 2002 from $341.7 million at December 31, 2001.  The majority of our assets consist of investments and cash, whichtotaled $239.6 million at June 30, 2002 and $222.7 million at December 31,2001.  We primarily invest in highquality bonds with the objective of providing stable income while maintainingliquidity at appropriate levels for our current and long-termrequirements.  Investments consistprimarily of government bonds, municipal bonds, collateralized mortgageobligations, and investment grade corporate bonds.  The modified duration of investments was 3.25 years at June 30,2002 compared to 3.90 years at December 31, 2001.   The decrease in the modified duration of our investments duringthe three months ended June 30, 2002 was primarily the result of increased cashand cash equivalents at June 30, 2002 compared to December 31, 2001 due tocurtailing new long-term investment purchases for the potential short-termliquidity requirements of the proposed minority share buy back transactiondescribed in Note 3 of the Notes to Condensed Consolidated FinancialStatements.  At June 30, 2002, theportfolio had an average Standard & Poor’s security quality rating of AA (Excellent),and there were no securities in default concerning the timely payment ofinterest and principal.  Our grossunrealized gains and gross unrealized losses in investments in securities were$8.0 million and $700,000, respectively, at June 30, 2002 and $6.2 million and$732,000, respectively, at December 31, 2001. These changes in our gross unrealized gains and losses were a result offluctuating bond market values due to volatility of interest rates in themarketplace.

 

Our recorded estimates of loss and loss adjustmentexpense reserves were $126.0 million at June 30, 2002 compared to $124.4million at December 31, 2001.  The $1.6million net increase in reserves at June 30, 2002 was due to growth in thenumber of insured vehicles and homeowner policies in force.

 

Unearned premiums were $48.2 million at June 30, 2002and $41.3 million at December 31, 2001. The increase in unearned premiums at June 30, 2002 compared to December31, 2001 of 16.7% was due to the increase in premiums written and the timing ofrenewals for the auto book of business that has a concentration of 6-monthrenewal dates in April and October. Other liabilities were $16.4 million at June 30, 2002 and $14.9 millionat December 31, 2001.  The 

 

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increase at June 30, 2002was due primarily to the timing of payments for statutory assessments.

 

Our book value per common share outstanding was $25.67at June 30, 2002, compared to $24.14 at December 31, 2001.  Shareholders’ equity was $171.6 million atJune 30, 2002, compared to $161.1 million at December 31, 2001.  This increase of $10.5 million was primarilydue to net income of $9.3 million and an increase in other comprehensive incomeof $1.2 million.  We expect to useretained earnings to finance future growth and the purchase price for theminority shares in the proposed transaction described in Note 3 of the Notes toCondensed Consolidated Financial Statements subject to the terms and conditionsof the related agreement and plan of merger.

 

# **CriticalAccounting Policies**

 

The preparation of financial statements in conformitywith accounting principles generally accepted in the United States requires usto make estimates and assumptions in certain circumstances that affect amountsreported in the accompanying condensed consolidated financial statements andrelated footnotes. These estimates and assumptions are evaluated on an on-goingbasis based on historical developments, market conditions, industry trends andother information we believe to be reasonable under the circumstances. Therecan be no assurance that actual results will conform to our estimates andassumptions, and that reported results of operations will not be materiallyadversely affected by the need to make accounting adjustments to reflectchanges in these estimates and assumptions from time to time.  Item 7 of our Annual Report on Form 10-Kdiscusses several critical accounting policies which we believe are mostsensitive to estimates and judgments and involve a higher degree of judgmentand complexity. There have been no material changes to that information duringthe first and second quarters of 2002.

 

**Resultsof Operations – Three and Six Months Ended June 30, 2002 Compared to Three andSix Months Ended June 30, 2001**

** **

Net income for the three and six months ended June 30,2002 was $6.6 million and $9.3 million, respectively, compared to $1.6 millionand $4.0 million for the same periods in 2001. Our income from operations before taxes was $9.7 million and $13.3million, respectively, for the three and six months ended June 30, 2002compared to $1.9 million and $5.4 million for the same periods in 2001.  The increases in income from operationsbefore taxes were due to fewer reported claims, a $700,000 capital gain, and a$700,000 reduction in goodwill and other intangibles amortization, whereas Juneof 2001 included $1.7 million of severance charges in connection with theProAssurance merger, and $1.5 million in investment losses for write downs inthe value of certain California utilities.

