United States
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K/A

(Mark One)
[x]      Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the fiscal year ended December 31, 2001
                                       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 1-11983

                           FPIC Insurance Group, Inc.
             (Exact Name of Registrant as Specified in its Charter)

             Florida                                  59-3359111
(State or Other Jurisdiction of                (IRS Employer Identification No.)
Incorporation or Organization)

225 Water Street, Suite 1400, Jacksonville, Florida           32202
(Address of Principal Executive Offices)                    (Zip Code)

                                 (904) 354-2482
              (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   Common Stock,
                                                               $.10 par value


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
   ---------------     -------------

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]

The aggregate market value of the Registrant's Common Stock (its only voting
stock) held by non-affiliates of the Registrant as of March 30, 2002 was
approximately $113,959,643.

As of March 20, 2002, there were 9,389,462 shares of the Registrant's Common
Stock, $.10 Par Value, outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

            Document                                    Incorporated in
-------------------------------              -----------------------------------
Proxy Statement for Registrant's                           Part III
Annual Shareholders' Meeting to
be held on June 5, 2002





<PAGE>

Part II, Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations is amended as follows for typographical changes in the
last paragraph of the discussion regarding Loss and Loss Adjustment Expenses
included in the Company's Form 10-K filed with the Securities and Exchange
Commission on March 27, 2002.

Item 7.  Management's Discussion & Analysis of Financial Condition and Results
         of Operations
------------------------------------------------------------------------------
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and the notes to the consolidated financial
statements appearing elsewhere in this report. The consolidated financial
statements include the results of all of the Company's wholly owned and majority
owned subsidiaries.

Safe Harbor Disclosure
----------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Any written or oral statements made by or on
behalf of the Company may include forward-looking statements, which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other factors (which are described in more
detail elsewhere herein and in documents filed by the Company with the
Securities and Exchange Commission) include, but are not limited to, (i)
uncertainties relating to government and regulatory policies (such as subjecting
the Company to insurance regulation or taxation in additional jurisdictions or
amending, revoking or enacting any laws, regulations or treaties affecting the
Company's current operations), (ii) the occurrence of insured or reinsured
events with a frequency or severity exceeding the Company's estimates, (iii)
legal developments, (iv) the uncertainties of the loss reserving process, (v)
the actual amount of new and renewal business and market acceptance of expansion
plans, (vi) the loss of the services of any of the Company's executive officers,
(vii) changing rates of inflation and other economic conditions, (viii) the
ability to collect reinsurance recoverables, (ix) the competitive environment in
which the Company operates, related trends and associated pricing pressures and
developments, (x) the impact of mergers and acquisitions, including the ability
to successfully integrate acquired businesses and achieve cost savings,
competing demands for the Company's capital and the risk of undisclosed
liabilities, (xi) developments in global financial markets that could affect the
Company's investment portfolio and financing plans, (xii) risk factors
associated with financing and refinancing, including the willingness of credit
institutions to provide financing and the availability of credit generally and,
(xiii) developments in reinsurance markets that could affect the Company's
reinsurance program.

The words "believe," "anticipate," "foresee," "estimate," "project," "plan,"
"expect," "intend," "hope," "will likely result" or "will continue" and
variations thereof or similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.

Critical Accounting Policies
----------------------------
The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities. On an on-going basis, management evaluates
its estimates, including those related to income taxes, loss and loss adjustment
expenses ("LAE") reserves, contingencies and litigation. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements:


                                       2
<PAGE>


Reinsurance. Reinsurance recoverables include the balances due from reinsurance
companies for paid and unpaid losses and LAE that will be recovered from
reinsurers, based on contracts in force. Amounts recoverable from reinsurers are
estimated in a manner consistent with the claim liability associated with the
reinsured policy. Reinsurance contracts do not relieve the Company from its
primary obligations to policyholders. Failure of reinsurers to honor their
obligations could result in losses to the Company. The Company evaluates the
financial condition of its reinsurers and monitors concentrations of credit risk
with respect to the individual reinsurers, which participate in its ceded
programs to minimize its exposure to significant losses from reinsurer
insolvencies. The Company holds collateral in the form of letters of credit or
trust accounts for amounts recoverable from reinsurers that are not designated
as authorized reinsurers by the domiciliary Departments of Insurance.

Income Taxes. The Company accounts for income taxes in accordance with Financial
Accounting Standard ("FAS") No. 109, "Accounting for Income Taxes." Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and
operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance against deferred tax assets is recorded if
it is more likely than not, that all or some portion of the benefits related to
the deferred tax assets will not be realized. Valuation allowances are based on
estimates of taxable income and the period over which deferred tax assets will
be recoverable. In the event that actual results differ from these estimates or
these estimates are adjusted in future periods, the Company may need to
establish a valuation allowance, which would impact our financial position and
results of operations. No such valuation allowance has been established to date
as the Company believes it is more likely than not that its deferred tax assets
will be fully realized.

Goodwill and Intangible Assets. Goodwill represents the aggregate cost of
companies acquired over the fair value of net assets at the date of acquisition
and is being amortized into income using the straight-line method over periods
ranging from ten to twenty-five years. Management regularly reviews the carrying
value of goodwill by determining whether the unamortized value of the goodwill
can be recovered through undiscounted future operating cash flows of the
acquired operation.

Intangible assets represent trade secrets acquired and non-compete agreements
entered into in connection with business combinations. These assets are being
amortized into income over periods corresponding with their terms or useful
lives that range from three to ten years using the straight-line method.
Management regularly reviews the carrying value of intangible assets by
determining whether the amortization of the intangible assets can be recovered
through undiscounted future operating cash flows of the acquired operation.

In the event goodwill or another intangible asset is impaired, a loss is
recognized based on the amount by which the carrying value exceeds the fair
value of the respective asset. Fair value is determined primarily using
anticipated cash flows at a rate commensurate with the risk involved. Losses on
assets to be disposed of are determined in a similar manner, except that fair
values are reduced for the cost of disposal.

Loss and Loss Adjustment Expenses. The Company estimates its liability for loss
and LAE using actuarial projections of ultimate losses and LAE and other
quantitative and qualitative analyses of conditions expected to effect the
future development of claims and related expenses. The estimated liability for
losses is based upon paid and case reserve estimates for losses reported,
adjusted through formula calculations to develop ultimate loss expectations;
related estimates of incurred but not reported losses and expected cash reserve
developments based on past experience and projected future trends; deduction of
amounts for reinsurance placed with reinsurers; and estimates received related
to assumed reinsurance. Amounts attributable to ceded reinsurance derived in
estimating the liability for loss and LAE are reclassified as assets in the
consolidated balance sheets as required by FAS No. 113. The liability for LAE is
provided by estimating future expenses to be incurred in settlement of claims
provided for in the liability for losses and is estimated using similar
actuarial techniques.



