SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q

          [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
                                       OR

          [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

                   For the transition period from ____ to ____

                          Commission File Number 1-7411

                            ALLCITY INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)


New York                                                   13-2530665
--------                                                   ----------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)


45 Main Street, Brooklyn, N.Y                              11201-3731
-----------------------------                              ----------
(Address of principal executive offices)                   (Zip Code)


Registrant's telephone number, including area code: (718)422-4000


Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter 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[ ]

On November 11, 2002 there were 7,078,625 shares of Common Stock
outstanding.




<PAGE>


<TABLE>
<CAPTION>
                            ALLCITY INSURANCE COMPANY

                                      INDEX




  PART I         FINANCIAL INFORMATION                                                                            PAGE
 <S>                                                                                                           <C>
  ITEM 1.  Interim Consolidated Financial Statements (Unaudited)...........................................
  Consolidated Balance Sheets - September 30, 2002 and
  December 31, 2001........................................................................................        1

  Consolidated Statements of Operations - Nine months ended
  September 30, 2002 and 2001..............................................................................        2

  Consolidated Statements of Operations - Three months ended
  September 30, 2002 and 2001..............................................................................        3

  Consolidated Statements of Cash Flows - Nine months
  ended September 30, 2002 and 2001 .......................................................................        4

  Consolidated Statements of Changes in Shareholders' Equity  -
  Nine months ended September 30, 2002 and 2001............................................................        5

  Notes to Interim Consolidated Financial Statements ......................................................        6

  ITEM 2.  Management's Discussion and Analysis of Financial
           Condition and Interim Results of Operations.....................................................        7

  ITEM 4.  Controls and Procedures.........................................................................       13

  PART II  OTHER INFORMATION

  ITEM 6.  Exhibits and Reports on Form 8-K................................................................       14

  Signature Page...........................................................................................       15

</TABLE>


                                       i
<PAGE>
                         PART 1 - FINANCIAL INFORMATION

    ITEM 1. FINANCIAL STATEMENTS

    ALLCITY INSURANCE COMPANY AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
    September 30, 2002 and December 31, 2001 (In thousands, except share and per
    share amounts)
                                                    SEPTEMBER 30,   DECEMBER 31,
                                                         2002           2001
                                                         ----           ----
                                                              (Unaudited)
    ASSETS
      Investments:
        Fixed maturities
             Available for sale (amortized cost of
            $34,713 in 2002 and $23,872 in 2001)         $ 35,352    $ 24,175
          Held to maturity (fair value
            of $489 in 2001)                                   -          480
        Equity securities available for sale                   -          429
        Short-term                                         73,186      98,467
        Other invested assets                               6,205       6,088
                                                          -------     -------
                                TOTAL INVESTMENTS         114,743     129,639

       Cash                                                    40          36
       Agents' balances, less allowance for
        doubtful accounts ($150 in 2002 and
               $837 in 2001)                                1,267       2,873
       Accrued investment income                              412         464
       Reinsurance balances receivable                    126,903     160,713
       Prepaid reinsurance premiums                           729       3,785
       Due from affiliates                                  3,853          -
       Other assets                                         2,375       4,730
                                                          -------     -------
                                TOTAL ASSETS             $250,322    $302,240
                                                          =======     =======
     LIABILITIES
       Unpaid losses                                     $163,425    $211,254
       Unpaid loss adjustment expenses                     26,491      32,037
       Unearned premiums                                    1,899       7,215
       Due to affiliates                                       -        9,713
       Due to investment brokers                           24,864          -
       Reinsurance balances payable                         2,244         949
       Other liabilities                                    3,213       8,054
       Surplus note                                         7,166       7,114
                                                          -------     -------
                                TOTAL LIABILITIES         229,302     276,336
                                                          -------     -------
     SHAREHOLDERS' EQUITY
       Common stock, $1 par value: 7,368,420
          shares authorized; 7,078,625 shares issued
            and outstanding in 2002 and 2001                7,079       7,079
       Additional paid-in capital                           9,331       9,331
       Accumulated other comprehensive income                 639         732
       Retained earnings                                    3,971       8,762
                                                          -------     -------
                         TOTAL SHAREHOLDERS' EQUITY        21,020      25,904
                                                          -------     -------
           TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $250,322    $302,240
                                                          =======     =======


    See Notes to Interim Consolidated Financial Statements.


