SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

                                       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 of incorporation)               (I.R.S. Employer Identification Number)


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


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


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

                                                Name of each exchange on
       Title of each class                          which registered
       -------------------                          ----------------
                                      None


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

                                      None
                                ----------------
                                (Title of Class)


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

Indicate by check mark whether the registrant (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 [ ]


The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 19, 2001 was $3,117,680.

The number of shares outstanding of each of the registrant's classes of common
shares, as of March 19, 2001, was 7,078,625.


DOCUMENTS INCORPORATED BY REFERENCE - NONE

<PAGE>
                                EXPLANATORY NOTE

This Report on Form 10-K/A amends and restates in their entirety the following
Items of the Annual Report on Form 10-K of Allcity Insurance Company (the
"Company") for the fiscal year ended December 31, 2000. Prior to the filing of
this Report on Form 10-K/A, the Company filed Quarterly Reports on Form 10-Q for
the fiscal quarters ended March 31, 2001 (as amended), June 30, 2001 (as
amended) and September 30, 2001, as well as Current Reports on Form 8-K dated
March 31, 2001 and January 2, 2002. All of these reports should be considered in
connection with this Form 10-K/A.



<PAGE>
                                     PART I

Item 1. Business

General

Allcity Insurance Company (the "Registrant", "Allcity" or the "Company") is a
property and casualty insurer. Empire Insurance Company ("Empire"), a property
and casualty insurer, owns approximately 84.6% of the outstanding common shares
of the Company and 100% of the outstanding common shares of Centurion Insurance
Company ("Centurion"). Empire's common shares are 100% owned and controlled,
through subsidiaries, by Leucadia National Corporation ("Leucadia").
Additionally, Leucadia indirectly owns an additional 6.7% of the outstanding
common shares of the Company. The Company, Empire and Centurion are sometimes
hereinafter collectively referred to as the Group.

Historically, the Group has specialized in commercial and personal property and
casualty insurance business primarily in the New York metropolitan area. The
Group has offered insurance products for vehicles (including medallion and
radio-controlled livery vehicles), general liability coverage, property coverage
(including mercantile and multi-family residential real estate) and workers'
compensation to commercial accounts and private passenger automobile and
homeowners products to individuals. The Group is organized into three divisions:
the Small Business Division, the Personal Lines Division and the Mid-Market
Division. Each of these divisions has separate management teams responsible for
all underwriting decisions with the Small Business Division focusing on
commercial package products for small businesses; the Personal Lines Division
focusing on personal automobile and homeowners insurance; and the Mid-Market
Division focusing on commercial automobile, commercial package and workers'
compensation insurance for larger accounts.

During the past several years, the Group has experienced poor underwriting
results and adverse reserve development in all of its lines of business. The
Group has responded to these developments by raising premium rates and reducing
the volume of unprofitable business, while at the same time attempting to reduce
its overhead.

Effective January 1, 2000, all assigned risk policy renewal obligations were
assigned to another insurance company. In 1999, a determination was made not to
accept any applications for new private passenger automobile business from
certain agents with the highest loss ratios. During the fourth quarter of 2000,
this determination was extended to include the entire agency force. Existing
policies of private passenger automobile insurance will be either sold,
non-renewed or cancelled in accordance with New York insurance law. If this 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. The Group also announced that all statutory automobile policies (public
livery vehicles) would be non-renewed effective March 1, 2001 due to poor
underwriting results.

On March 1, 2001, the Group announced that, effective immediately, it would no
longer issue any new (as compared to renewal) insurance policies in any lines of
business and that it has filed plans of orderly withdrawal with the New York
Insurance Department as required. Existing commercial lines policies will be
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 an agreement for the sale of the Group's renewal rights (the
"Tower Agreement"). Under the Tower Agreement, Tower will buy the renewal rights
for substantially all of the Group's remaining lines of business, excluding
private passenger automobile and commercial automobile/garage, for a fee based
on the direct written premium actually renewed by Tower. The amount of the fee
is not expected to be material. The Group will continue to be responsible for
the remaining term of existing policies and all claims incurred prior to the
expiration of these policies. For commercial lines, the Group will thereafter
have no renewal obligations for those policies. Under New York insurance law,
the Group is obligated to offer renewals of homeowners, dwelling fire, personal
insurance coverage and personal umbrella for a three-year policy period;
however, the Tower Agreement provides that Tower must offer replacements for
these policies. The closing of the transaction is subject to the approval of the
New York Insurance Department.

Certain of the lines of business included in the agreement with Tower
historically had acceptable loss ratios. However, despite repeated attempts, the
Group has not been able to reduce its expenses sufficiently to be profitable
with its reduced volume of business. This has been due in part to information
systems and a personnel infrastructure built to service multiple lines of
property and casualty business where the costs are more fixed than variable in
nature, and a high cost agency distribution channel. An additional investment of
both capital and management would have been required to attempt to reduce the
Group's cost structure to a level commensurate with its book of business. In
weighing the potential returns against the risks inherent in that strategy, the
Group determined not to make the investment.

                                       2
<PAGE>
The Group is currently exploring its options for the future. Assuming the Tower
Agreement is consummated, the Group will only have renewal obligations for
remaining personal lines insurance (primarily automobile) not replaced by Tower,
the remaining policy term of all existing policies and a claim run-off
operation. The Group may commence new property and casualty insurance operations
if a new business model with an acceptable expense structure can be developed,
enter into a joint venture with another property and casualty insurance
operation, explore entering the claim services business or commence a
liquidation. There may be other options that the Company will explore, but no
assurance can be given at this time as to what the ultimate plan will be.

As of March 3, 2001, the Group was rated "B+" (very good) by A.M. Best Company
("Best") and rated "BB-" (marginal) by Standards & Poors Insurance Rating
Services ("S&P"). Should the Group decide to commence new property and casualty
insurance operations or enter into an insurance joint venture, its existing
ratings may affect its ability to pursue its plans. As with all ratings, Best
and S&P ratings are subject to change at any time.

