SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549

                          FORM 10-K

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

For the fiscal year end                     Commission File Number
 December 31, 1999                                0-671

                      MOTOR CLUB OF AMERICA
     ------------------------------------------------------
     (Exact name of registrant as specified in its charter)

       New Jersey                          22-0747730
------------------------       -----------------------------------
(State of incorporation)       (I.R.S. Employer Identification No.)

95 Route 17 South, Paramus, New Jersey              07653
----------------------------------------          ----------
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code (201)291-2000

Securities registered pursuant to Section 12(b) of the Act: None

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

            Common Stock (par value) $.50 per share
            ---------------------------------------
                         (Title of Class)

Indicate by check mark whether the registrant (l) 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 voting Common Stock (par value
$.50 per share) held by non-affiliates on March 24, 2000 was
$8,061,604 based on the closing selling price.

2,124,387 shares of Common Stock were outstanding as of March 24,
2000.

Documents Incorporated by Reference:  Portions of the Registrant's
definitive proxy statement issued in conjunction with the June 7,
2000 Annual Meeting of Shareholders (Part III).



                        MOTOR CLUB OF AMERICA
                     ANNUAL REPORT ON FORM 10-K
                          DECEMBER 31, 1999


               PART I                                         PAGE
               ------                                         ----

ITEM   1.      BUSINESS
ITEM   2.      PROPERTIES
ITEM   3.      LEGAL PROCEEDINGS
ITEM   4.      SUBMISSION OF MATTERS TO A VOTE OF
               SECURITY HOLDERS

               PART II
               -------

ITEM   5.      MARKET FOR THE REGISTRANT'S COMMON EQUITY
               AND RELATED STOCKHOLDER MATTERS
ITEM   6.      SELECTED FINANCIAL DATA
ITEM   7.      MANAGEMENT'S DISCUSSION AND
               ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS
ITEM   8.      FINANCIAL STATEMENTS AND
               SUPPLEMENTARY DATA
ITEM   9.      CHANGES IN AND DISAGREEMENTS WITH
               ACCOUNTANTS ON ACCOUNTING AND
               FINANCIAL DISCLOSURE

               PART III
               --------

ITEM   10.     DIRECTORS AND EXECUTIVE OFFICERS OF
               THE REGISTRANT
ITEM   11.     EXECUTIVE COMPENSATION
ITEM   12.     SECURITY OWNERSHIP OF CERTAIN
               BENEFICIAL OWNERS AND MANAGEMENT
ITEM   13.     CERTAIN RELATIONSHIPS AND RELATED
               TRANSACTIONS

               PART IV
               -------

ITEM   14.     EXHIBITS, FINANCIAL STATEMENTS
               SCHEDULES AND REPORTS ON FORM 8-K

Cautionary Statement

       This Report on Form 10-K contains statements that are not
historical facts and are considered "forward-looking statements"
(as defined in the Private Securities Litigation Reform Act of
1995), which can be identified by terms such as "believes",
"expects",  "may", "will", "should", "anticipates", the negatives
thereof, or by discussions of strategy.  Certain statements
contained herein are forward-looking statements that involve risks,
uncertainties, opinions and predictions, and no assurance can be
given that the future results will be achieved since events or
results may differ materially as a result of risks facing the
Company.  These include, but are not limited to, economic, market
or regulatory conditions as well as risks associated with Motor
Club of America's entry into new markets;  Motor Club of America's
acquisition of North East Insurance Company on September 24, 1999;
Motor Club of America's acquisition of Mountain Valley Indemnity
Company on March 1, 2000; diversification; catastrophic events; and
state regulatory and legislative actions which can affect the
profitability of certain lines of business and impede Motor Club of
America's ability to charge adequate rates.  Accordingly, Motor
Club of America's premium growth and underwriting results have been
and will continue to be potentially materially affected by these
factors.