                                       1
<PAGE>
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the nine months ended September 30, 2002 and 2001
(In thousands, except share and per share amounts)

                                                    NINE MONTHS ENDED
                                                      SEPTEMBER 30,
                                                      -------------
                                                     2002       2001
                                                     ----       ----
    REVENUES
       Premiums earned                            $ 3,727    $14,949
       Net investment income                        2,341      7,135
       Net securities gains                         1,385      1,463
       Other income                                    38        107
                                                  -------   --------
                                                    7,491     23,654
                                                  -------   --------

  LOSSES AND EXPENSES
     Losses                                         2,465     25,017
     Loss adjustment expenses                       3,312      7,928
     Other underwriting expenses, less
       deferrals of $0 in 2002
       and $1,783 in 2001                           3,885      4,380
     Amortization of deferred policy
       acquisition costs                              -        4,818
     Interest on surplus note                         249        424
                                                  -------   --------
                                                    9,911     42,567
                                                  -------   --------
  LOSS BEFORE FEDERAL INCOME TAXES                 (2,420)   (18,913)
                                                  -------   --------

  FEDERAL INCOME TAXES
       Current expense/(benefit)                      -         -
       Deferred expense/(benefit)                     -         -
                                                  -------   --------
                                                      -         -
                                                  -------   --------
             NET LOSS                             $(2,420)  $(18,913)
                                                  =======   ========
  Per share data, based on 7,078,625
   average shares outstanding in 2002
   and 2001
  BASIC AND DILUTED LOSS PER SHARE                $ (0.34)  $  (2.67)
                                                  =======   ========
  CASH DIVIDEND PER SHARE                         $ 0.335   $    -
                                                  =======   ========




             See Notes to Interim Consolidated Financial Statements.

                                        2
<PAGE>
    ALLCITY INSURANCE COMPANY AND SUBSIDIARYCONSOLIDATED STATEMENTS OF
    OPERATIONS (UNAUDITED) For the three months ended September 30, 2002 and
    2001(In thousands, except share and per share amounts)

                                                   THREE MONTHS ENDED
                                                      SEPTEMBER 30,
                                                    ---------------
                                                     2002       2001
    REVENUES
       Premiums earned                              $   673    $ 3,062
       Net investment income                            605      2,093
       Net securities gains                           1,338        447
       Other income                                      14         23
                                                    -------    -------
                                                      2,630      5,625
                                                    -------    -------

  LOSSES AND EXPENSES
     Losses                                             704      6,254
     Loss adjustment expenses                           691      1,853
     Other underwriting expenses, less
       deferrals of $0 in 2002 and 2001               1,593      1,256
     Amortization of deferred policy
       acquisition costs                                 -          -
     Interest on surplus note                            83        118
                                                    -------    -------
                                                      3,071      9,481
                                                    -------    -------

  LOSS BEFORE FEDERAL INCOME TAXES                     (441)    (3,856)

  FEDERAL INCOME TAXES
       Current expense/(benefit)                         -        -
       Deferred expense/(benefit)                        -        -
                                                         -        -
             NET LOSS                              $   (441)   $(3,856)
                                                   =========   ========
  Per share data, based on 7,078,625
   average shares outstanding in 2002
   and 2001
  BASIC AND DILUTED LOSS PER SHARE                 $  (0.06)   $ (0.54)
                                                   =========   ========
  CASH DIVIDEND PER SHARE                          $  0.335    $   _
                                                   =========   ========






  See Notes to Interim Consolidated Financial Statements.




                                       3
<PAGE>
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the nine months ended September 30, 2002 and 2001
(In thousands)
                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                              -------------
                                                             2002         2001
                                                             ----         ----
NET CASH FLOWS FROM OPERATING ACTIVITIES