For the years ended December 31, 2000, 1999 and 1998 net earned premiums for the
Company were $30.9 million, $42.4 million and $67.5 million, respectively.
During the year ended December 31, 2000, 4% of net earned premiums of the
Company were derived from assigned risk business, 21% from commercial automobile
lines, 40% from other commercial lines and 35% from personal lines.
Substantially all of the Group's policies are written in New York for a one-year
period. The Group is licensed in New York to write most lines of insurance that
may be written by a property and casualty insurer. Empire is also licensed to
write insurance in Connecticut, Massachusetts, Missouri, New Hampshire and New
Jersey.

On a quarterly basis, the Group reviews and adjusts its estimated loss reserves
for any changes in trends and actual loss experience. Included in the Company's
results for 2000 was approximately $15.9 million related to losses and loss
adjustment expenses ("LAE") from prior accident years. The Group will continue
to evaluate the adequacy of its loss reserves and record future adjustments to
its loss reserves as appropriate.


Pooling Agreement

All insurance business written by the Company is subject to a pooling agreement
with Empire under which the Company and Empire effectively operate as one
company. The pooling agreement and subsequent amendments were approved by the
New York Insurance Department. The Company operates under the same general
management as Empire and has full use of Empire's personnel, information
technology systems and facilities. As of December 31, 2000, Empire and its
subsidiaries had 335 full and part-time employees. Currently, and for all
periods presented, all premiums, losses, LAE and other underwriting expenses are
shared on the basis of 70% to Empire and 30% to the Company.

Financial Information Relating to Business Segments

For all periods presented, the Company's operations are presented in the
following business segments:

         (1)      Small Business - includes commercial package products for
                  small businesses.

         (2)      Mid-Market - includes commercial automobile (including
                  medallion and radio-controlled livery vehicles), commercial
                  package and workers' compensation insurance for larger
                  accounts.

         (3)      Personal Lines - includes private passenger automobile,
                  homeowners and fire and allied insurance coverages.


                                       3
<PAGE>
<TABLE>
The following table presents business segment data, net of reinsurance, for each
of the three years ended December 31, 2000 (in thousands, except loss ratio
information):

<CAPTION>

                      Premiums       Premiums          Losses and LAE          Loss
                       Written         Earned             Incurred             Ratio
<S>                    <C>            <C>                  <C>                <C>
2000

Personal Lines (1)     $  9,647       $ 12,099             $ 17,862            147.6%
Mid-Market               13,994         13,152               22,001            167.3%
Small Business            5,443          5,604                3,944             70.4%
Total                  $ 29,084       $ 30,855             $ 43,807            141.9%


1999

Personal Lines (1)     $ 15,156       $ 22,404             $ 19,236             85.9%
Mid-Market               11,679         13,771               19,751            143.4%
Small Business            5,977          6,273                3,551             56.6%
Total                  $ 32,812       $ 42,448             $ 42,538            100.2%


1998

Personal Lines (1)     $ 29,357       $ 39,251             $ 35,741             91.1%
Mid-Market               22,162         21,643               27,459            126.9%
Small Business            6,540          6,618                6,389             96.5%
Total                  $ 58,059       $ 67,512             $ 69,589            103.1%



(1) Includes assigned risk automobile business, which the Company no longer
participates in effective January 1, 2000.
</TABLE>

For further information concerning Business Segments, see Notes 8 and 12 of the
Notes to Consolidated Financial Statements, included elsewhere herein.


Combined Ratios

Set forth below is certain statistical information for the Company prepared in
accordance with generally accepted accounting principles ("GAAP") and statutory
accounting principles ("SAP"), for the three years ended December 31, 2000. The
Loss Ratio is the ratio of net incurred losses and LAE to net premiums earned.
The Expense Ratio is the ratio of underwriting expenses (policy acquisition
costs, commissions, and a portion of administrative, general and other expenses
attributable to underwriting operations) to net premiums written, if determined
in accordance with SAP, or to net premiums earned, if determined in accordance
with GAAP. A Combined Ratio below 100% indicates an underwriting profit and a
Combined Ratio above 100% indicates an underwriting loss. The Combined Ratio
does not include the effect of investment income.


                                       4
<PAGE>
<TABLE>
<CAPTION>
                                               Years Ended December 31,

                                          2000           1999           1998
<S>                                     <C>            <C>            <C>
Loss Ratio: (a)
      GAAP                               141.9%         100.2%          103.1%
      SAP                                141.9%         100.2%          103.1%
      Industry (SAP) (b)                   N/A           78.8%           76.5%

Expense Ratio:
      GAAP                                51.2%          39.7%           26.3%
      SAP                                 50.4%          45.0%           31.3%
      Industry (SAP) (b)                   N/A           29.3%           29.5%

Combined Ratio:  (c)
      GAAP                               193.1%         139.9%          129.4%
      SAP                                192.3%         145.2%          134.4%
      Industry (SAP) (b)                   N/A          108.1%          106.0%



(a) Includes Loss and Loss Adjustment Expenses.

(b) Source: Best's Aggregates & Averages, Property/Casualty, 2000 Edition.
    Industry Combined Ratios may not be fully comparable as a result of, among
    other things, differences in geographical concentration and in the mix of
    property and casualty insurance products.

(c) For 1998, the difference in the accounting treatment for curtailment gains
    relating to defined benefit pension plans was the principal reason for the
    difference between the GAAP Combined Ratio and the SAP Combined Ratio.
    Additionally, for all three years, the difference relates to the accounting
    for certain costs which are treated differently under SAP and GAAP. For
    further information about the Company's Combined Ratios see Item 7,
    "Management's Discussion and Analysis of Financial Condition and Results of
    Operations" of this Report.
</TABLE>


Reinsurance

The Company's maximum retained limit for all lines of business was $0.3 million
for 2000 and 1999. The Company's maximum retained limit for 1998 was $0.5
million for workers' compensation and $0.3 million for other property and
casualty lines. Additionally, the Company has entered into a property
catastrophe excess of loss treaty to protect against certain losses. Its
retention of lower level losses in this treaty is $7.5 million for 2001, and was
$7.5 million for 2000, 1999 and 1998.