                              PART I
                              ------

Item 1. Business
----------------
(a)    GENERAL DEVELOPMENT OF BUSINESS

       Motor Club of America (the "Registrant") and a group of
directly or indirectly wholly-owned subsidiaries of which the
Registrant is parent are known as the "Motor Club of America
Companies" (the "Motor Club of America Group") and provide property
and casualty insurance services. The Registrant, incorporated in
New Jersey in 1933 as "Automobile Association of New Jersey", is
the successor to a New Jersey corporation organized in 1926. The
present name was adopted in 1958.

       The Registrant has four subsidiaries which write property and
casualty insurance. Motor Club of America Insurance Company ("Motor
Club"), incorporated in 1989, writes private passenger automobile
("PPA") business. Preserver Insurance Company ("Preserver"),
incorporated in 1992, writes small commercial, homeowners and
ancillary coverages. Motor Club and Preserver are domiciled in the
State of New Jersey and write insurance in that State only as well.

       The Registrant is pursuing a strategy to: (1) increase its
identification as a provider of small commercial lines insurance
and has continued to expand its product line in support of this
objective; and (2) expand and diversify its insurance operations
outside the State of New Jersey. The Registrant believes that both
of these objectives can be attained through the acquisition of
other insurance companies which present opportunities to write
these product lines in different geographic areas. The Registrant
expects to continue to follow this strategy.

       On September 24, 1999, the Registrant acquired North East
Insurance Company ("North East") and its subsidiaries. North East,
incorporated in 1965 in the State of Maine, writes private
passenger and commercial automobile as well as small commercial and
ancillary coverages in that State. American Colonial Insurance
Company ("American Colonial"), a wholly-owned subsidiary of North
East, was incorporated in 1982 and has not written any insurance
coverage since March 1990. American Colonial is domiciled in New
York.

       Motor Club, Preserver, North East and American Colonial are
collectively referred to as the "Insurance Companies".

       On March 1, 2000, the Registrant completed the acquisition of
Mountain Valley Indemnity Company ("Mountain Valley"). Mountain
Valley was incorporated in 1995 in the State of New Hampshire and
writes small and mid-sized commercial coverages in New York and all
of the New England states except Connecticut.  The Registrant
believes that these acquisitions fully establish it as a regional
commercial lines company in New England and the Mid-Atlantic
regions.


(b)    FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

       The Registrant does not have any reportable industry segments
for the three fiscal years reported in this Form 10-K.

(c)    Narrative Description of Business
       See Items 1 (a) and 7

Fire and Casualty Insurance Operations
--------------------------------------
GENERAL

       The Insurance Companies distribute insurance  policies and
generate premium revenue through approximately 174 independent
producers in New Jersey and 161 independent producers in Maine.

       The Registrant anticipates continuing its emphasis of the
small commercial and ancillary coverages written by Preserver in
the State of New Jersey and through newly acquired American
Colonial in New York and Mountain Valley in the States of New York,
Massachusetts, New Hampshire, Vermont, Rhode Island and Maine.
North East is expected to increase its emphasis of small commercial
coverages as well.  Motor Club and North East write private
passenger automobile ("PPA") business in the States of New Jersey
and Maine, respectively. PPA business is expected to increase as
well.

       At December 31, 1999 Preserver and Motor Club were separately
rated B+ (Very Good) by A.M. Best; North East was rated B (Fair).
American Colonial plans to commence insurance operations in New
York in the second quarter of 2000. Best ratings are based upon
factors relevant to policyholders and are not directed toward the
protection of investors.  Management believes that the Best rating
is an important factor in marketing the Insurance Companies' and
Mountain Valley's products.

       Effective July 1, 1998, Motor Club began converting its
existing policies from six month terms to twelve month policy terms
(the "Policy Term Conversion"). While the Policy Term Conversion
temporarily increased the amount of premiums written by Motor Club
in 1998, it did not effect the amount of premiums earned.  The
Policy Term Conversion was implemented to reduce the frequency of
renewal, thereby increasing operating efficiency and service levels
and reducing expenses.

      The results of the Registrant include the operations of North
East since its acquisition on September 24, 1999.