 Net loss                                                $(2,420)     $(18,913)
  Adjustments to reconcile net loss
    to net cash used for operating
    activities:
            Amortization of deferred policy
              acquisition costs                               -          4,818
             Provision for doubtful accounts                (687)         (630)
        Net securities  gains                             (1,385)       (1,463)
       Policy acquisition costs incurred
         and deferred                                         -         (1,783)
       Net change in:
         Agents' balances                                  2,293         4,607
         Reinsurance balances receivable                  33,810        (3,960)
         Prepaid reinsurance premiums                      3,056         9,972
         Unpaid losses and loss adjustment
           expenses                                      (53,375)         (818)
         Unearned premiums                                (5,316)      (18,676)
         Due(from)to affiliates                          (13,566)        7,890
         Reinsurance balances payable                      1,295         3,666
              Other, net                                  (1,775)        1,478
 NET CASH USED FOR OPERATING ACTIVITIES                  (38,070)      (13,812)
                                                        --------      --------
 NET CASH FLOWS FROM INVESTING ACTIVITIES
      Acquisition of fixed maturities                    (20,831)      (62,829)
      Net change in other invested assets                   (117)        7,370
      Proceeds from sale of fixed maturities               8,004        88,338
      Proceeds from maturities of fixed
        maturities                                         3,441        20,934
      Net change in short-term investments,
             including amounts due investment brokers     50,145       (40,069)
                                                        --------      --------
 NET CASH PROVIDED BY INVESTING ACTIVITIES                40,642        13,744
                                                        --------      --------
 NET CASH FLOWS FROM FINANCING ACTIVITIES
           Dividends paid to shareholders                 (2,371)            -
      Interest paid on surplus note                         (197)            -
                                                        --------      --------
 NET CASH USED FOR FINANCING ACTIVITIES                   (2,568)            -
                                                        --------      --------
           NET INCREASE (DECREASE) IN CASH                     4           (68)
        Cash, at beginning of period                          36            77

        Cash at the end of period                         $   40        $    9
                                                        ========      ========


See Notes to Interim Consolidated Financial Statements.


                                       4
<PAGE>

ALLCITY INSURANCE COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
For the nine months ended September 30, 2002 and 2001
(In thousands, except par value)

<TABLE>
<CAPTION>

                                                              ACCUMULATED
                                      COMMON                    OTHER
                                      STOCK     ADDITIONAL   COMPREHENSIVE
                                      $1 PAR      PAID-IN       INCOME/      RETAINED
                                      VALUE      CAPITAL       (LOSS)       EARNINGS       TOTAL
                                      -----      -------       ------       --------       -----
<S>                                <C>         <C>           <C>           <C>         <C>
Balance, January 1, 2001             $7,079      $9,331        $    571    $  26,810     $ 43,791
Comprehensive loss:
  Net loss                                                                   (18,913)     (18,913)
  Other comprehensive income(loss):
      Unrealized holding gains
       arising during the period
       (net of deferred tax
       of $0)                                                     1,795                     1,795
      Less: reclassification of
       net securities gains
       included in net loss
      (net of deferred tax of $0)                                (1,220)                   (1,220)
                                                                                         --------
  Comprehensive loss                                                                      (18,338)
                                    -------     -------        --------    ---------     --------
Balance, September 30, 2001         $ 7,079     $ 9,331        $  1,146    $   7,897     $ 25,453
                                    =======     =======        ========    =========     ========
Balance, January 1, 2002            $ 7,079     $ 9,331        $    732    $   8,762     $ 25,904
Dividends paid to shareholders                                                (2,371)      (2,371)
Comprehensive loss:
  Net loss                                                                    (2,420)      (2,420)
  Other comprehensive income(loss):
      Unrealized holding gains
       arising during the period
       (net of deferred tax
             of $0)                                                  370                      370
   Less: reclassification of
       net securities gains
       included in net loss
       (net of deferred tax of $0)                                 (463)                     (463)
                                                                                         --------
  Comprehensive loss                                                                       (2,513)
                                    -------     -------        --------    ---------     --------
Balance, September 30, 2002         $ 7,079     $ 9,331        $    639    $   3,971     $ 21,020
                                    =======     =======        ========    =========     ========

</TABLE>



See Notes to Interim Consolidated Financial Statements.






                                       5
<PAGE>
                    ALLCITY INSURANCE COMPANY AND SUBSIDIARY
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.      The unaudited interim consolidated financial statements, which reflect
        all adjustments (consisting only of normal recurring items) that
        management believes necessary to fairly present interim results of
        operations, should be read in conjunction with the Notes to Consolidated
        Financial Statements (including the Summary of Significant Accounting
        Policies) included in the Company's audited consolidated financial
        statements for the year ended December 31, 2001 which are included in
        the Company's Annual Report filed on Form 10-K for such year (the "2001
        10-K"). Results of operations for interim periods are not necessarily
        indicative of annual results of operations. The consolidated balance
        sheet at December 31, 2001 was extracted from the audited annual
        financial statements and does not include all disclosures required by
        generally accepted accounting principles for annual financial
        statements.