Effective January 1, 1997 Empire entered into a quota share reinsurance
agreement with its subsidiary, Centurion. Under this agreement, Empire assumes
50% up to July 1, 1997 and 75% thereafter of the effective period premiums and
losses of Centurion and grants Centurion a ceding commission. Under the pooling
agreement, 70% of such business assumed will be retained by Empire and 30% will
be ceded to the Company.

Although reinsurance does not legally discharge an insurer from its primary
liability for the full amount of the policy liability, it does make the assuming
reinsurer liable to the insurer to the extent of the reinsurance ceded. The
Company's reinsurance generally has been placed with certain of the largest
reinsurance companies, including (with their respective Best ratings) General
Reinsurance Corporation (A++) and Zurich Reinsurance (NA), Inc. (A+). The
Company believes its reinsurers to be financially capable of meeting their
respective obligations. However, to the extent that any reinsuring company is
unable to meet its obligations, the Company would be liable for the reinsured
risks. The Company has established reserves, which the Company believes are
adequate, for any nonrecoverable reinsurance.


                                       5
<PAGE>
Investments

Investment activities represent a significant part of the Company's total
income. Investments are managed by the Company's investment advisors under the
direction of, and upon consultation with, the Company's investment committee.

The Company has a diversified investment portfolio of securities, a substantial
portion of which is rated "investment grade" by established bond rating agencies
or issued or guaranteed by the U.S. Treasury or by governmental agencies. A
portion of the Company's invested assets represent an investment in a limited
partnership which invests principally in convertible preferred stocks,
convertible long-term debt securities, limited partnerships, and common stocks
sold, but not yet purchased. At December 31, 2000, 1999 and 1998, the average
yield of the Company's bond portfolio was approximately 6.4%, 6.5% and 5.8%,
respectively, and the average maturity of the Company's bond portfolio for 2000,
1999 and 1998 was approximately 2.2 years, 2.6 years and 3.2 years,
respectively.

Tax Sharing Agreement

The Company has been included in the consolidated federal income tax returns of
Leucadia since 1993. Under the terms of the tax sharing agreement between
Leucadia and the Company, the Company computes its tax provision on a separate
return basis and is either charged its share of federal income tax resulting
from its taxable income or is credited for tax benefits resulting from its
losses to the extent it could use the losses on a separate return basis.

Government Regulation

Insurance companies are subject to detailed regulation and supervision in the
states in which they transact business. Such regulation pertains to matters such
as approving policy forms and various premium rates, minimum reserves and loss
ratio requirements, the type and amount of investments, minimum capital and
surplus requirements, granting and revoking licenses to transact business,
levels of operations and regulating trade practices. Insurance companies are
required to file detailed annual reports with the supervising agencies in each
of the states in which they do business, and are subject to examination by such
agencies at any time. Increased regulation of insurance companies at the state
level and new regulation at the federal level is possible, although the Company
cannot predict the nature or extent of any such regulation or what impact it
would have on the Company's operations.

For additional information see Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of this Report.

In 1998, the National Association of Insurance Commissioners ("NAIC") adopted
the Codification of Statutory Accounting Principles ("Codification"), which
replaces the current Accounting Practices and Procedures manual as the NAIC's
primary guidance on statutory accounting as of January 1, 2001. The Codification
provides guidance for areas where statutory accounting has been silent and
changes current statutory accounting in some areas. The New York Insurance
Department recently adopted the Codification guidance (Regulation 172),
effective January 1, 2001, but did not adopt several key provisions of the
guidance. The Company will reflect the cumulative effect of the Codification
guidance in its statutory financial statements as a direct adjustment to
statutory surplus for the quarter ending March 31, 2001, to be filed with the
New York Insurance Department by May 15, 2001. The Company is in the process of
determining the potential effects of the codification.

The Group is a member of state insurance funds, which provide certain protection
to policyholders of insolvent insurers doing business in those states. Due to
insolvencies of certain insurers, the Group has been assessed certain amounts
which have not been material and are likely to be assessed additional amounts by
state insurance funds. The Company believes that it has provided for all
anticipated assessments and that any additional assessments will not have a
material adverse effect on the Company's financial condition or results of
operations.

                                       6
<PAGE>
Competition

The insurance industry is a highly competitive industry, in which many of the
Company's competitors have substantially greater financial resources, larger
sales forces, more widespread agency and broker relationships, endorsements from
affinity groups and more diversified lines of insurance coverage. Additionally,
federal administrative, legislative and judicial activity has resulted in
changes to federal banking laws that increase the ability of national banks to
offer insurance products.

The Company believes that property and casualty insurers generally compete on
the basis of price, customer service, consumer recognition, product design,
product mix and financial stability. The industry has historically been cyclical
in nature, with periods of less intense price competition generating significant
profits, followed by periods of increased price competition resulting in reduced
profitability or loss. The current cycle of intense price competition has
continued for a longer period than in the past, suggesting that the significant
infusion of capital into the industry in recent years, coupled with larger
investment returns has been, and may continue to be, a depressing influence on
policy rates. The profitability of the property and casualty insurance industry
is affected by many factors, including rate competition, severity and frequency
of claims (including catastrophe losses), interest rates, state regulation,
court decisions and judicial climate, all of which are outside the Company's
control.

Loss and Loss Adjustment Expenses

Liabilities for unpaid losses, which are not discounted (except for certain
workers' compensation liabilities), and LAE are determined using case-basis
evaluations, statistical analyses and estimates for salvage and subrogation
recoverable and represent estimates of the ultimate claim costs of all unpaid
losses and LAE. Liabilities include a provision for losses that have occurred
but have not yet been reported. These estimates are subject to the effect of
trends in future claim severity and frequency experience. Adjustments to such
estimates are made from time to time due to changes in such trends as well as
changes in actual loss experience. These adjustments are reflected in current
earnings.