 

Our direct premiums written were $44.6 million and$83.8 million for the three and six months ended June 30, 2002, respectively,an increase of 21.9% and 21.5% from the comparable periods in 2001.  Direct premiums written for automobile coveragewere $37.4 million and $72.3 million for the three and six months ended June30, 2002, respectively, an increase of 19.9% compared to the comparable periodsin 2001.  Approximately 35% of theincreased premiums for autos was due to an increase in the statutoryassessments required by the Michigan Catastrophic Claims Association (“MCCA”),which assessments are included in the rates charged to policyholders.  The remaining increase in auto premiumsreflects policyholder growth of 4.5% and an increase in the value of autosbeing insured.  The number of insuredvehicles increased to

 

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178,967 at June 30, 2002 from 171,208 at June 30, 2001.  Our homeowners business also continued toincrease.  Direct premiums written forhomeowners were $6.9 million and $11.2 million for the three and six monthsended June 30, 2002, respectively, an increase of 32.7% and 33.3%,respectively, compared to the comparable periods in 2001.  The increases in homeowners premiums weredue to a 12% rate increase for homeowners that became effective October 1,2001, an increase in the value of homes insured, and growth in the numberof policyholders.  Thenumber of insured homes increased 15.6% to 52,070 at June 30, 2002 from 45,040at June 30, 2001.  In addition to homeowners,we also offer boat and umbrella policies as an accommodation to our primaryline of private passenger automobile insurance.  Direct premiums written for boat and umbrella were $294,000 and$364,000 for the three and six months periods ended June 30, 2002.

 

Net premiums written were $40.8 million and $77.8million for the three and six months ended June 30, 2002, respectively, anincrease of 15.6% and 17.3%, respectively, compared to the comparable periodsin 2001.  However, the increase instatutory assessments ceded to the MCCA was greater than the increase inassociated direct premiums written for the three and six months ended June 30,2002 due to the timing of the MCCA assessment and the level of premiums cededto the MCCA.  Net premiums earned were$36.4 million and $70.9 million for the three and six months ended June 30,2002, respectively, an increase of 11.6% and 11.1%, respectively, compared tothe comparable periods in 2001.  Theincrease in net premiums earned for the three and six months ended June 30,2002 lagged behind the increase in net premiums written due to the businessgrowth and timing differences in when revisions for rate increases becameeffective, versus when they are earned for accounting purposes.

 

Our combined ratio was 83.8% and 91.1% for the threeand six months ended June 30, 2002, respectively, compared to 97.1% and 96.9%for the three and six months ended June 30, 2001, respectively.  Overall, our net loss ratio for the threeand six months ended June 30, 2002 was 53.6% and 61.4%, respectively, comparedto 59.9% and 62.8% for the three and six months ended June 30, 2001,respectively.

 

Net loss ratios for the personal automobile andhomeowners products were as follows:

 
|                           |   | **For the  Three Months  Ended June 30,** |   | **For the  Six Months  Ended June 30,** |   |
|--------------------------------|--------|-------------------------------------------|--------|-----------------------------------------|--------|
|                           |   | **2002**                                  |   | **2001**                                |   | **2002** |   | **2001** | ** ** |
| Personal auto  liability       |   | 39.7                                      | %      | 38.7                                    | %      | 52.6 | % | 44.0 | % |
| Personal auto  physical damage |   | 64.2                                      | %      | 60.8                                    | %      | 65.3 | % | 66.3 | % |
| Total personal  auto           |   | 55.1                                      | %      | 53.3                                    | %      | 60.8 | % | 58.8 | % |
| Homeowners                     |   | 44.4                                      | %      | 109.0                                   | %      | 66.1 | % | 93.4 | % |
| Overall net loss  ratio        |   | 53.6                                      | %      | 59.9                                    | %      | 61.4 | % | 62.8 | % |

 

The decreases in overall net loss ratio and combinedratio for the second quarter of 2002 were due to decreases in both thefrequency and severity of homeowner claims combined with the 12% rate increasefor homeowners.  The increased frequencyand severity of personal auto liability claims reported in the first quarter of2002 leveled off during the second quarter of 2002 and personal auto losses forthe six months ended June 30, 2002 were comparable to the same period in 2001.