2.      During the past several years, the Company and its parent company,
        Empire Insurance Company ("Empire"), (collectively referred to as "the
        Group"), experienced poor underwriting results and adverse reserve
        development in all of its lines of business. During 2001, the Group
        explored its options for developing a new business model and strategy.
        After evaluating these options, the Group announced in December 2001
        that it had determined that it was in the best interest of its
        shareholders and policyholders to commence an orderly liquidation of all
        of the Group's operations. The Group will only accept business that it
        is obligated to accept by contract or New York insurance law; it will
        not engage in any other business activities except for its claims runoff
        operations. The voluntary liquidation of its operations is expected to
        be substantially complete by 2005. Given the Group's and the Company's
        current financial condition, the expected costs to be incurred during
        the claims runoff period, and the inherent uncertainty over ultimate
        claim settlement values, no assurance can be given that the Company's
        shareholders will be able to receive any value at the conclusion of the
        voluntary liquidation of its operations.


3.      In the quarter ended September 30, 2002, the Company paid to its
        shareholders a $0.335 per share cash dividend (the "Dividend")
        aggregating $2,371,340. The Dividend had the effect of increasing the
        stand-alone statutory surplus of Empire by approximately $2,000,000. At
        September 30, 2002, Empire's stand-alone statutory surplus exceeded the
        minimum statutory surplus requirement of $3,300,000 by approximately
        $4,500,000. In the event that Empire's stand-alone statutory surplus
        declines below the minimum in the future, no assurance can be given that
        material adverse regulatory action will not be taken against Empire
        (which could adversely affect the Company's ability to collect its
        reinsurance balances receivable from Empire, the outstanding balance of
        which was approximately $99,000,000 at September 30, 2002) or the
        Company.

4.      The New York State Department of Taxation and Finance (the "Department
        of Taxation and Finance") is in the process of auditing the Group's New
        York Franchise tax returns for the years 1992 through 1996 and has
        asserted that the Company and Empire should have filed their returns on
        a combined basis, rather than on a separate company basis. If the
        Company and Empire were required to file on a combined basis, the Group
        would be required to pay an additional franchise tax and related
        surcharge tax of approximately $5,700,000, plus interest, for the
        periods in question. The Group has informed the Department of Taxation
        and Finance that it does not agree with its position on this matter, and
        is in the process of submitting additional information. The Company does
        not believe it is probable that it will sustain a loss as a result of
        this assertion and therefore has not made any loss provision in its
        financial statements. If the Group does not prevail in this matter, the
        Company's share of this additional tax would be approximately
        $1,700,000, plus interest pursuant to the terms of the pooling
        agreement.


                                       6
<PAGE>
5.      Empire and the Company have a financial dispute with a company that
        previously acted as a third party claims administrator for the Group
        ("Former Claims Administrator"). The Group received a $1,736,000 claim
        for unpaid services from the Former Claims Administrator that the Group
        believes it is not obligated to pay because the services provided by the
        Former Claims Administrator were deficient and resulted in damages to
        the Group in excess of the $1,736,000 claim. The Group is currently
        evaluating its options to resolve this dispute, including possibly
        litigating the matter. The Group does not believe it is probable that it
        will have to pay the $1,736,000 to the Former Claims Administrator,
        however, if the Group does not prevail in this matter, the Company's
        share of this payment, which has not been accrued, would be $520,800
        pursuant to the terms of the pooling agreement.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF INTERIM OPERATIONS


        The following should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in the 2001 10-K.

LIQUIDITY AND CAPITAL RESOURCES

        During the past several years, the Group experienced poor underwriting
results and adverse reserve development in all of its lines of business. During
2001, the Group explored its options for developing a new business model and
strategy. After evaluating these options, the Group announced in December 2001
that it had determined that it was in the best interest of its shareholders and
policyholders to commence an orderly liquidation of all of its operations. The
Group will only accept business that it is obligated to accept by contract or
New York insurance law; it will not engage in any other business activities
except for its claims runoff operations. The voluntary liquidation of its
operations is expected to be substantially complete by 2005. Given the Group's
and the Company's current financial condition, the expected costs to be incurred
during the claims runoff period, and the inherent uncertainty over ultimate
claim settlement values, no assurance can be given that the Company's
shareholders will be able to receive any value at the conclusion of the
voluntary liquidation of its operations.