                                       3
<PAGE>


The liabilities for losses and LAE and the related estimation methods are
continually reviewed and revised to reflect current conditions and trends. The
resulting adjustments are reflected in the operating results of the current
year. While management believes the liabilities for losses and LAE are adequate
to cover the ultimate liability, the actual ultimate loss costs may vary from
the amounts presently provided and such differences may be material.

The Company also has direct and assumed liabilities under covered extended
reporting endorsements associated with claims-made MPL policy forms, which
generally provide, at no additional charge, continuing MPL coverage for
claims-made insureds in the event of death, disability or retirement. These
liabilities are carried within unearned premium reserves and are estimated using
techniques, which possess elements of both loss reserves and pension
liabilities, and thus, include additional assumptions for mortality, morbidity,
retirement, interest and inflation.

In performing its tests of the liability for losses and LAE as of December 31,
2001, the Company's independent actuarial firm utilized multiple methods and
developed a range of reasonable estimates. The Company's liability for losses
and LAE, net of reinsurance, as of December 31, 2001 is $238.1 million, which
corresponds with the point estimate of its independent actuarial firm's
consolidated range of estimates of $223.2 million (minus $14.9 million, or 6%)
to $255.5 million (plus $17.4 million, or 7%). For each 1% increase or decrease
in the Company's estimated liability for losses and LAE as of December 31, 2001,
that could occur in one or more future periods, a corresponding charge or credit
to income in the amount of approximately $2.4 million ($1.8 million, after tax
effects) would occur.

Commitments and Contingencies. Liabilities for loss contingencies arising from
claims, assessments, litigation, fines and penalties, and other sources are
recorded when it is probable that a liability has been incurred and the amount
of the assessment and/or remediation can be reasonably estimated.

General
-------
FPIC Insurance Group, Inc. (the "Company") was formed in 1996 in connection with
a reorganization (the "Reorganization") pursuant to which it became the parent
company of Florida Physicians Insurance Company, Inc. ("Florida Physicians") and
McCreary Corporation ("McCreary"), a third party administrator. In connection
with the Reorganization, Florida Physicians shareholders became the shareholders
of the Company and received five shares of the Company's common stock for each
of their shares of Florida Physicians common stock. In May 2001, the Company
changed the name of Florida Physicians to First Professionals Insurance Company,
Inc. ("First Professionals"). Effective January 1, 2002, McCreary and its
subsidiary, Employers Mutual, Inc. ("EMI") were consolidated by legal entity
merger, with EMI continuing as the surviving entity.

The Company has three main operating segments as follows: insurance, reciprocal
management and third party administration ("TPA"). The Company's primary sources
of revenue are management fees and dividends received from its subsidiaries. The
primary sources of revenue for these amounts are premiums earned and investment
income derived from the insurance segment and fee and commission income from the
reciprocal management and TPA segments.

Through the insurance segment, the Company specializes in professional liability
insurance products and services for physicians, dentists, other healthcare
providers and attorneys. The Company's medical professional liability ("MPL")
insurance is written substantially on a "claims-made" basis (as opposed to an
"occurrence" basis) providing protection to the insured only for those claims
that arise out of incidents occurring, and of which notice to the insurer is
given, while coverage is in effect. The Company also offers "tail coverage" for
claims reported after the expiration of the policy for occurrences during the
coverage period. The price of tail coverage is based on the length of time the
insured has been covered under the Company's claims-made form. The Company
provides free tail coverage for insured physicians who die or become disabled
during the coverage period of the policy and for those who have been insured by
the Company for at least five consecutive years and retire completely from the
practice of medicine. Through the reciprocal management segment, the Company
provides brokerage and administration services for reinsurance programs and
brokerage services for the placement of


                                       4
<PAGE>


annuities in structured settlements. The Company's TPA markets and administers
self-insured and fully insured plans for both large and small employers,
including group accident and health, workers' compensation and general liability
and property insurance.

The Company's financial position and results of operations are subject to
fluctuations due to a variety of factors. Unexpected high frequency or severity
of losses for the Company's insurance subsidiaries in any period, particularly
in the Company's prior three policy years, could have a material adverse effect
on the Company. In addition, reevaluations of the liability for loss and LAE
could result in an increase or decrease in liabilities and a corresponding
adjustment to earnings. The Company's historical results of operations are not
necessarily indicative of future earnings.

Overview
--------
Overall, 2001 was a successful year for the Company. Improving market conditions
laid the foundation for strategic opportunities that allowed the Company to
build its business and strengthen its market position. In addition, the Company
took initiatives to improve its operations as soft market conditions subsided.

During the year, competitors that had previously competed heavily on price
either raised their prices, reduced writings or in some cases exited the market.
As a specialized carrier, the Company was positioned to take advantage of
increasing demand and the improved pricing environment that resulted. Top-line
growth, from both price improvements and increased policyholder counts,
resulted. Strong results from our reciprocal management segment also resulted in
significant growth in programs managed.

The Company also accomplished a number of significant strategic initiatives
during 2001, including: a) its 2002 reinsurance program at acceptable rates; b)
completion of a new credit facility with a syndicate of banks, reducing
outstanding debt by approximately $14 million, or 21%; c) completion of
the Company's exit from the small group accident and health ("A&H") business; d)
consolidation of the Company's third party administration operations; and e)
implementation of an integrated investment program engaging outside professional
investment managers.

Net income for the year ended December 31, 2001, totaled $2.9 million, or $0.31
per diluted share, compared with net income of $0.6 million, or $0.06 per
diluted share, for the year ended December 31, 2000. The 2001 results include
the after-tax effects of $5.4 million for an adjustment made to increase
reserves on prior years' business and $0.4 million in restructuring charges
associated with the Company's TPA operations. Improved pricing and growth in
policyholders during 2001 generated significant top-line growth.

Total revenues for the year ended December 31, 2001 increased 8%, to $197.5
million, from $182.3 million for the year ended December 31, 2000. Annual
revenue growth was driven primarily by growth in earned premiums, which
contributed $10.6 million to such growth. Strong improvements in pricing and the
addition of MPL policyholders, primarily in Florida and Missouri, were the
primary source of premium growth. Commission income and claims administration
and management fees earned by the Company's non-insurance subsidiaries in New
York and Florida also grew, contributing $7.1 million to the growth in total
revenues. The growth in total revenues during 2001 was offset by a $1.7 million
decline in investment income as a result of lower market yields.