The Company relies upon standard actuarial ultimate loss projection techniques
to obtain estimates of liabilities for losses and LAE. These projections include
the extrapolation of both losses paid and incurred by business line and accident
year and implicitly consider the impact of inflation and claims settlement
patterns upon ultimate claim costs based upon historical patterns. In addition,
methods based upon average loss costs, reported claim counts and pure premiums
are reviewed in order to obtain a range of estimates for setting the reserve
levels. For further input, changes in operations in pertinent areas including
underwriting standards, product mix, claims management and legal climate are
periodically reviewed.


                                       7
<PAGE>
<TABLE>
In the following table, the liability for losses and LAE of the Company, is
reconciled for each of the three years ended December 31, 2000. Included therein
are current year data and prior year development.

<CAPTION>
                                     RECONCILIATION OF LIABILITY FOR LOSSES AND LAE

                                               2000          1999          1998
<S>                                       <C>           <C>           <C>
(In thousands)

Net SAP liability for losses and LAE,
at beginning of the year                    $113,602     $ 139,771     $ 145,260

Provision for losses and LAE for
claims occurring in the current year          27,880        36,524        56,698
Increase in estimated losses and LAE
for claims occurring in prior years           15,927         6,014        12,891
Total incurred losses and LAE                 43,807        42,538        69,589


Loss and LAE payments for claims
occurring during:
    Current year                               8,920        12,382        19,203
    Prior years                               52,902        56,325        55,875
                                              61,822        68,707        75,078

Net SAP liability for losses and LAE,
at end of year                                95,587       113,602       139,771

Reinsurance recoverable                      172,919       228,334       294,461

Liability for losses and LAE at
the end of year as reported in
the financial statements (GAAP)            $ 268,506     $ 341,936     $ 434,232
</TABLE>

The following table presents the development of balance sheet liabilities for
1990 through 2000 for the Company. The liability line at the top of the table
indicates the estimated liability for unpaid losses and LAE recorded at the
balance sheet date for each of the indicated years. The middle section of the
table shows the re-estimated amount of the previously recorded liability based
on experience as of the end of each succeeding year. As more information becomes
available and claims are settled, the estimated liabilities are adjusted upward
or downward with the effect of decreasing or increasing net income at the time
of adjustment. The lower section of the table shows the cumulative amount paid
with respect to the previously recorded liability as of the end of each
succeeding year

The "cumulative deficiency" represents the aggregate change in the estimates
over all prior years. For example, the initial 1990 liability estimate indicated
on the table of $75,420,000 has been re-estimated during the course of the
succeeding ten years, resulting in a re-estimated liability at December 31, 2000
of $85,129,000 or a deficiency of $9,709,000. If the re-estimated liability were
less than the liability initially established, a cumulative redundancy would be
indicated.

In evaluating this information it should be noted that each amount shown for
"cumulative deficiency" includes the effects of all changes in amounts for prior
periods. For example, the amount of the deficiency related to losses settled in
1994, but incurred in 1990, will be included in the cumulative deficiency amount
for 1990, 1991, 1992 and 1993. This table is not intended to and does not
present accident or policy year loss and LAE development data. Conditions and
trends that have affected development of the liability in the past may not
necessarily occur in the future. Accordingly, it would not be appropriate to
extrapolate future redundancies or deficiencies based on this table.


                                       8
<PAGE>
<TABLE>
<CAPTION>
Analysis of Loss and Loss Adjustment Expenses Development
(In thousands)

Years ended
December 31,        1990      1991      1992      1993       1994       1995      1996       1997       1998      1999     2000
<S>                 <C>      <C>       <C>        <C>       <C>         <C>       <C>        <C>        <C>       <C>      <C>

Liability for Unpaid
Losses and Loss
Adjustment Expenses $75,420  $ 84,178  $ 96,712   $106,115   $ 121,923  $142,718  $ 143,494  $ 145,260  $ 139,771 $113,602 $95,587

Liability Re-
estimated as of:
 One year later     $74,844  $ 83,987  $ 96,516   $103,181   $ 132,189  $150,852  $ 151,798  $ 158,152  $ 145,785 $129,529 $     -
 Two years later     73,538    83,341    97,208    112,176     140,620   160,686    163,378    163,609    162,692
 Three years later   73,151    85,197   103,592    118,127     150,434   172,650    179,200    176,825
 Four years later    74,190    88,928   108,430    124,375     160,542   182,318    184,693
 Five years later    76,509    92,035   112,988    132,606     167,164   183,482
 Six years later     78,392    95,273   118,446    137,669     166,893
 Seven years later   80,040    99,467   121,715    137,462
 Eight years later   83,670   101,505   121,383
 Nine years later    84,981   101,276
 Ten years later     85,129
Cumulative
Deficiency          $(9,709) $(17,098) $(24,671)  $(31,347)  $ (44,970) $(40,764) $ (41,199) $ (31,565) $ (22,921)$(15,927)$     -

Cumulative Amount
of Liability
Paid Through:
 One year later     $23,681  $ 26,852  $  33,903  $  35,048  $  45,789  $ 60,382  $  56,475  $  55,875  $  56,325 $ 52,902 $     -
 Two years later     38,067    44,989     54,615     59,701     80,911    95,190     94,062     93,714     97,887
 Three years later   50,194    59,336     71,653     81,680    105,977   121,900    122,811    126,295
 Four years later    58,830    69,955     85,689     97,917    124,645   141,259    146,697
 Five years later    65,025    77,965     95,938    109,083    136,791   156,006
 Six years later     69,568    83,886    102,416    116,929    146,283
 Seven years later   72,683    88,139    107,246    123,022
 Eight years later   75,932    91,364    111,097
 Nine years later    78,103    93,862
 Ten years later     79,863

Net Liability - End of year as shown above        $ 106,115  $ 121,923  $ 142,718  $ 143,494 $ 145,260  $139,771  $113,602 $ 95,587
Reinsurance                                         184,718    219,676    257,161    262,593   272,266   294,461   228,334  172,919
Gross Liability - End of year
  as shown above                                  $ 290,833  $ 341,599  $ 399,879  $ 406,087 $ 417,526  $434,232  $341,936 $268,506