 

Policy acquisition and underwriting expenses were $8.5million and $16.0 million for the three and six months ended June 30, 2002,respectively, compared to $9.0 million and $16.4

 

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million for the same periods in 2001. The underwriting expenses ratios were 23.2% and 22.6% for the three andsix months ended June 30, 2002 respectively, compared to 27.5% and 25.7% forcomparable periods in 2001.  Thedecreases in 2002 are due to a $1.7 million charge in 2001 for expenses relatedto severance payments from change of control agreements in connection with theProAssurance merger that was not incurred in 2002.  Additionally, there was a premium tax refund of $400,000 recordedin 2002 from a prior year tax reduction and increased efficiencies as costsincreased at a slower pace than premiums. Amortization expense was $31,000 and $62,000 for the three and sixmonths ended June 30, 2002 compared to $731,000 and $1.5 million for thecomparable periods in 2001. The decrease was due to the adoption of SFAS No.142.

 

Net investment income, excluding realized investmentgains and losses, was $2.8 million and $5.7 million for the three and sixmonths ended June 30, 2002, respectively, compared to $2.7 million and $5.6million for the three and six months ended June 30, 2001, respectively.  Declining interest rates offset most of thepositive effect of a larger portfolio of investments during the three and sixmonths ended June 30, 2002, compared to the same periods in 2001.  Consistent with 2001, investment income forthe three and six months ended June 30, 2002 was attributable primarily tointerest income and not to realized capital gains.  However, the increase in realized capital gains for the threemonths ended June 30, 2002 was due to the maturity and subsequent recovery of$700,000 in June 2002 from one of the securities that had been previouslywritten down in June 2001 as securities deemed to have other than temporarydeclines in fair value due to uncertainty with California electric utilities.

 

The weighted average tax equivalent book yield of thefixed maturity portfolio was 7.49% for the six months ended June 30, 2002,compared to 7.91% for the same period in 2001. The annualized tax equivalent total rate of return, which includes bothincome and changes in market value of securities, was 13.21% and 8.17% for thethree and six months ended June 30, 2002, compared to 2.37% and 5.98% for thethree and six months ended June 30, 2001. The increased returns were due to the recovery of a security previouslywritten down that more than offset lower interest rates and the downturn in theU.S. economy.

 

**Liquidityand Capital Resources**

 

Our primary sources of cash are from premiums,investment income and proceeds from maturities of portfolio investments.  The principal uses of cash are for paymentsof claims, commissions, taxes, operating expenses and purchases ofinvestments.  Cash flow and liquidityare managed in order to meet anticipated short-term payment obligations, and tomaximize opportunities to earn interest on those funds not immediatelyrequired.

 

Our cash increased by $13.8 million during the sixmonths ended June 30, 2002 compared to an increase of $3.5 million for the sameperiod in 2001.  The increase for thesix months ended June 30, 2002 was primarily the result of curtailing newlong-term investment purchases for the potential short-term liquidityrequirements of the proposed minority share buy back transaction discussed inNote 3 of the Notes to Condensed Consolidated Financial Statements.  Cash provided by operations for the sixmonths ended June 30, 2002 was $14.9 million compared to $12.3 million for thesix months ended June 30, 2001.  The$2.6 million increase was primarily due to the increase in premiums writtenduring the six months ended June 30, 2002.

 

Theproposed “going private” transaction described in Note 3 of the Notes toCondensed Consolidated Financial Statements will have a material effect onHoldings’ liquidity.  The total amountto be paid in the transaction to holders of Holdings stock and options, asprovided in the

 

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agreement and plan ofmerger, is $33.4 million, which is expected to be paid from Holdings’ existingcash and investments.  We do not expectto incur indebtedness to finance the transaction or to affect the reserves ofMEEMIC, but Holdings’ cash will be substantially depleted as a result of thetransaction.  The transaction is subjectto a number of conditions, including approval by our shareholders other thanProNational and its affiliates and associates. If the transaction does not occur or is substantially delayed we mayresume the purchase of new longer-term investments.  Additionally increases in litigation expenses could substantiallyincrease the cost of the transaction.

 

Historically,our liquidity requirements have been met by funds provided by operations.  Due to the short-term nature of ourproducts, a decrease in premiums or demand for our products could have asignificant impact on the availability of our funds.  Also, a substantial increase in paid claims, the occurrence ofmulti-catastrophe events or insolvency of our reinsurers could negativelyimpact our cash flows and our ability to pay our liabilities.