Total expenses for the year ended December 31, 2001 increased 6%, to $196.4
million, from $185.2 million for the year ended December 31, 2000. Net losses
and LAE incurred for the year ended December 31, 2001 increased $5.6 million or
5%, over the prior year. Excluding the pre-tax reserve strengthening in 2001 and
2000 of $8.8 million and $21.0 million, respectively, net losses and LAE
incurred increased $17.7 million, or 17% during the year 2001. The increase
reflects growth and the continuation of the Company's policy to maintain its
reserves at a conservative level. Other underwriting expenses also contributed
to the increase in total expenses, primarily as a result of enhancements made to
the Company's financial and reporting systems and an increase in operating
expenses related to growth in business. Offsetting the increases in expenses was
a reduction in the allowance for bad debts of $1.0 million.


                                       5
<PAGE>

Insurance Segment
-----------------
The Company's insurance segment is made up of its four insurance subsidiaries,
First Professionals, Anesthesiologists Professional Assurance Company ("APAC")
and The Tenere Group, Inc. ("Tenere") companies of Intermed Insurance Company
and Interlex Insurance Company. Holding company operations are included within
the insurance segment due to its size and prominence and the substantial
attention devoted to the segment. Financial data for the Company's insurance
segment for the years ended December 31, 2001, 2000 and 1999 are summarized in
the table below. Dollar amounts are in thousands.

<TABLE>
<CAPTION>
                                                               Percentage                      Percentage
                                                  2001           Change           2000          Change          1999
                                             ---------------- -------------  --------------- -------------  -------------

<S>                                        <C>                   <C>       <C>                 <C>        <C>
Direct and Assumed Premiums Written        $     245,403          24%      $    197,280          33%      $  148,216
                                             ================                ===============                =============
Net Premiums Written                       $     147,084          -9%      $    161,931          32%      $  122,433
                                             ================                ===============                =============

Net Premiums Earned                        $     131,058           9%      $    120,454           2%      $  118,072
Net Investment Income                             22,819          -7%            24,505          30%          18,832
Net Realized Investment Gains                      1,429         420%               275         -22%             351
Commission Income                                     62         -61%               157         145%              64
Finance Charge and Other Income                      733         -52%             1,520           4%           1,467
Intersegment Revenue                               2,112          95%             1,083         100%              --
                                             ----------------                ---------------                -------------
    Total Revenues                         $     158,213           7%      $    147,994           7%      $  138,786
                                             ----------------                ---------------                -------------

Net Losses and LAE Incurred                $     128,346           5%      $    122,766          52%      $   80,968
Other Underwriting Expense                        25,684          24%            20,677          -2%          21,014
Interest Expense                                   4,566           6%             4,291           8%           3,981
Other Expenses                                       997         -64%             2,790          -1%           2,823
Intersegment Expense                               3,852         -42%             6,675         154%           2,628
                                             ----------------                ---------------                -------------
    Total Expenses                         $     163,445           4%      $    157,199          41%      $  111,414
                                             ----------------                ---------------                -------------

    (Loss) Income Before Taxes                    (5,232)         43%            (9,205)       -134%          27,372

                                             ----------------                ---------------                -------------
    Net (Loss) Income                      $        (847)         71%      $     (2,925)       -115%     $   19,776
                                             ================                ===============                =============
</TABLE>


Total insureds, including insureds under fronting arrangements, were 18,794,
12,150 and 11,318 for the years ended December 31, 2001, 2001 and 1999,
respectively.

Direct and assumed premiums written increased 24%, to $245.4 million for the
year ended December 31, 2001 from $197.3 million for the year ended December 31,
2000. Excluding the effects of the non-recurring portion of assumed premiums
under the 100% quota share reinsurance agreement written in the first quarter of
2000 between the Company's insurance subsidiaries and Physicians' Reciprocal
Insurers ("PRI") whereby the Company assumed the death, disability and
retirement ("DD&R") risks under PRI's claims-made insurance policies in exchange
for cash and investments of approximately $34 million, and the effects of the
decline in premiums under A&H programs, which were discontinued in 2001, of
$16.7 million, direct and assumed premiums written increased approximately $99
million or 71%. The increase in direct and assumed premiums written is due to
the effect of rate increases and growth in new business and premiums written
under fronting arrangements. The growth in direct premiums written was partially
offset by declines in MPL assumed premiums written and group A&H premiums
written.

Direct and assumed premiums written increased 33%, to $197.3 million for the
year ended December 31, 2000 from $148.2 million for the year ended December 31,
1999. The increase in direct and assumed premiums written is primarily related
to the 100% quota share reinsurance agreement written in the first quarter of
2000 between the Company's insurance subsidiaries and PRI, as noted above. In
addition, the Company experienced growth in direct premiums written in Texas,
Alabama, Missouri, Kansas, and Georgia complimented by the acquisition of Tenere
on March 17, 1999, which was only included in operations after such date. The
increases in direct and assumed premiums written were offset by experience
adjustment accruals for business assumed from PRI. The


                                       6
<PAGE>


experience adjustments represent an estimate of the amount of premium the
Company will return to PRI in future years.

Net premiums earned increased 9%, to $131.1 million for the year ended December
31, 2001 from $120.5 million for the year ended December 31, 2000. The increase
in net premiums earned is less than the increase in direct and assumed premiums
written for the same period primarily due to the inherent lag between written
and earned premiums. In addition, as noted above, direct premiums written
include premiums written under fronting agreements for which a relatively small
portion of business is retained and therefore only a small portion of premium is
ultimately earned. The increase in net premiums earned is due to growth in the
number of policyholders and the effects of rate increases instituted by the
Company's insurance subsidiaries during 2001. Partially offsetting this increase
was a decline in A&H premiums earned of 70%, to $7.2 million for the year ended
December 31, 2001, from $24.1 million for the year ended December 31, 2000.

Net premiums earned increased 2%, to $120.5 for the year ended December 31, 2000
from $118.1 million for the year ended December 31, 1999. The increase in net
premiums earned is related to growth in assumed reinsurance, which contributed
additional assumed premiums earned of $3.1 million, and growth in direct
premiums written at APAC and Tenere during the year 2000. The Company increased
premium rates at First Professionals, APAC, and Tenere in 2000. As a result of
the rate increases taken by First Professionals, selective underwriting, and the
competitive environment in Florida, net premiums earned decreased in First
Professionals core MPL business, and First Professionals experienced a decline
in its physician insureds. APAC and Tenere experienced more favorable market
conditions, which allowed them to grow their earned premiums and policyholder
counts. Such growth offset some of the decline in net premiums earned at First
Professionals and resulted in overall increases in the Company's direct
professional liability insureds.