Net Re-Estimated Liability -
  Latest                                          $ 137,462  $ 166,893  $ 183,482  $ 184,693 $ 176,825  $162,692  $129,529
Re-estimated Reinsurance -
  Latest                                            273,682    325,569    353,635    363,792   341,658   318,663   240,396
Gross Re-estimated Liability -
  Latest                                          $ 411,144  $ 492,462  $ 537,117  $ 548,485 $ 518,483  $481,355  $369,925

Gross Cumulative
 Deficiency                                       $(120,311) $(150,863) $(137,238) $(142,398)$(100,957) $(47,123) $(27,989)

</TABLE>

As reflected in the above table, the Company's reported loss and loss adjustment
expense reserves as of the end of each calendar year were subsequently
determined to be deficient. This adverse development first became apparent to
the Company during the 1995 calendar year, when an increase to prior years'
reserves was recorded for the first time. In each subsequent calendar year, the
Company's recalculation of the reserve balances for prior periods continued to
result in higher reserve estimates. These higher reserve estimates were
reflected in the Company's annual financial statements upon determination.



                                       9
<PAGE>
During the period from 1991 through 2000, the Company recorded in its Statements
of Operations total net adverse reserve development of $57.6 million, as
disclosed in the Reconciliation of Liability for Losses and LAE table for such
years. This adverse development was experienced in substantially all of the
Company's lines of insurance; however, the amount of reserve increases and the
periods in which the reserves were recorded were not the same for all lines of
insurance. On a calendar year basis, the aggregate $57.6 million adverse reserve
development was recorded, as set forth in the table below:

                                                                 Redundancy/
                                                                (Deficiency)
Calendar year recorded                                         (in thousands)
----------------------                                         --------------

1991                                                                   $  576
1992                                                                      191
1993                                                                      196
1994                                                                    2,934
1995                                                                 (10,266)
1996                                                                  (8,134)
1997                                                                  (8,304)
1998                                                                 (12,891)
1999                                                                  (6,014)
2000                                                                 (15,927)
                                                                  ----------

  Prior year reserve development recorded 1991 to 2000            $ (57, 639)


This reserve development is reflected in the ten-year Analysis of Loss and Loss
Adjustment Expense Development table above; however, because the deficiency line
in the table is calculated on a cumulative basis, the $57.6 million of actual
adverse reserve development experienced by the Company is reported as
deficiencies in multiple years in the table. An examination of the adverse loss
reserve development recorded during 2000 will illustrate this point. During 2000
the Company recorded $15.9 million of adverse loss reserve development related
to claims incurred in years prior to 2000. This amount is reflected in the 1999
column of the table as a cumulative deficiency. However, since this adverse loss
reserve development related to claims incurred and whose settlement cost was
originally estimated in various periods prior to 2000, the cumulative deficiency
line in years prior to 2000 includes this adverse loss reserve development as
follows: 1999: $15.9 million; 1998: $16.9 million; 1997: $13.2 million; 1996:
$5.5 million; and 1995: $1.2 million (amounts prior to 1995 were insignificant).
Because the cumulative deficiencies reflected in the ten-year Analysis of Loss
and Loss Adjustment Expense Development table above add up to a much greater
number than the actual adverse development recorded by the Company, an
understanding of the Company's reserve deficiencies during 1990-1999 can only be
obtained from an analysis of the adverse reserve development actually recorded
by the Company in its financial statements in each year in the period, beginning
in 1995 (the first year in which adverse reserve development was recorded).


                                       10
<PAGE>
The information below identifies certain of the more significant trends and
events that the Company has experienced in recent years, resulting in the
Company's recognition of the adverse loss reserve development in 1995 and each
subsequent calendar year. As described below, the reserve development recorded
by the Company was caused by many factors, including initial loss ratio
estimates used by the Company that were subsequently found to be too low as a
result of actual loss experience, as well as factors external to the Company
that weren't known at the time business was written. In addition, the long
period of time it takes to settle third-party liability claims in the New York
City marketplace further complicates the reserve estimation process. Frequently,
these claims are not received immediately after the accident occurs, and in
fact, a claimant can wait until just before the expiration of the statute of
limitations (three years from the date of the accident) to make a claim. Once
received, a claim may take several years until the claim reaches final
resolution in the New York City courts.

1995
----

In 1995, of the $10.3 million of adverse loss reserve development recorded by
the Company, $6.9 million was in the private passenger automobile line of
insurance. In 1994, the Company acquired a large block of assigned risk private
passenger automobile business that nearly doubled the volume previously written
by the Company. In 1995, losses began to develop in this line of insurance that
indicated a higher ultimate loss ratio than the Company had experienced on
similar blocks of assigned risk business from earlier periods, which experience
formed the basis of the Company's original loss estimate. As a result, the
Company increased its estimate for loss reserves for the assigned risk business
acquired in 1994 and earlier years.

1996, 1997 and 1998
-------------------

For the years ended December 31, 1996, 1997, and 1998, the Company recorded
adverse loss reserve development of $ 8.1 million, $8.3 million and $12.9
million. For 1996, 1997 and 1998, these amounts included $6 million, $2.1
million and $4.2 million, respectively, in the commercial automobile liability
line, and $2.4 million, $3.3 million and $4.2 million, respectively, in the
commercial package liability line. Beginning in 1992, the Company entered into
new market segments of the voluntary commercial business for automobile and
general liability lines, including specialty programs for sanitation trucks, gas
stations, fuel oil deliveries and limousines. Initially, the Company's loss
ratio estimate for these new market segments was based upon its experience with
similar lines of business and standard actuarial ultimate loss projection
techniques, which consider expected loss ratios.

During 1996, claims began to develop unfavorably and the Company used such claim
development to revise the assumptions that had formed the basis of its actuarial
studies; as a consequence reserves were increased. The increase in ultimate loss
estimates did not become apparent prior to 1996, primarily due to the long
period of time it takes to settle claims in these new sub-lines of business. The
Company further increased its loss estimates and increased reserves for these
market segments in 1997 and 1998 as well. Except for the three-year period from
1996 to 1998, there has been no other material development for these market
segments first entered into in 1992.