       The tables which follow set forth the direct premiums written
and earned, by line of insurance, for the last five years:
<TABLE>
<CAPTION>
                        DIRECT WRITTEN PREMIUMS
            (Amounts in Thousands - Exclusive of Service Charges)

<S>                  <C>       <C>      <C>         <C>       <C>        <C>

                         1999                 1998                  1997
                    Direct   Percent     Direct   Percent     Direct    Percent
Program            Premium   of Total   Premium   of Total   Premium   of Total
-------            ------------------   ------------------   ------------------
Motor Club PPA       $39,611   64.2%    $54,254     76.7%     $43,238    74.7%
Preserver Commercial  11,504   18.7%      9,672     13.7%       8,019    13.9%
Preserver Personal     6,804   11.0%      6,833      9.6%       6,596    11.4%
North East             3,777    6.1%          0      0.0%           0     0.0%
                     -------  -----     -------    -----      -------   -----
   Total             $61,696  100.0%    $70,759    100.0%     $57,853   100.0%
                     =======  =====     =======    =====      =======   =====
</TABLE>
<TABLE>
<CAPTION>
                         DIRECT WRITTEN PREMIUMS
         (Amounts in Thousands - Exclusive of Service Charges)
<S>                  <C>        <C>       <C>        <C>
                           1996                1995
                     Direct    Percent   Direct   Percent
Program             Premium    of Total  Premium   of Total
-------             -------------------  ------------------
Motor Club PPA       $41,055    76.0%     $32,100    73.1%
Preserver Commercial   6,744    12.5%       5,828    13.3%
Preserver Personal     6,216    11.5%       5,972    13.6%
North East                 0     0.0%           0     0.0%
                     -------   -----      -------   -----
   Total             $54,015   100.0%     $43,900   100.0%
                     =======   =====      =======   =====
</TABLE>
<TABLE>
<CAPTION>
                                  DIRECT EARNED PREMUIMS
                 (Amounts in Thousands - Exclusive of Service Charges)
<S>               <C>       <C>      <C>         <C>       <C>        <C>
                      1999                 1998                  1997
                 Direct   Percent     Direct   Percent     Direct    Percent
Program         Premium   of Total   Premium   of Total   Premium   of Total
-------         ------------------   ------------------   ------------------
Motor Club PPA    $41,781   65.9%    $43,631     73.6%     $43,381    75.4%
Preserver
 Commercial        10,508   16.6%      8,916     15.0%       7,698    13.4%
Preserver
 Personal           6,843   10.8%      6,764     11.4%       6,422    11.2%
North East          4,248    6.7%          0      0.0%           0     0.0%
                  -------  -----     -------    -----      -------   -----
   Total          $63,380  100.0%    $59,311    100.0%     $57,501   100.0%
                  =======  =====     =======    =====      =======   =====
</TABLE>
<TABLE>
<CAPTION>
                          DIRECT EARNED PREMIUMS
          (Amounts in Thousands - Exclusive of Service Charges)

<S>              <C>        <C>       <C>        <C>
                       1996                1995
                 Direct    Percent   Direct   Percent
Program         Premium    of Total  Premium   of Total
-------         -------------------  ------------------
Motor Club PPA   $39,242    75.6%     $29,841    73.5%
Preserver
 Commercial        6,526    12.6%       5,184    12.7%
Preserver
 Personal          6,152    11.8%       5,592    13.8%
North East             0     0.0%           0     0.0%
                 -------   -----      -------   -----
   Total         $51,920   100.0%     $40,617   100.0%
                 =======   =====      =======   =====
</TABLE>

       The following table sets forth ratios for the Insurance
Companies prepared in accordance with generally accepted accounting
principles ("GAAP") and with statutory accounting practices ("SAP")
prescribed or permitted by state insurance authorities.  The SAP
combined ratio, a standard measure of underwriting profitability,
is the sum of: (i) the ratio of incurred losses and loss expenses
to net earned premium ("loss ratio"); and (ii) the ratio of
expenses incurred for commissions, premium taxes, administrative
and other underwriting expenses to net written premium ("expense
ratio").  The GAAP combined ratio is calculated in the same manner
except that it is based on GAAP amounts and the denominator for
each component is net earned premium.
<TABLE>
<CAPTION>
  <S>                               <C>         <C>        <C>
                                           December 31,
                                   ----------------------------
                                   1999        1998       1997
                                   ----------------------------
GAAP operating ratios:
  Loss ratio                        72.8%       68.6%      65.1%
  Expense ratio                     36.4%       29.1%      33.3%
                                   -----        ----       ----
  Combined ratio                   109.2%       97.7%      98.4%
                                   =====        ====       ====
Statutory operating ratios:
  Loss ratio                        74.7%       69.9%      66.3%
  Expense ratio                     33.3%       28.8%      32.4%
                                   -----        ----       ----
  Combined ratio                   108.0%       98.7%      98.7%
                                   =====        ====       ====
</TABLE>