        For the nine month periods ended September 30, 2002 and 2001, net cash
was used for operations principally as a result of a decrease in premiums
written and the payment of claims and operating expenses. As a result of its
decision to conduct an orderly liquidation of all of its operations, the Company
expects to report a net use of cash from operations resulting primarily from the
payment of claims and other expenses in excess of revenues generated for the
foreseeable future. During 2001, the Company replaced a significant portion of
its fixed maturities investment portfolio with shorter-term investments in order
to shorten its duration to match its anticipated cash needs.

        At September 30, 2002 and 2001, the yield of the Company's fixed
maturities portfolio was 1.9% and 3.2%, respectively, with an average maturity
of 0.6 years and 0.6 years, respectively. Additionally, the Company has a
diversified investment portfolio of securities, approximately 95% of which is
rated "investment grade" by established bond rating agencies or issued or
guaranteed by the U.S. Treasury or by governmental agencies.


                                       7
<PAGE>
        During the nine months ended September 30, 2002 and 2001, the Company
sold certain securities to meet short-term cash flow needs and realized capital
gains of $1,385,000 and $1,463,000 in the 2002 and 2001 periods, respectively.
The Company will continue to use the cash flow generated from its investment
portfolio, including investment income and proceeds generated from the maturity
and sale of investments, and from collection of its reinsurance receivables, a
substantial portion of which is due from its parent, Empire, to settle its loss
and loss adjustment expense ("LAE") reserves. At September 30, 2002, these
assets (less balances due to investment brokers for securities acquired in
September 2002 and settled in October 2002) totaled $217,234,000 as compared to
the Company's loss and LAE reserves of $189,916,000. The Company expects to
settle approximately 55% of these liabilities by the end of 2004. Additionally,
the Company has not experienced any material default in the payment of
reinsurance claims due from its reinsurance providers.

        In the quarter ended September 30, 2002, the Company paid to its
shareholders a $0.335 per share cash dividend (the "Dividend") aggregating
$2,371,340. The Dividend had the effect of increasing the stand-alone statutory
surplus of Empire by approximately $2,000,000. At September 30, 2002, Empire's
stand-alone statutory surplus exceeded the minimum statutory surplus requirement
of $3,300,000 by approximately $4,500,000. In the event that Empire's
stand-alone statutory surplus declines below the minimum in the future, no
assurance can be given that material adverse regulatory action will not be taken
against Empire (which could adversely affect the Company's ability to collect
its reinsurance balances receivable from Empire, the outstanding balance of
which was approximately $99,000,000 at September 30, 2002) or the Company.

        The New York State Department of Taxation and Finance (the "Department
of Taxation and Finance") is in the process of auditing the Group's New York
Franchise tax returns for the years 1992 through 1996 and has asserted that the
Company and Empire should have filed their returns on a combined basis, rather
than on a separate company basis. If the Company and Empire were required to
file on a combined basis, the Group would be required to pay an additional
franchise tax and related surcharge tax of approximately $5,700,000, plus
interest, for the periods in question. The Group has informed the Department of
Taxation and Finance that it does not agree with its position on this matter,
and is in the process of submitting additional information. The Company does not
believe it is probable that it will sustain a loss as a result of this assertion
and therefore has not made any loss provision in its financial statements. If
the Group does not prevail in this matter, the Company's share of this
additional tax would be approximately $1,700,000, plus interest pursuant to the
terms of the pooling agreement.






                                       8
<PAGE>
INTERIM RESULTS OF OPERATIONS-NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2002
COMPARED TO THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2001.

        Net earned premium revenues of the Company were $3,727,000 and
$14,949,000 for the nine month periods ended September 30, 2002 and 2001,
respectively, and $673,000 and $3,062,000 for the three month periods ended
September 30, 2002 and 2001, respectively. The Company's earned premiums
declined in all lines of business during the nine and three month periods ended
September 30, 2002 as a result of actions announced during late 2000 and the
first quarter of 2001. During the fourth quarter of 2000, the Group announced
that it would no longer accept any new private passenger automobile policies.
Existing policies of private passenger automobile insurance will be either sold,
non-renewed or cancelled in accordance with New York insurance law. If the
private passenger automobile book of business is not sold, it is expected that
the Group will continue to issue renewal policies over the next several years as
required by applicable insurance law. In March 2001, the Group announced that it
would no longer issue any new (as compared to renewal) insurance policies in all
other lines of business and that it had filed plans of orderly withdrawal with
the NYID as required. Commercial lines policies were non-renewed or canceled in
accordance with New York insurance law or replaced by Tower Insurance Company of
New York or Tower Risk Management (collectively "Tower") under the agreement for
the sale of the Group's renewal rights. Excluding the remaining terms of
existing policies that the Group intends to either non-renew or cancel, as of
September 30, 2002, the Group's in force premium volume totaled approximately
$6,800,000. As indicated above, these policies are primarily personal lines
policies whose volume will continue to decline as the Group exercises its
non-renewal rights under New York insurance law or policyholders choose to
non-renew their policies.