                                       11
<PAGE>
In addition, during 1998 the Company's claim examiners began recording increases
in the expected settlement costs for 1997 accident year claims in other
sub-lines of the commercial automobile line of insurance in larger amounts than
previously expected. As a result, the 1997 accident year loss ratio for the
commercial automobile line is now currently estimated to be 130%, which is 30
points higher than the current estimate for the 1996 accident year and 50 points
higher than the current estimate for the 1995 accident year. Such a large change
in the loss experience for this book of business from prior experience was not
expected.

1999 and 2000
-------------

In 1999 and 2000, the Company recorded adverse loss reserve development of $6.0
million and $15.9 million, respectively, of which $5.1 million and $6.1 million,
respectively, related to Personal Injury Protection ("PIP") coverage in all of
its automobile lines of insurance. The majority of the 1999 development resulted
from increased claim cost estimates for the 1998 accident year. It was during
1999 that the Company first began to experience greater severity (the amount
paid to a claimant) in automobile liability claims, which were subsequently
determined to be PIP related. Also during 1999, the Company started to see the
lengthening of the time from the date of loss to the date a claim was first
reported. This change in loss development patterns resulted in more claims being
reported at later dates, which further increased the Company's loss estimates.
In 1999, the Company incorporated this developing trend into its ultimate loss
estimate for PIP related claims and increased its loss reserves accordingly.

During the latter half of 2000, and in particular, the fourth quarter, the
Company experienced further unfavorable development in PIP claims. This
development occurred in all accident years from 1996 through 1999, with further
deterioration in the 1998 accident year being the most significant component.
The Company observed this unfavorable development with respect to both the
frequency and severity of claims. The Company incorporated the results of this
activity with that of developing industry trends into its actuarial valuation
for its PIP coverage and increased its loss reserve estimate.

In the past, the Company has written various commercial package and homeowner
policies that offer liability protection to the insured, and has exposure to
third party liability claims in these lines of insurance. During 2000, the
Company experienced newly reported and reopened liability claims with increased
severity for accident years 1998 and prior. As a result, the Company recognized
$4.5 million of loss reserve development for those accident years. One of the
primary reasons for the reopened claims was that the increase in severity made
certain types of liability claims that previously had lower settlement values
more attractive litigation candidates for plaintiff's attorneys.

Throughout 2000, the Company outsourced a significant portion of its claim
handling responsibilities to outside third party claim administrators. While the
Company anticipates that these administrators will be able to settle these
claims for smaller amounts than the Company was achieving, the loss adjustment
expense reserve needed to be increased to recognize the fees due to the
administrators. Such fees are higher on a per claim basis than the Company's
cost to handle claims in-house. Accordingly, in 2000 the adverse loss reserve


                                       12
<PAGE>
development recorded by the Company included an increase to the loss adjustment
expense reserve of $3.3 million. The Company has not recognized any reserve
reduction for the potentially lower settlement amounts that may be achieved by
the third party administrators.

For additional information, please see Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included elsewhere
herein.















                                       13
<PAGE>
                                     PART II

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

The purpose of this section is to discuss and analyze the Company's financial
condition, liquidity and capital resources and results of operations. This
analysis should be read in conjunction with the financial statements and related
notes which appear elsewhere in this Report.

Liquidity and Capital Resources

In 2000 and 1999, net cash was used for operations as a result of a decrease in
premiums written and the payment of claims. As discussed above, it is currently
anticipated the Company's premiums will continue to decline while the Company
runs off its claims liabilities. This is expected to result in a continued net
use of the Company's cash for operations over the next several years.

At December 31, 2000 and 1999 the yield of the Company's fixed maturities
portfolio was 6.4% and 6.5%, respectively, with an average maturity of 2.2 years
and 2.6 years for 2000 and 1999, respectively. Additionally, the Company
maintains a diversified investment portfolio of securities, of which at December
31, 2000, approximately 66% of the fixed maturities portfolio was invested in
issues of the U.S. Treasury and its governmental agencies with the remainder
primarily invested in investment grade corporate and industrial issues.

The Company maintains cash, short-term and readily marketable securities and
anticipates that the cash flow from investment income, maturities and sales of
short-term investments and fixed maturities will be sufficient to satisfy its
anticipated cash needs. During 2000 and 1999, the Company sold certain
securities at a net realized capital loss to meet short-term cash flow needs.
The Company will continue to sell its investment portfolio and collect its
reinsurance receivables to generate the cash that will be required to settle its
loss and loss adjustment expense reserves. At December 31, 2000, these assets
totaled $341 million as compared to the Company's loss and loss adjustment
expense reserves of $269 million. The Company expects to settle approximately
80% of these liabilities within the next 3 years. Additionally, the Company has
not experienced any material default in the payment of reinsurance claims due
from its reinsurance providers. The Company does not presently anticipate paying
dividends in the near future and believes it has sufficient capital to meet its
currently anticipated level of operations.

Results of Operations

The Company's pre-tax income (loss) was $(17.9) million, $(6.3) million and $.8
million for the years ended December 31, 2000, 1999 and 1998, respectively.
These amounts were negatively impacted by adverse reserve development of prior
years' reserves of $15.9 million, $6 million and $12.9 million for 2000, 1999
and 1998, respectively. The more significant trends and events that the Company
has experienced in recent years, which resulted in the recognition of the
adverse loss reserve development, are identified below following the Company's
combined ratios.

Net earned premium revenues of the Company were $30.9 million, $42.4 million and
$67.5 million for the years ended December 31, 2000, 1999 and 1998,
respectively. While earned premiums declined in almost all lines of business
during 2000 and 1999, the most significant reductions during 2000 were in
assigned risk automobile ($4.4 million) and voluntary private passenger
automobile ($4.4 million), and during 1999 were in assigned risk automobile
($7.3 million), voluntary private passenger automobile ($8.1 million) and
commercial package policies ($3.7 million). Effective January 1, 2000, all
policy renewal obligations for assigned risk contracts were assigned to another
insurance company. However, the Company remains liable for the claim settlement
costs for assigned risk claims that occurred during the policy term. The decline
in voluntary private passenger automobile resulted from tighter underwriting
standards, increased competition and the Company's decision in 1999 to no longer
accept new policies from those agents who historically have had poor
underwriting results. The Company's termination of certain unprofitable agents
also adversely affected premium volume in other lines of business.