       In general, when the combined ratio is under 100%,
underwriting results are considered profitable.  Conversely, when
the combined ratio is over 100%, underwriting results are generally
considered unprofitable.  The combined ratio reflects underwriting
results and not investment income, federal income taxes or other
non-operating income or expense.  The Registrant's operating income
is generally a function of both underwriting results and investment
income.

LOSS RESERVES

       Reserves for unpaid losses and loss expenses at any report
date reflect the estimate of the liabilities for the ultimate net
loss of reported claims and estimated incurred but not reported
claims.

       The liability for unpaid losses and loss expenses is
determined using case-basis evaluations and statistical projections
and represents estimates of the ultimate net cost of all unpaid
losses and loss expenses through December 31 of each year.  These
estimates are continually reviewed and refined as historical
experience develops, new information becomes known and the effects
of trends in future claim severity and frequency are considered.

       The liabilities are adjusted accordingly with such adjustments
being reflected in the current year operations.  Apart from the
emergence of PPA development for claims occurring in 1999 related
to PPA legislation enacted in New Jersey (discussed below), no
trends that are considered abnormal have been identified as of the
most recent evaluation date, December 31, 1999.

       Motor Club and Preserver generally reinsure all risks in
excess of $100,000 for property lines (increased from $75,000 for
losses incurred before July 1, 1997) and $150,000 for casualty
lines.  North East reinsures all risks in excess of $200,000 for
both property and casualty lines.

       The following table presents a reconciliation of beginning and
ending liability balances for 1999, 1998 and 1997, reported under
GAAP:
<TABLE>
<CAPTION>
           RECONCILIATION OF LIABILITY FOR LOSSES AND LOSS EXPENSES
  <S>                                             <C>       <C>       <C>

                                                   1999     1998      1997
                                                  --------------------------
                                                     (Thousands of Dollars)
Liability for losses and loss expenses, net of
  reinsurance recoverables, at January 1           $39,814   $32,884   $28,114
Liability for losses and loss expenses, net
  of reinsurance recoverables, North East
  Acquisition                                        8,820       -         -
Incurred losses and loss expenses
 Provision for current year claims                  37,272    32,598    29,369
 Increase in provision for prior years'
  claims                                             3,359     3,881     3,773
                                                   -------   -------   -------
 Total incurred losses and loss expenses            40,631    36,479    33,142
                                                   -------   -------   -------
Payments for losses and loss expenses
 Payments on current year claims                    16,448    12,038    12,169
 Payments on prior years' claims                    20,288    17,511    16,203
                                                   -------   -------   -------
 Total payments for losses and loss expenses        36,736    29,549    28,372
                                                   -------   -------   -------
Liability for losses and loss expenses, net
  of reinsurance recoverables, at December 31       52,529    39,814    32,884

Reinsurance recoverables on unpaid losses
  and loss expenses, at December 31                 18,454    18,521    17,363
                                                   -------   -------   -------
Liability for losses and loss expenses,
  gross of reinsurance recoverables,
  at December 31                                   $70,983   $58,335   $50,247
                                                   =======   =======   =======
</TABLE>

       The reconciliation shows a 1999 deficiency of $3,359,000 in
the liability recorded at December 31, 1998.  The deficiency is
primarily the result of initial net adverse development of reserves
at December 31, 1998 and 1997 which is consistent with the
Registrant's loss development history.