Net investment income decreased 7%, to $22.8 million for the year ended December
31, 2001 from $24.5 million for the year ended December 31, 2000. The decrease
in net investment income is primarily the result of lower investment returns on
the Company's investment portfolio during 2001 caused by lower prevailing
interest rates in fixed income securities. The effects of lower yields have been
offset to some degree by growth in cash and invested assets resulting from
growth in insurance premiums. On a consolidated basis, the Company's total
investment portfolio grew to $ 424.2 million in 2001, up $19.2 million or 5%,
from $405.0 million in 2000.

Net investment income increased 30%, to $24.5 for the year ended December 31,
2000 from $18.8 million for the year ended December 31, 1999. The increase is
primarily due to the investments received in association with the 100% DD&R
quota share reinsurance agreement between the Company's insurance subsidiaries
and PRI. On a consolidated basis, the Company's total investment portfolio grew
to $405.0 million in 2000, up $58.4 million or 17%, from $346.6 million in 1999.

Net realized investment gains increased 420%, to $1.4 million for the year ended
December 31, 2001 from $0.3 million for the year ended December 31, 2000. The
Company engaged new professional investment managers during the third quarter of
2001 as part of its overall investment strategy. While the Company's investment
strategy remains focused on high quality, fixed income securities, it does plan
some changes in its present asset allocation to take advantage of changing
market conditions. The increase in net realized investment gains coincides with
the liquidation of investments associated with repositioning the Company's
investment portfolio.

Finance charge and other income decreased 52%, to $0.7 million for the year
ended December 31, 2001 from $1.5 million for the year ended December 31, 2000.
The decline in finance charge and other income is due to the Company's decision
to include a provision for finance charges within its Florida MPL policy
premiums, rather than assessing finance charges separately.

The liability for losses and LAE represents management's best estimate of the
ultimate cost of all losses incurred but unpaid and considers prior loss
experience, loss trends, the Company's loss retention levels and changes in the
frequency and severity of claims. The process of establishing reserves for
property and casualty claims is a complex and uncertain process, requiring the
use of informed estimates and judgments. The Company's estimates


                                       7
<PAGE>


and judgments may be revised as additional experience and other data become
available and are reviewed, as new or improved methodologies are developed or as
current laws change. Any such revisions could result in future changes in the
estimates of losses or reinsurance recoverables, and would be reflected in the
Company's results of operations when the change occurs. The Company believes its
liability for losses and LAE is adequate; however, given the inherent
uncertainty in reserve estimates, there can be no assurance that the ultimate
amount of actual losses will not exceed the related amounts currently estimated.
Furthermore, any such difference, either positive or negative, could have a
material effect on the Company's results of operations and financial position.

Net losses and LAE incurred increased 5%, to $128.3 million for the year ended
December 31, 2001 from $122.8 million for the year ended December 31, 2000. The
loss ratios for such periods were 98% and 102%, respectively. A loss ratio is
defined as the ratio of loss and LAE incurred to net premiums earned. During the
fourth quarter of 2001, the Company made a decision to adjust reserves upward by
$8.8 million, pre-tax. The Company's decision to increase reserves reflects the
Company's policy to maintain its reserves at a conservative level. Excluding the
pre-tax reserve strengthening in 2001 and 2000 of $8.8 million and $21.0
million, respectively, net losses and LAE incurred increased $17.7 million, or
17% during the year 2001. This increase is consistent with the strong growth in
business during 2001 and continues to reflect the Company's stated objective of
maintaining its reserves at a conservative level, taking into consideration
expected loss trends and all other pertinent considerations. The increase in
losses and LAE incurred was partially offset by a decline in the Company's group
A&H business corresponding with the complete withdrawal from its group A&H
programs in 2001.

Net losses and LAE incurred increased 52%, to $122.8 million for the year ended
December 31, 2000 from $81.0 million for the year ended December 31, 1999. The
loss ratios for such periods were 102% and 69%, respectively. The increase in
net losses and LAE incurred is primarily due to an increase in the loss and LAE
provision during 2000 resulting from a reserve strengthening of $21.0 million,
pre-tax. In addition, the 1999 results included reserve releases of
approximately $17.0 million resulting from favorable development in loss
experience on business written in years prior to 1999, which did not recur
during the year 2000.

Other underwriting expenses increased 24%, to $25.7 million for the year ended
December 31, 2001 from $20.7 million for the year ended December 31, 2000. The
increase in other underwriting expenses is primarily attributable to additional
operating expenses associated with the growth in business and expenses incurred
to improve the information systems used by the Company. In addition, two of the
Company's insurance subsidiaries, First Professionals and APAC, increased their
accruals for guarantee fund assessments by approximately $0.9 million, combined.
Offsetting these increases was a reduction in the allowance for bad debts of
$1.0 million.

Other underwriting expenses decreased 2%, to $20.7 million for the year December
31, 2000 from $21.0 million for the year ended December 31, 1999. The decline in
other underwriting expenses is attributable to a decline in assumed reinsurance
costs and the accretion of the deferred credit associated with the 100% DD&R
quota share reinsurance agreement entered into during the first quarter of 2000.

Other expenses declined 64%, to $1.0 million for the year ended December 31,
2001 from $2.8 million for the year ended December 31, 2000. Other expenses for
the year 2000 included a non-recurring pre-tax severance charge of $1.8 million,
which did not recur in 2001.

Reciprocal Management
---------------------
The Company's reciprocal management segment is made up of Administrators for the
Professions, Inc. ("AFP"), the Company's New York subsidiary, and its two wholly
owned subsidiaries, FPIC Intermediaries, Inc. ("Intermediaries") and Group Data
Corporation ("Group Data"). AFP acts as administrator and attorney-in-fact for
PRI, the second largest medical professional liability insurer for physicians in
the state of New York. Intermediaries acts as a reinsurance broker and
intermediary in the placement of reinsurance. Group Data acts as a broker in the
placement of annuities for structured settlements. The segment also includes the
business of Professional Medical Administrators, LLC ("PMA"), a 70% owned
subsidiary of the Company. PMA provides brokerage and administration services
for professional liability insurance programs.


                                       8
<PAGE>


Financial data for the Company's reciprocal management segment for the years
ended December 31, 2001, 2000 and 1999 are summarized in the table below. Dollar
amounts are in thousands.