        Pre-tax losses for the Company were $2,420,000 and $18,913,000 for the
nine month periods ended September 30, 2002 and 2001, respectively, and $441,000
and $3,856,000 for the three month periods ended September 30, 2002 and 2001,
respectively. The pre-tax losses include increases for loss and LAE for prior
accident years of $1,100,000 and $17,700,000 for the nine month periods ended
September 30, 2002 and 2001, respectively, and $400,000 and $3,900,000 for the
three month periods ended September 30, 2002 and 2001, respectively. In
addition, during the nine month period ended September 30, 2001, the Company
wrote-off approximately $2,600,000 of deferred policy acquisition costs as their
recoverability from premiums and related investment income was no longer
anticipated.

        During the nine month period ended September 30, 2002, the Company
increased its reserve estimates by a net amount of $1,100,000. This increase was
comprised of $2,000,000 of a net increase in expected losses, an increase in LAE
reserves of $1,600,000 and a reduction of $2,500,000 of an accrual for workers'
compensation fund assessments. The increase for expected loss development
consisted of an increase to the Company's reserve estimates in the workers'
compensation line by $3,400,000, primarily for accident years 1999 and prior
which reflects the Company's current analysis of its and the industry's recent
experience. Partially offsetting this was a decrease in the Company's reserve
estimates in the automobile lines of business for the 1998 through 2001 accident
years by $2,300,000, primarily relating to personal injury protection coverage
("PIP"). This decrease was principally due to favorable reported loss
development during the period which the Company believes is primarily due to
improved claims handling, which resulted in improved severity. The Company also
increased its loss reserve estimate for older accident years by approximately
$900,000 principally in the general liability and commercial package policies
lines of businesses which reflects the Company's recent claim experience.


                                       9
<PAGE>
The 2002 increase in LAE reserves of $1,600,000 referred to above is primarily
the result of a higher than expected level of payment activity during the
period, principally related to outside attorneys handling third party liability
claims and the payment of internal overhead costs allocated to claims handling.
During the three months ended June 30, 2002, the Company reduced its accrual for
certain New York workers' compensation fund assessments. As a result of a
legislative change, these workers' compensation fund assessments are currently
determined based on workers' compensation premiums writings, rather than on the
basis of loss payments as had previously been the case. Due to a reduction in
workers' compensation premium volume, the Company was able to reduce its accrual
for these fund assessments by approximately $3,000,000 of which $2,500,000 was
recorded as a reduction in loss reserves and $500,000 was recorded as a
reduction in other liabilities during the nine months ended September 30, 2002.

        During the nine month period ended September 30, 2001, the Company
increased its reserve estimates for its commercial package policies lines of
business, primarily due to increases in severity of liability claims for
accident years 1998 and prior. The Company has exposure for third party
liability claims in many of its lines of insurance. During 2001, there were
several settlements and court decisions on third party liability cases for
amounts that were greater than the industry's or the Company's historical
experience for similar claims, which had formed the basis for the Company's
estimated loss reserves. These results signaled a change in the judicial
environment in the Company's marketplace. Accordingly, in 2001, the Company
increased its loss reserve estimate by approximately $6,900,000 due to an
estimated increase in severity for these exposures. Reserve increases in the
nine month period ended September 30, 2001 also resulted from unfavorable
development principally in automobile lines of business for the 1998 through
2000 accident years, primarily relating to PIP, and in its workers' compensation
lines of insurance. The Company believed that the increased loss estimates for
PIP were consistent with industry trends during 2001, and increased loss
reserves for all automobile lines by $3,300,000. In addition, the Company also
increased its reserves for LAE by $5,500,000 as a result of increases to its
loss reserves and an increase in future overhead costs which will be allocated
to settle claims currently incurred.

        As a result of the terrorist attacks on September 11, 2001 at the World
Trade Center, the Company recorded estimated incurred losses and LAE of $800,000
for the nine months ended September 30, 2001, primarily relating to business
interruption coverage.