 

Basedon historical trends, market conditions and our business plans, we believe thatour existing resources and sources of funds will be sufficient to meet ourshort term and long term liquidity needs. However, because economic, market and regulatory conditions may change,there can be no assurance that our funds will be sufficient to meet theseliquidity needs.

 

**Item 3.  Quantitative and Qualitative Disclosures About Market Risk**

 

Marketrisk is the risk of loss due to adverse changes in market rates andprices.  Our primary market riskexposure is to changes in interest rates. The active management of interest rate risk is essential to ouroperations.

 

Wemanage market risk through an investment committee consisting of senior officersof the Company, consultants and a professional investment advisor.  The committee periodically measures theimpact that an instantaneous rise in interest rates would have on the fairvalue of securities.  The committee alsomeasures the duration, or interest rate sensitivity, of a fixed income securityor portfolio.  Our investment policylimits the duration of our portfolio to a maximum of 300% of the duration ofour liabilities.

 

Weare vulnerable to interest rate risk because, like other insurance companies,we invest primarily in fixed maturity securities, which are interest-sensitiveassets.  We do not invest in fixedmaturity securities for trading purposes. Mortgage-backed securities, which make up approximately 20% of ourinvestment portfolio, are particularly susceptible to interest ratechanges.  We invest primarily in classesof mortgage-backed securities that are less subject to prepayment risk and, asa result, somewhat less susceptible to interest rate risk than othermortgage-backed securities.

 

Ourfixed maturity investment portfolio was valued at $186.0 million at June 30,2002 and had a duration of 3.25 years. The following table shows the effects of a change in interest rate onthe fair value and duration of our portfolio. We have assumed an immediate increase or decrease of 1% or 2% ininterest rate.  You should not considerthis assumption or the values shown in the table to be a prediction of actualfuture results.

 

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| **Change in Rates** |   | **Portfolio  Value**       | ** ** | **Change   in Value** | ** ** | **Modified  Duration** | ** ** |
|---------------------|--------|----------------------------|------------|-----------------------|------------|------------------------|------------|
|                |   | **(dollars in thousands)** | ** ** |
| +2%                 |   | $                          | 172,540    |                  | $          | (13,488                | )     | 3.77 |   |
| +1%                 |   | $                          | 179,394    |                  | $          | (6,634                 | )     | 3.62 |   |
|   0%           |   | $                          | 186,028    |                  | —     |                   | 3.25       |   |
| -1%                 |   | $                          | 192,019    |                  | $          | 5,991                  |       | 3.09 |   |
| -2%                 |   | $                          | 197,432    |                  | $          | 11,404                 |       | 3.27 |   |

 

The other financial instruments, which include cash,premiums due from reinsurers and accrued investment income, do not produce asignificant difference in fair value when included in the market risk analysisdue to their short-term nature.

 

###### **PART II.  OTHER INFORMATION**

 

**Item 6. Exhibits and Reports on Form8-K**

 
| (a)    | Exhibits                                                                                    |
|--------|---------------------------------------------------------------------------------------------|
|   | 10.23                                                                                       | Tax Allocation Agreement between Holdings and  ProAssurance, Inc. dated June 27, 2001. |
|   |                                                                                        |
|   | 10.24                                                                                       | Agreement and Plan of Merger, dated July 9, 2002  (included as Exhibit 10 to Form 8-K as filed with the Securities and Exchange  Commission on July 9, 2002, is incorporated herein by reference). |
|   |                                                                                        |
|   | 99.2                                                                                        | Certification of Principal Executive Officer. |
|   |                                                                                        |
|   | 99.3                                                                                        | Certification of Principal Financial Officer. |
|   |                                                                                        |
| (b)    | No reports on Form 8-K were filed by Holdings during  the three months ended June 30, 2002. |

#### ** **

#### **SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 

 
|                         | MEEMIC Holdings, Inc.    |
|------------------------------|--------------------------|
|                         |                     |
|                         |                     |
| Date:  August  14, 2002 | /s/ Christine C. Schmitt |   |
|                         | Christine C. Schmitt     |
|                         | Its:                     | Chief Financial Officer, Secretary and Treasurer |
|                         |                     | (as principal financial officer and on behalf of the  registrant) |
|                              |                          |  |  |

 

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