<TABLE>
<CAPTION>
                                                                         Percentage                 Percentage
                                                              2001         Change         2000        Change          1999
                                                          ------------- ------------- ------------- ------------  -------------
<S>                                                     <C>                 <C>       <C>              <C>       <C>
Net Investment Income                                   $      344           35%      $    254         440%      $      47
Claims Administration and Management Fees                   22,959           35%        17,044           1%         16,955
Commission Income                                            2,484          107%         1,199          79%            671
Other Income                                                   399          -76%         1,680          -4%          1,758
Intersegment Revenue                                         3,111          -39%         5,129         237%          1,522
                                                          -------------               -------------               -------------
    Total Revenues                                      $   29,297           16%      $ 25,306          21%      $  20,953
                                                          -------------               -------------               -------------

Claims Administration and Management Expenses           $   18,420           23%      $ 15,023           4%      $  14,490
Other Expenses                                               2,173            0%         2,172           1%          2,152
Intersegment Expense                                         1,518          145%           619         100%             --
                                                          -------------               -------------               -------------
    Total Expenses                                      $   22,111           24%      $ 17,814           7%      $  16,642
                                                          -------------               -------------               -------------

      Income Before Taxes                                    7,186           -4%         7,492          74%          4,311

                                                          -------------               -------------               -------------
      Net Income                                        $    4,348            0%      $  4,360          90%     $    2,298
                                                          =============               =============               =============
</TABLE>

In accordance with the management agreement between AFP and PRI, AFP receives a
management fee equal to 13% of PRI's direct premiums written, with an adjust-
ment for expected return premiums.  AFP's claims administration and management
fees are entirely comprised of these fees.  Claims administration and manage-
ment fees increased 35%, to $23.0 million for the year ended December 31, 2001,
from $17.0 million for the year ended December 31, 2000.  The increase in claims
administration and management fees is due to an increase in the premiums written
by PRI.  The Company's revenues and results of operations are financially
sensitive to the revenues and results of operations of PRI.  In addition, PRI,
as an MPL insurer, is subject to many of the same types of risks as those of the
Company's insurance subsidiaries, which are described throughout this document.

Commission income increased 107%, to $2.5 million for the year ended December
31, 2001 from $1.2 million for the year ended December 31, 2000. The increase in
commission income corresponds with the increase in the amount of reinsurance
brokered by Intermediaries in 2001.

Commission income increased 79%, to $1.2 million for the year ended December 31,
2000 from $0.7 million for the year ended December 31, 1999. The increase in
commission income is attributable to a full year of brokerage income from
Intermediaries, which was formed during the second quarter of 1999.

Other income decreased 76%, to $0.4 million for the year ended December 31, 2001
from $1.7 million for the year ended December 31, 2000. The decrease in other
income is the result of lower statutory net income at PRI compared to the year
2000. The income received by AFP related to PRI's statutory net income for the
years ended December 31, 2001, 2000 and 1999 was $0.3 million, $1.6 million and
$1.7 million, respectively.  In accordance with the management agreement between
AFP and PRI, AFP receives or pays an amount equal to 10% of PRI's statutory net
income or loss.

Claims administration and management expenses increased 23%, to $18.4 million
for the year ended December 31, 2001 from $15.0 million for the year ended
December 31, 2000. The increase in claims administration and management expense
is primarily attributable to an increase in commission expense incurred as a
result of growth in brokerage and administration business at AFP and PMA. Under
terms of the management agreement between AFP and PRI, AFP is responsible for
brokerage costs incurred by PRI. In addition, the Company incurred additional
operating expenses related to the growth in direct business at PRI.


                                       9
<PAGE>


Third Party Administration
--------------------------
The Company's TPA segment is made up of McCreary and its subsidiary EMI.
Effective January 1, 2002, McCreary and EMI were consolidated by legal entity
merger, with EMI continuing as the surviving entity. Financial data for the
Company's TPA segment for the years ended December 31, 2001, 2000 and 1999 are
summarized in the table below. Dollar amounts are in thousands.

<TABLE>
<CAPTION>
                                                                     Percentage                Percentage
                                                           2001        Change         2000       Change         1999
                                                        ------------ ------------  ----------- ------------  -----------
<S>                                                   <C>               <C>        <C>            <C>        <C>
Net Investment Income                                 $     159         -33%       $    239        26%       $    189
Net Realized Investment Losses                               --         100%           (366)      100%             --
Claims Administration and Management Fees                12,545          -3%         12,982        32%          9,850
Commission Income                                         2,502          19%          2,108        21%          1,741
Other Income                                                 36         -83%            213       -58%            507
Intersegment Revenue                                        742         -52%          1,547        40%          1,106
                                                        ------------               -----------               -----------
    Total Revenues                                    $  15,984          -4%       $ 16,723        25%       $ 13,393
                                                        ------------               -----------               -----------

Claims Administration and Management Expenses         $  14,931          -5%       $ 15,683        33%       $ 11,807
Other Expenses                                            1,327         -28%          1,833       -11%          2,066
Intersegment Expense                                        594          28%            464       100%             --
                                                        ------------               -----------               -----------
    Total Expenses                                    $  16,852          -6%       $ 17,980        30%       $ 13,873
                                                        ------------               -----------               -----------

      Loss Before Taxes                                    (868)         31%         (1,257)     -162%           (480)
                                                        ------------               -----------               -----------
      Net Loss                                        $    (571)         30%       $   (821)     -300%       $   (205)
                                                        ============               ===========               ===========
</TABLE>

During the fourth quarter 2001, the Company incurred a pre-tax charge of
approximately $0.6 million in connection with the disposition of the Brokerage
Services, Inc. ("BSI") division of EMI in Albuquerque, New Mexico. Under the
plan, the Company sold the division's assets and cancelled its service
agreements with self-insured customers. Certain other contracts were retained
and will be serviced by the Company's Jacksonville, Florida division. The 2001
restructuring activity was a continuation of the Company's consolidation of the
TPA operations and brings to an end the restructuring activities of the
Albuquerque division that began during the fourth quarter of 2000 when the
Company incurred a pre-tax charge of $0.5 million. Excluding the effects of the
restructuring charges, the TPA segment incurred a net loss of approximately $0.2
million and $0.5 million for the years 2001 and 2000, respectively.

Net realized investment losses for the year ended December 31, 2000 were $0.4
million, largely due to the write down of the Company's investment in a joint
venture, Bexar Credentials, Inc. ("Bexar") in the fourth quarter of 2000. The
Company's stock in Bexar was redeemed for $70 thousand in cash and notes
receivable in January 2001. All amounts receivable by the Company from the sale
have been collected.