        During the period between 1984 and 1995, the Company entered into
certain retrospectively rated reinsurance contracts covering substantially all
lines of business, except workers' compensation. Under these contracts, the
Company paid the reinsurer provisional premiums that are subject to adjustment
based on subsequent loss development. Ceded premiums accrued under these
contracts reduce both net written and earned premiums during the period the
retrospective reinsurance premiums are accrued. If additional unfavorable loss
development emerges in future periods, the Company may be required to accrue
additional retrospective reinsurance premiums. As a consequence of its reserve
increases, the Company reduced premiums and pre-tax profits by $314,000 and
$2,435,000 for the nine month periods ended September 30, 2002 and 2001,
respectively, and $86,000 and $1,400,000 for the three month periods ended
September 30, 2002 and 2001, respectively, to recognize reinsurance premiums due
for 1995 and prior years under retrospectively rated reinsurance contracts.


                                       10
<PAGE>
        In management's judgment, information currently available has been
appropriately considered in estimating the Company's loss reserves. However, the
reserving process relies on the basic assumption that past experience is an
appropriate basis for predicting future events. The Company will continue to
evaluate the adequacy of its loss reserves on a quarterly basis, incorporating
any future changes in trends and actual loss experience, and record adjustments
to its loss reserves as appropriate.

        Net investment income for the nine and three month periods ended
September 30, 2002 were lower than the comparable 2001 periods due to a
reduction in investments held as a result of a decrease in premiums written and
the payment of claims and operating expenses, as well as a reduction in
investment yields resulting from lower interest rates and the Company's decision
to shorten the duration of its investment portfolio.

        During the three month period ended September 30, 2002, the Company
recorded a net increase in other underwriting expenses of approximately $392,000
primarily due to the write off of uncollectible premium receivables.

        The Company had no current federal tax expense or benefit for the nine
and three month periods ended September 30, 2002 and 2001. In addition, due to
the Company's uncertainty as to having future taxable income necessary for
realization of the deferred tax assets, a valuation allowance has been provided
for all periods shown for the total amount of the deferred tax asset.

        Empire and the Company have a financial dispute with a company that
previously acted as a third party claims administrator for the Group ("Former
Claims Administrator"). The Group received a $1,736,000 claim for unpaid
services from the Former Claims Administrator that the Group believes it is not
obligated to pay because the services provided by the Former Claims
Administrator were deficient and resulted in damages to the Group in excess of
the $1,736,000 claim. The Group is currently evaluating its options to resolve
this dispute, including possibly litigating the matter. The Group does not
believe it is probable that it will have to pay the $1,736,000 to the Former
Claims Administrator, however, if the Group does not prevail in this matter, the
Company's share of this payment, which has not been accrued, would be $520,800
pursuant to the terms of the pooling agreement.





                                       11
<PAGE>
CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION

        Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Interim Operations may contain
forward-looking statements pursuant to the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements may
relate, but are not limited, to projections of revenues, income or loss, capital
expenditures, fluctuations in insurance reserves, plans for growth and future
operations, competition and regulation as well as assumptions relating to the
foregoing.

        Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted or quantified. When used in
this Management's Discussion and Analysis of Financial Condition and Results of
Interim Operations, the words "estimates", "expects", "anticipates", "believes",
"plans", "intends" and variations of such words and similar expressions are
intended to identify forward-looking statements that involve risks and
uncertainties. Future events and actual results could differ materially from
those set forth in, contemplated by or underlying the forward-looking
statements.

        The factors that could cause actual results to differ materially from
those suggested by any such statements include, but are not limited to, those
discussed or identified from time to time in the Company's public filings,
including:

        o       general economic and market conditions or prevailing interest
                rate levels,

        o       changes in domestic laws, regulations and taxes,

        o       changes in competition and pricing environments,

        o       regional or general changes in asset valuation,

        o       the occurrence of significant natural disasters,

        o       the inability to reinsure certain risks economically,

        o       the adequacy of loss and LAE reserves,

        o       prevailing interest rate levels,

        o       weather related conditions that may affect the Company's
                operations,

        o       effectiveness of the Tower agreement,

        o       the ability to attract and retain key personnel,

        o       adverse selection through renewals of the Group's policies,

        o       regulatory approval of the Group's proposed actions in response
                to the findings of the Department,

        o       adverse regulatory action against the Group,

        o       Empire's surplus falling below the minimum statutory surplus
                requirement,