                                       14
<PAGE>
During the fourth quarter of 2000, the Group announced that it would no longer
accept any new private passenger automobile policies from any agents. Existing
policies of private passenger automobile insurance will be either sold,
non-renewed or cancelled in accordance with New York insurance law. If this 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. The Group also announced that all statutory automobile policies (public
livery vehicles) would be non-renewed effective March 1, 2001, due to poor
underwriting results.

On March 1, 2001, the Group announced that, effective immediately, it would no
longer issue any new (as compared to renewal) insurance policies and that it has
filed plans of orderly withdrawal with the New York Insurance Department as
required. Existing commercial lines policies will be non-renewed or canceled in
accordance with New York insurance law or replaced by Tower. The Group will
continue to be responsible for the remaining term of its existing policies and
all claims incurred prior to the expiration of these policies. For commercial
lines, the Group will thereafter have no renewal obligations for those policies.
Under New York insurance law, the Group is obligated to offer renewals of
homeowners, dwelling fire, personal insurance coverage and personal umbrella for
a three-year policy period; however, the Tower Agreement provides that Tower
must offer replacements for these policies. The closing of the transaction is
subject to the approval of the New York Insurance Department.

During the remaining term of the Company's policies that will be sold or
non-renewed at the expiration of the policy term, and for other policies which
may have to be renewed under New York insurance law, the Company's estimate of
losses for those policies will be based on its accumulated loss experience in
those line of insurance as well as industry trends. The Company's accident year
loss ratios for certain of these policies, in particular private passenger
automobile, will be high reflecting the poor loss experience and adverse reserve
development that the Company has experienced in the past.

The NAIC has adopted model laws incorporating the concept of a "risk based
capital" ("RBC") requirement for insurance companies. Generally, the RBC formula
is designed to measure the adequacy of an insurer's statutory capital in
relation to the risks inherent in its business. The RBC formula is used by the
states as an early warning tool to identify weakly capitalized companies for the
purpose of initiating regulatory action. Although New York State has not adopted
the RBC requirements for property and casualty insurance companies, New York
does require that property and casualty insurers file the RBC information with
the New York Insurance Department ("the Department"). The NAIC also has adopted
various ratios for insurance companies which, in addition to the RBC ratio, are
designed to serve as a tool to assist state regulators in screening and
analyzing the financial condition of insurance companies operating in their
respective states. The Company and its parent had certain NAIC ratios outside of
the acceptable range of results for the year ended December 31, 2000.

In 2001, the Department completed its fieldwork for its triennial examination of
the statutory-basis financial statements of the Company and its parent as of
December 31, 1999 but has not as yet issued its report. However, the Department
has verbally informed the Company that its estimate of the Company's required
loss and loss adjustment expense reserves as of December 31, 1999 was higher
than the amount recorded by the Company. The Department's estimate of loss and
loss adjustment expense reserves for accident years 1999 and prior is
approximately $15,000,000 higher than the Company's recorded reserves for such
accident years as of December 31, 2000. The Company and its parent are currently
discussing the results of the Department's reserve study with them, and are
working to reconcile the differences between the two estimates. Based on the
Company's and its parent's recent discussions with the Department, and their
decision to file plans of orderly withdrawal from all lines of business, as
previously described, the Company believes that no material adverse action will
be taken by the Department at this time. However, no assurance can be given that
the Company and its parent will not be required to increase their reserves or
that the Department will not take materially adverse regulatory action in the
future.

The Group is currently exploring its options for the future. Assuming the Tower
Agreement is consummated, the Group will only have renewal obligations for
remaining personal lines insurance (primarily automobile) not replaced by Tower,
the remaining policy term of all existing policies and a claim run-off
operation. The Group may commence new property and casualty insurance operations
if a new business model with an acceptable expense structure can be developed,
enter into a joint venture with another property and casualty insurance
operation, explore entering the claim services business or commence a
liquidation. There may be other options that the Company will explore, but no
assurance can be given at this time as to what the ultimate plan will be.


                                       15
<PAGE>
<TABLE>
The Company's combined ratios as determined under GAAP and SAP were as follows:
<CAPTION>
                                  Years Ended December 31,
                                  2000             1999              1998
      <S>                <C>              <C>               <C>
      GAAP               193.1%           139.9%            129.4%
      SAP                192.3%           145.2%            134.4%
</TABLE>


The Company's combined ratios increased in 2000 primarily due to unfavorable
loss reserve development from prior accident years, increased loss adjustment
expenses for newly outsourced claims and adverse development in loss adjustment
expenses. In addition, these ratios increased due to reduced service fees,
higher 2000 accident year loss ratios, higher severance costs and overhead costs
which, although lower, have not declined commensurate with the reduced premium
volume. The Company's combined ratios increased in 1999 primarily due to the
reduction in premium volume at a rate greater than the reduction in net
underwriting and other costs. In addition, in 1999, the expense ratios were
adversely affected by the reduction in service fees, increased expenditures
related to the installation of new information systems, providing Internet
access to agents and severance costs.

During 2000, the Company recorded adverse loss reserve development of $15.9
million, principally in the 1996 through 1999 accident years. This development
was attributable to an increase in the severity of personal injury protection
claims ("PIP") and an increase in the frequency of liability claims in the
private passenger automobile line ($2.8 million), an increase in the frequency
of liability claims in the commercial automobile line ($1.9 million), an
increase in the frequency and severity of PIP claims in the assigned risk
automobile line ($1.4 million) and an increase in the severity of certain
liability claims in the commercial package policies lines of business ($4.5
million). The increases in severity and frequency of claims in automobile lines
of business, particularly with respect to PIP claims, are consistent with
emerging industry trends in the New York City marketplace. In addition, the
Company increased its estimate for loss adjustment expenses by $3.3 million as a
result of the decision to outsource a significant amount of claim handling
functions in 2000. Claim files for workers' compensation, automobile no-fault
and automobile and other liability claims were outsourced at a cost greater than
the reserves previously recorded to handle the claims internally. The Group has
outsourced almost two-thirds of its claims. Currently, the Group is primarily
handling complex claims, first party claims and certain automobile liability and
general liability claims internally. Complex claims generally consist of those
that have potentially large settlement exposure and are not expected to settle
quickly. The Company has also increased its reserve estimate for claims handled
internally.