Claims administration and management fees declined 3%, to $12.5 million for the
year ended December 31, 2001 from $13.0 million for the year ended December 31,
2000. The decline in claims administration and management fees is due to the
termination of certain non-profitable contracts at the Company's Albuquerque
division.  Excluding the effect of the terminated contracts, claims administra-
tion and management fees increased $1.1 million for the year ended December 31,
2001, as compared to the same period in 2000.

Claims administration and management fees increased 32%, to $13.0 million for
the year ended December 31, 2000 from $9.9 million for the year ended December
31, 1999. The growth in claims administration and management fees is
attributable to the acquisition of assets related to the BSI division, by EMI
during the third quarter of 1999, and the resulting recognition of a full twelve
months of revenue from the acquired operations during the current year.

Commission income increased 19%, to $2.5 million for the year ended December 31,
2001 from $2.1 million for the year ended December 31, 2000. The increase in
commission income corresponds with increases in the underlying rates paid by
customers for reinsurance being placed by the TPA segment under alternative
market arrangements.


                                       10
<PAGE>


Commission income increased 21%, to $2.1 million for the year ended December 31,
2000 from $1.7 million for the year ended December 31, 1999. The increase in
commission income is the result of growth in the placement of insurance and
reinsurance by McCreary with external parties on behalf of its self-insured
customers during 2000.

Claims administration and management expenses declined 5%, to $14.9 million for
the year ended December 31, 2001 from $15.7 million for the year ended December
31, 2000. The decline in claims administration and management expenses is due to
the termination of certain non-profitable contracts at the Company's Albuquerque
division. Excluding the effect of the terminated contracts, claims
administration and management expenses increased $1.0 million for the year ended
December 31, 2001, as compared to the same period in 2000.

Claims administration and management expenses increased 33%, to $15.7 million
for the year ended December 31, 2000 from $11.8 million for the year ended
December 31, 1999. The growth in claims administration and management expenses
is primarily attributable to the acquisition of assets by EMI during the third
quarter of 1999.

For the year ended December 31, 2001, other expenses decreased 28%, to $1.3
million from $1.8 million for the year ended December 31, 2000. Excluding the
restructuring charges taken during the fourth quarter of 2001 and 2000 mentioned
above, other expenses declined 46%, to $0.7 million for the year ended December
31, 2001, from $1.3 million for the year ended December 31, 2000. The decrease
in other expenses represents savings from the Company's disposition of non-core
businesses during 2000.

Other expenses decreased 11%, to $1.8 million for the year ended December 31,
2000 from $2.1 million for the year ended December 31, 1999. Excluding the
restructure charge taken during the fourth quarter of 2000 mentioned above,
other expenses declined 36%, to $1.3 million for the year ended December 31,
2000. The decrease in other expenses represents savings from the disposition of
non-core businesses during 2000.

Selected Balance Sheet Items - Years Ended December 31, 2001 and 2000
---------------------------------------------------------------------
Cash and invested assets increased $18.0 million, to $442.0 million as of
December 31, 2001 from $424.0 million as of December 31, 2000. The increase in
cash and invested assets is due primarily to the growth in premiums, which
increased the amounts available for investment, offset by a reduction in cash
associated with the pay down and refinancing of the Company's credit facility.

Accrued investment income decreased $1.3 million, to $4.6 million as of December
31, 2001 from $5.9 million as of December 31, 2000. The decrease in accrued
investment income is due to lower investment returns on the Company's investment
portfolio associated with lower interest rates on fixed income securities.

Premiums receivable increased $37.1 million, to $73.4 million as of December 31,
2001 from $36.3 million as of December 31, 2000. The increase in premiums
receivable is due to the growth in premiums written, resulting from rate
increases realized by the Company's insurance subsidiaries on core MPL lines and
an increase in new and renewal MPL business.

Due from reinsurers on unpaid losses and advance premiums increased $22.7
million, to $80.4 million as of December 31, 2001 from $57.7 million as of
December 31, 2000. Ceded unearned premiums increased $30.7 million, to $40.8
million as of December 31, 2001, from $10.1 million as of December 31, 2000. The
increases in these assets are related to the increase in the underlying reserves
and unearned premiums resulting from growth in premiums written and earned on
the Company's core MPL business and the increase in premiums written under
fronting arrangements whereby the Company cedes substantially all of the
business to other insurance carriers.

Deferred policy acquisition costs increased $3.0 million, to $9.0 million as of
December 31, 2001 from $6.0 million as of December 31, 2000. The increase in
deferred policy acquisition costs is due to an increase in underwriting expenses
as a result of the growth in premiums written.


                                       11
<PAGE>


Deferred income taxes increased $1.6 million, to $19.9 million as of December
31, 2001 from $18.3 million as of December 31, 2000. The increase in deferred
income taxes relates to an increase in deferred taxes associated with changes in
unrealized gains on financial instruments and growth in the Company's insurance
business.

Goodwill and intangible assets decreased $2.4 million, to $58.5 as of December
31, 2001 from $60.9 million as of December 31, 2000. The decrease in goodwill
and intangible assets is due to amortization.

Federal income tax receivable decreased $3.2 million, to $5.3 million as of
December 31, 2001 from $8.5 million as of December 31, 2000. The decrease in
federal income tax receivable corresponds with the related decrease in the
current benefit recognized in 2001, and the receipt of a federal tax refund
related to the overpayment of estimated taxes for the year 2000.

The Company's liability for loss and LAE increased $37.2 million, to $318.5
million as of December 31, 2001 from $281.3 million as of December 31, 2000. The
increase in the liability for loss and LAE is attributable to increases in
premiums earned and the establishment of reserves for the current book of
business, taking into consideration expected loss trends and an appropriately
conservative loss ratio. In addition, the Company recorded a pre-tax reserve
adjustment of $8.8 million in the fourth quarter of 2001 to strengthen reserves
established for prior coverage years. The adjustment to reserves reflects the
soft market conditions that prevailed for coverage years 2000 and prior.

Unearned premiums increased $46.7 million, to $146.8 million as of December 31,
2001 from $100.1 million as of December 31, 2000. The increase in unearned
premiums is primarily related to growth in premiums written at the Company's
insurance subsidiaries.

Reinsurance payable increased $20.2 million, to $26.7 million as of December 31,
2001 from $6.5 million as of December 31, 2000. The increase in reinsurance
payable is related to an increase in premiums written for direct MPL business
and business written under fronting arrangements whereby the Company cedes
substantially all of the business to other insurance carriers.