                                       12
<PAGE>
        o       developments in claims handling, including adverse litigation
                developments with respect to environmental claims, including
                lead poisoning, and other liability claims that could adversely
                affect the voluntary liquidation plan of the Group,

        o       the Group's ability to manage the claims runoff,

        o       increased loss adjustment expenses resulting from an extended
                claims run-off period,

        o       changes in composition of the Company's assets and liabilities
                through acquisitions or divestitures,

        o       an adverse determination by the New York State Department of
                Taxation and Finance on its audit of the Group's New York State
                franchise tax returns for the years 1992 through 1996, and

        o       An adverse resolution of the financial dispute with a former
                third party claims administrator.

        Undue reliance should not be placed on these forward-looking statements,
which are applicable only as of the date hereof. The Company undertakes no
obligation to revise or update these forward-looking statements to reflect
events or circumstances that arise after the date of this Management's
Discussion and Analysis of Financial Condition and Results of Interim Operations
or to reflect the occurrence of unanticipated events.

ITEM 4. CONTROLS AND PROCEDURES

                (a) The Company maintains disclosure controls and procedures
        that are designed to ensure that information required to be disclosed in
        the Company's filings under the Securities Exchange Act of 1934 is
        recorded, processed, summarized and reported within the periods
        specified in the rules and forms of the Securities and Exchange
        Commission. Such information is accumulated and communicated to the
        Company's management, including its principal executive officer and
        principal financial officer, as appropriate, to allow timely decisions
        regarding required disclosure. The Company's management, including the
        principal executive officer and the principal financial officer,
        recognizes that any set of controls and procedures, no matter how well
        designed and operated, can provide only reasonable assurance of
        achieving the desired control objectives.


                Within 90 days prior to the filing date of this quarterly report
        on Form 10-Q, the Company has carried out an evaluation, under the
        supervision and with the participation of the Company's management,
        including the Company's principal executive officer and the Company's
        principal financial officer, of the effectiveness of the design and
        operation of the Company's disclosure controls and procedures. Based on
        such evaluation, the Company's principal executive officer and principal
        financial officer concluded that the Company's disclosure controls and
        procedures are effective.


                (b) There have been no significant changes in the Company's
        internal controls or in other factors that could significantly affect
        the internal controls subsequent to the date of their evaluation in
        connection with the preparation of this quarterly report on Form 10-Q.


                                       13
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        a)      Exhibits

                99.1    Certification of Chief Executive Officer pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002.

                99.2    Certification of Principal Financial Officer pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002.


        b)      Report on Form 8-K

                None.


















                                       14
<PAGE>
                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                             ALLCITY INSURANCE COMPANY
                                                     Registrant

Date: November 14, 2002                      By: /s/ Rocco J. Nittoli
                                                 ------------------------------
                                                 Rocco J. Nittoli
                                                 Chief Operating Officer
                                                 (Principal Financial Officer)























                                       15
<PAGE>
                                 CERTIFICATIONS


I, H.E. Scruggs, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Allcity Insurance
Company;

2. Based on my knowledge, this quarterly 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 quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 quarterly 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
quarterly report (the "Evaluation Date"); and

        c) presented in this quarterly 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
quarterly 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 corrective
actions with regard to significant deficiencies and material weaknesses.


Date: November 14, 2002
                                           By: /s/ H.E. Scruggs
                                               --------------------------------
                                               H.E. Scruggs
                                               Chief Executive Officer

<PAGE>
                                 CERTIFICATIONS

I, Rocco J. Nittoli, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Allcity Insurance
Company;

2. Based on my knowledge, this quarterly 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 quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 quarterly 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
quarterly report (the "Evaluation Date"); and

        c) presented in this quarterly 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
quarterly 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 corrective
actions with regard to significant deficiencies and material weaknesses.


Date: November 14, 2002
                                              By: /s/ Rocco J. Nittoli
                                                  -----------------------------
                                                  Rocco J. Nittoli
                                                  Principal Financial Officer
<PAGE>
                                  EXHIBIT INDEX
                                  -------------

   Exhibit
   Number                                Description
   ------                                -----------

    99.1        Certification of Chief Executive Officer pursuant to Section 906
                of the Sarbanes-Oxley Act of 2002.

    99.2        Certification of Principal Financial Officer pursuant to Section
                906 of the Sarbanes-Oxley Act of 2002.