During 1999, the Company recorded adverse loss reserve development of $6
million, principally due to an increase in severity of 1998 accident year losses
in the assigned risk automobile and voluntary private passenger automobile
lines, and 1996 accident year losses in certain classes of the commercial
automobile line. As a result, the Company increased its reserves by $2.2 million
for assigned risk automobile, $1.5 million for voluntary private passenger
automobile and $1.4 million for commercial automobile lines.


                                       16
<PAGE>
During 1998, the Company recorded adverse loss reserve development of $12.9
million. In 1998, the Company reviewed the adequacy of the reserves carried for
its open claims' files, focusing on workers' compensation, commercial auto and
other commercial liability lines of business. As part of the review,
substantially all open workers' compensation claim files were reviewed for every
accident year up to and including 1998. Additionally, during 1998, the Group
reorganized the commercial auto claims department. As part of this realignment,
more complex claims files were reviewed by the most experienced claims examiners
and assumptions regarding average claims severity and probable ultimate losses
were revised. Accordingly, prior years reserves were increased by $3.9 million
for workers' compensation, $4.2 million for commercial automobile and $4.2
million for other commercial liability lines of business.

During the period between 1984 and 1995, the Company entered into certain
retrospectively rated reinsurance contracts covering substantially all lines of
business, except worker's 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.

Net earned premiums revenues of the Company were reduced for retrospective
reinsurance premiums by $1.4 million, $1.4 million and $0.6 million for the
years ended December 31, 2000, 1999 and 1998, respectively.

For all lines of property and casualty insurance business, the Company employs a
variety of standard actuarial ultimate loss projection techniques, statistical
analyses and case-basis evaluations to estimate its liability for unpaid losses.
The actuarial projections include an extrapolation of both losses paid and
incurred by business line and accident year and implicitly consider the impact
of inflation and claims settlement patterns upon ultimate claim costs based upon
historical patterns. These estimates are performed quarterly and consider any
changes in trends and actual loss experience. Any resulting change in the
estimate of the liability for unpaid losses, including those discussed above, is
reflected in current year earnings during the quarter the change in estimate is
identified.

The reserving process relies on the basic assumption that past experience is an
appropriate basis for predicting future events. The probable effects of current
developments, trends and other relevant matters are also considered. Since the
establishment of loss reserves is affected by many factors, some of which are
outside the Company's control or are affected by future conditions, reserving
for property and casualty claims is a complex and uncertain process requiring
the use of informed estimates and judgments. As additional experience and other
data become available and are reviewed, the Company's estimates and judgments
may be revised. While the effect of any such changes in estimates could be
material to future results of operations, the Company does not expect such
changes to have a material effect on its liquidity or financial condition.

In management's judgment, information currently available has been appropriately
considered in estimating the Company's loss reserves. 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.

Investment income has decreased by approximately $1.0 million or 8.2% in 2000
and decreased by approximately $2.1 million, or 14.2% in 1999, primarily as a
result of lower invested assets due to claim payments and a decrease in premiums
written. During 2000 and 1999, the Company had realized capital losses of $0.2
million and $1.7 million, respectively, principally due to the sale of fixed
maturities to satisfy operating cash needs. During 1998, the Company recorded
$6.1 million in realized capital gains principally on the sale of fixed
maturities, primarily U.S. Treasury Notes.

The combination of other underwriting expenses incurred and the amortization of
deferred policy acquisition costs reflected a decrease of $3.1 million or 16.4%
in 2000 and approximately $2.2 million or 10.5% in 1999. The decrease in both
2000 and 1999 primarily related to the decline in premium revenue coupled with a
reduction in operating expenses. 1998 included increased expenses relating to
the move of the Company's executive and administrative offices to Brooklyn, New
York and higher underwriting costs offset in part by a $2.0 million pension
curtailment gain.

Due to the uncertainty of future taxable income necessary for realization of the
deferred tax asset, a valuation allowance has been provided as of December 31,
2000 on the total amount of the deferred tax asset.


                                       17
<PAGE>
Impact of Inflation

The Company, as well as the property and casualty insurance industry in general,
is affected by inflation. With respect to losses, the Company's claim severity
is affected by the impact of inflation on the cost of automobile repair parts,
medical costs and lost wages. The costs of adjusting claims and other
underwriting expenses have also been affected by inflationary pressures on
salaries and employee benefits. The Company receives rate increases based in
part upon its experience as well as the industry's experience. Accordingly,
premium increases generally follow the rate of inflation.


Cautionary Statement for Forward-Looking Information

Statements included in this Report 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 Report, 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 general economic and market
conditions, changes in domestic laws, regulations and taxes, changes in
competition and pricing environments, regional or general changes in asset
valuation, the occurrence of significant natural disasters, the inability to
reinsure certain risks economically, the adequacy of loss reserves, prevailing
interest rate levels, weather related conditions that may affect the Company's
operations, consummation of the Tower Agreement, the ability to attract and
retain key personnel, adverse selection through renewals of the Group's
policies, the Group's ability to develop an alternative business model and
changes in composition of the Company's assets and liabilities through
acquisitions or divestitures. 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
Report or to reflect the occurrence of unanticipated events.





                                       18
<PAGE>
                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                           ALLCITY INSURANCE COMPANY

February 7, 2002                           By: /s/ Rocco J. Nittoli
                                               ----------------------------
                                               Rocco J. Nittoli
                                               Chief Operating Officer










                                       19