Premiums paid in advance and unprocessed premiums increased $3.8 million, to
$9.9 million as of December 31, 2001 from $6.1 million as of December 31, 2000.
The increase in paid in advance and unprocessed premiums reflects the policy
renewal cycle at the Company's largest insurance subsidiary whereby the majority
of policies are renewed with an effective date of January 1 or July 1 of each
year. In addition, the Company instituted a rate increase at its largest
insurance subsidiary in December 2001.

The Company's revolving credit facility and term loan decreased $14.2 million,
to $53.0 million as of December 31, 2001 from $67.2 million as of December 31,
2000. On August 31, 2001, the Company entered into a revolving Credit and Term
Loan Agreement (the "credit facility") with five financial institutions. The
initial aggregate principal amount of the new credit facility was $55 million,
including (i) a $37.5 million revolving credit facility (with a $15 million
letter of credit sub-facility), which matures on August 31, 2004, and (ii) a
$17.5 million term loan facility, repayable in twelve equal quarterly
installments of approximately $1.5 million each commencing on December 31, 2001.
The credit facility replaced a $75 million revolving credit facility (the "prior
facility") that was entered into by the Company in January 1999, which would
have matured on January 4, 2002. Approximately $67.2 million of principal was
outstanding under the prior facility. The Company used available funds to pay
down the difference between the outstanding principal amount of the prior
facility and the initial amount of the new facility.

Accrued expenses and other liabilities increased $10.4 million, to $28.8 million
as of December 31, 2001 from $18.4 million as of December 31, 2000. The increase
in accrued expenses and other liabilities is primarily attributable to the
increase in operating expenses associated with the growth in business.
Approximately $2.9 million of the increase in accrued expenses and other
liabilities reflects the recognition of a liability for the Company's derivative
financial instrument in accordance with FAS No. 133.


                                       12
<PAGE>

Investments
-----------
The Company's investment strategy is to maintain a diversified investment
portfolio that is focused on high grade, fixed income securities. The majority
of these securities are held as invested assets by the various insurance
subsidiaries. At the close of 2001, approximately 27% of the fixed-income
portfolio was invested in tax-exempt securities and approximately 73% in taxable
securities.

Realized investment gains and losses are recorded when investments are sold,
other-than-temporarily impaired or in certain situations, as required by
generally accepted accounting principles, when investments are marked-to-market,
with the corresponding gain or loss included in earnings. Variations in the
amount and timing of realized investment gains and losses could cause
significant variations in periodic net earnings.

Stock Repurchase Plans
----------------------
During 2001, the Company repurchased 21,500 shares of its stock on the open
market under its previously announced stock repurchase program at an average
price of $10.84 per share. Under the Company's stock repurchase programs, shares
may be repurchased at such times, and in such amounts, as management deems
appropriate, and subject to the requirements of its credit facility under which
the Company may repurchase shares up to an amount not to exceed 50% of net
income of the immediately preceding year. A decision whether or not to make
additional repurchases is based upon an analysis of the best use of the
Company's capital. Since the commencement of these repurchase programs, the
Company has repurchased 875,000 of its shares at a cost of approximately $16.2
million. A total of 365,500 shares remain available to be repurchased under the
programs.

Liquidity and Capital Resources
-------------------------------
The payment of losses, LAE and operating expenses in the ordinary course of
business is the principal need for the Company's liquid funds. Cash provided by
operating activities has been used to pay these items and was sufficient during
2001 to meet these needs. Management believes these sources will be sufficient
to meet the Company's cash needs for operating purposes for at least the next
twelve months. However, a number of factors could cause increases in the dollar
amount of losses and LAE and may therefore adversely affect future reserve
development and cash flow needs. Management believes these factors include,
among others, inflation, changes in medical procedures, increased use of managed
care and adverse legislative changes. In order to compensate for such risk, the
Company: (i) maintains what management considers to be adequate reinsurance;
(ii) monitors its reserve positions and regularly performs actuarial reviews of
loss and LAE reserves; and (iii) maintains adequate asset liquidity (by managing
its cash flow from operations coupled with the maturities from its fixed income
portfolio investments).

The Company maintains a $55 million credit facility with five banks. The credit
facility replaced a $75 million prior facility that was entered into by the
Company in January 1999, which would have matured on January 4, 2002.
Approximately $67.2 million of principal was outstanding under the prior
facility. The Company used available funds to pay down the difference between
the outstanding principal amount of the prior facility and the initial amount of
the new credit facility.

As of December 31, 2001, the Company had $53.0 million outstanding under the
credit facility. The credit facility is comprised of (i) a $37.5 million
revolving credit facility (with a $15 million letter of credit sub-facility),
which matures on August 31, 2004, and (ii) a $17.5 million term loan facility,
repayable in twelve equal quarterly installments of approximately $1.5 million
each that commenced December 31, 2001. Amounts outstanding under the credit
facility bear interest at a variable rate, primarily based upon LIBOR plus an
applicable margin of 2.25 percentage points, which may be reduced to a minimum
of 1.75 percentage points as the Company reduces its outstanding indebtedness.
The Company is not required to maintain compensating balances in connection with
these credit facilities but is charged a fee on the unused portion, which ranges
from 20 to 30 basis points.

Under the terms of the credit facility, the Company is required to meet certain
financial covenants. Significant covenants as of December 31, 2001, are as
follows: a) total debt to cash flow available for debt service cannot be greater
than 4.00:1 for the quarter ending December 31, 2001 and 3:50:1 thereafter; b)
combined net premiums written to combined statutory capital and surplus cannot
exceed 2.00:1; c) the fixed charge coverage ratio cannot

                                       13
<PAGE>


be less than 2.00:1 at the end of each quarter through December 31, 2002, there-
after the fixed charge coverage ratio cannot be less than 2:25:1 and d) funded
debt to total capital plus funded debt cannot exceed 0.27:1. The credit facility
also contains minimum equity and risk-based capital requirements and requires
the Company's insurance subsidiaries to maintain at least an A- (Excellent)
rating from A.M. Best.

Should the Company fail to meet one or more of its loan covenants, such
occurrence would be considered an event of default. In the event the Company was
unable to provide an allowable remedy for such event of default, the Company's
lenders would be entitled to certain remedies, including the ability to demand
immediate repayment, including payment in full. Were the Company's lenders to
demand immediate payment in full, the Company could not make such payment
from existing funds and would have to seek replacement financing. Under such
circumstances, the Company's ability to secure such replacement financing could
not be assured, and if obtained, such financing would likely carry higher costs.

At December 31, 2001, the Company did not meet its fixed charge coverage ratio
loan covenant, primarily as a result of the reserve strengthening charge in the
fourth quarter described above. The Company's lenders have waived this violation
bringing the Company into compliance with its loan covenants. In addition, the
Company and its lenders have re-negotiated a modification to the fixed charge
coverage ratio loan covenant from 2.5:1, to 2.0:1 for the year 2002; and
to 2.25:1 beginning in the first quarter of 2003. In connection with the
waiver and modification, the applicable margin charged by the lenders as part of
interest costs will increase 25 basis points, or 1/4 of 1 percent beginning in
2002.

At December 31, 2001, the Company held investments with a fair value of
approximately $55.2 million scheduled to mature during the next twelve months,
which when combined with net cash flows from operating activities, are expected
to provide the Company with sufficient liquidity and working capital. As
reported in the accompanying consolidated statements of cash flows, the Company
has generated positive net cash from operations of $33.2 million, $14.8 million
and $14.3 million in 2001, 2000 and 1999, respectively.

Shareholder dividends payable by the Company's insurance subsidiaries are
subject to certain limitations imposed by Florida and Missouri laws. During
2002, these subsidiaries are permitted, within insurance regulatory guidelines,
to pay dividends of approximately $10.7 million, without prior regulatory
approval.

The National Association of Insurance Commissioners has developed risk-based
capital ("RBC") measurements for insurers, which have been adopted by the
Florida and Missouri Departments of Insurance. RBC measurements provide state
regulators with varying levels of authority based on the adequacy of an
insurer's adjusted surplus. At December 31, 2001, the Company's insurance
subsidiaries maintained adjusted surplus in excess of their required RBC
thresholds.

The Company's insurance subsidiaries are subject to assessment by the financial
guaranty associations in the states in which they conduct business for the
provision of funds necessary for the settlement of covered claims under certain
policies of insolvent insurers. Generally, these associations can assess member
insurers on the basis of written premiums in their particular states.

In addition to standard assessments, the Florida and Missouri Legislatures may
also levy special assessments to settle claims caused by certain catastrophic
losses. The Company would be assessed on a basis of premium written. During
2001, a special assessment was levied on First Professionals and APAC that
totaled $0.9 million. No special assessments were made in 2000 and 1999. In
addition, the Company could be subject to additional assessments in the future
as a result of damages caused by catastrophic losses, such as a hurricane.

Accounting Pronouncements
-------------------------
Effective January 1, 2001, the Company adopted FAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and FAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities, an amendment to
FAS No. 133". FAS No. 133 requires all derivative financial instruments, such as
interest rate swaps, to be recognized in the financial statements and measured
at fair value regardless of the


                                       14
<PAGE>


purpose or intent for holding them. Changes in the fair market value of
derivative financial instruments are either recognized periodically in income or
shareholders' equity (as a component of accumulated other comprehensive income),
depending on whether the derivative is being used to hedge changes in fair value
or cash flows. FAS No. 138 amended the accounting and reporting standards for
certain derivative instruments and hedging activities under FAS No. 133. The
adoption of FAS No. 133 did not have a material effect on the Company's
consolidated financial statements, but did increase total shareholders' equity
by $124 thousand at January 1, 2001 as a cumulative effect of a change in
accounting principle.

In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No.
141 "Business Combinations." FAS No. 141 addresses financial accounting and
reporting for business combinations and supersedes Accounting Principles Board
("APB") Opinion No. 16, "Business Combinations," and FAS No. 38, "Accounting for
Preacquisition Contingencies of Purchased Enterprises." The standard eliminates
the pooling of interests method of accounting for business combinations except
for qualifying business combinations initiated prior to July 1, 2001 and
requires that all intangible assets be accounted for separately from goodwill,
for acquisitions after July 1, 2001. Management believes the adoption of FAS No.
141 will not have a significant impact on the Company's consolidated financial
statements.

In June 2001, the FASB issued FAS No. 142, "Goodwill and Other Intangible
Assets." FAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets." The standard provides that goodwill and other intangible
assets with indefinite lives are no longer to be amortized. These assets are to
be reviewed for impairment annually, or more frequently if impairment indicators
are present. Separable intangible assets that have finite lives will continue to
be amortized over their useful lives. Impairment testing is required during the
first year of adoption and any impairment losses resulting from such testing
will be reported as a cumulative effect of a change in accounting principle in
the first quarter of 2002. Upon its adoption in the first quarter of 2002, the
Company will cease the amortization of goodwill, which will have the effect of
increasing its reported income. Goodwill amortization for the year 2001 was $3.5
million. The Company is also in the process of obtaining independent valuations
of its reporting units as required by the transitional impairment provisions of
FAS No. 142. It is possible that upon completion of the valuations, the Company
could be required under the new standards to recognize a transitional impairment
charge. Should the valuations of the reporting units fall below the carrying
values, the related goodwill could partially or totally be impaired and the
Company could recognize an impairment charge up to the carrying amount of
goodwill or $67.2 million. However, as the Company has not yet completed its
valuations, it is too early to tell whether any charge will be required.

In June 2001, the FASB issued FAS No. 143, "Accounting for Asset Retirement
Obligations."  FAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived  assets and
the associated asset retirement costs.  Although earlier application is
encouraged, FAS No. 143 is effective for financial statements issued for fiscal
years beginning after June 15, 2002.  Management  believes the adoption of FAS
No. 143 will not have a significant impact on the Company's consolidated
financial statements.

In August 2001, the FASB issued FAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The proposed standard provides a unified model
for all assets to be disposed of, including the disposal of segments of a
business currently accounted for under APB Opinion No. 30.  FAS No. 144 also
resolves the implementation issues and inconsistencies in accounting for assets
to be disposed of raised by FAS No. 121 and covers the reporting of discontinued
operations.  The standard supersedes FAS No. 121, while retaining the
recognition and measurement provisions of FAS No. 121 for long-lived assets to
be held and used and the measurement of long-lived  assets to be disposed of by
sale.  Management believes the adoption of FAS No. 144 will not have a
significant impact on the Company's consolidated financial statements.


                                       15
<PAGE>


SIGNATURES
Pursuant to the requirements of Sections 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, on this the 27th day of
March, 2002.

                                       FPIC Insurance Group, Inc.


                                       By       /s/ Kim D. Thorpe
                                         ---------------------------------------
                                           Kim D. Thorpe,
                                           Executive Vice President
                                           and Chief Financial Officer






                                       16