       The Registrant believes that its book of business,
particularly Motor Club's PPA book of business, has loss
development characteristics which result in initial adverse
development ("Initial Development") but ultimately develop closer
to the reserves initially established.  This Initial Development
typically occurs during the first 24 to 36 months of a given year's
reserves.  Historically, the Initial Development has been offset by
redundancies from older years approximating or greater than the
Initial Development.  However, as Motor Club's PPA book of business
has grown, the Initial Development has been greater than the
redundancies in  older years.

       The Registrant believes that as the new PPA book of business
written by Motor Club continues to stabilize and  mature, the Net
Cumulative Deficiency in the more recent years will decline and
thus the deficiencies indicated will diminish.  The Registrant
believes this pattern is supported by the generally sequential
decline in the Net Cumulative Deficiency from the most recent year
presented to the oldest year presented.  The Registrant also
believes that the Initial Development referred to is generally
consistent and identifiable in the table on page 16.

       The Registrant also believes that the 1996 adverse development
is attributable principally to losses which occurred in 1996,
primarily in Motor Club's PPA book of business.  During 1996, Motor
Club's new PPA book of business was in its first twelve months of
development.  As is consistent with applicable New Jersey statutes,
no new business had yet been non-renewed, resulting in a book of
PPA business that lacked historical experience.  Thereafter,
certain business was non-renewed and the performance of the book
has improved.  Given the adverse development of this particular
year, it is possible that the Net Cumulative Deficiency for 1996
may not develop consistently with the other years described above,
but the Registrant does not believe that this is indicative of
prospective loss development for years after 1996.

       The differences between the liability for unpaid losses and
loss expenses reported in the Registrant's consolidated financial
statements prepared in accordance with GAAP and those reported in
the annual statements filed by the Insurance Companies with State
insurance departments in accordance with SAP are reconciled as
follows:

<TABLE>
<CAPTION>
  <S>                                    <C>          <C>        <C>
                                                    December 31,
                                           ----------------------------
                                           1999         1998       1997
                                           ----------------------------
                                               (thousands of dollars)
Liability for unpaid losses and
  loss expenses on a SAP basis
  (net of reinsurance recoverables
  on unpaid losses and loss expenses)     $56,759      $43,111    $35,900
Reinsurance recoverables on unpaid
  losses and loss expenses                 18,454       18,521     17,363
Anticipated salvage and subrogation
 recoveries                                (4,230)      (3,297)    (3,016)
                                          -------      -------    -------
Liability for unpaid losses and loss
  expenses, as reported in the
  Registrant's GAAP basis financial
  statements                              $70,983      $58,335    $50,247
                                          =======      =======    =======
</TABLE>

       The anticipated effect of inflation is implicitly considered
when estimating liabilities for losses and loss expenses.  While
anticipated price increases due to inflation are considered in
estimating the ultimate claim costs, the increase in the average
severity of claims is caused by a number of factors that vary with
the individual type of policy written.  These anticipated trends
are monitored based on actual development and are modified if
necessary.

       The table on Page 16 presents the development of the GAAP
balance sheet liabilities for 1990 through 1999; data is presented
for those years in which the Insurance Companies had operations and
were owned by the Registrant.

       The top line on the table shows the estimated liability for
unpaid losses and loss expenses recorded at the balance sheet date
for each of the indicated years.  This liability represents the
estimated amount of losses and loss expenses for claims arising in
that and all prior years that are unpaid at the balance sheet date,
including losses that had been incurred but not yet reported. The
upper portion of the table shows the re-estimated amount of the
previously recorded liability, based on experience as of the end of
each succeeding year.  The estimate is increased or decreased as
more information becomes known about the frequency and severity of
claims for development years.  The Net Cumulative Deficiency
represents the aggregate change in the estimates over all prior
years.  The lower section of the table shows the cumulative amounts
paid with respect to previously recorded liabilities as of the end
of each succeeding year.

       In evaluating this information, it should be noted that each
amount includes the effects of all changes in amounts for prior
periods.  For example, the amount of deficiency relating to losses
settled in 1998, but incurred in 1993, will be included in the
cumulative deficiency for the 1998 year.
       This table does not present accident or policy year
development data, which readers may be more accustomed to
analyzing.  Conditions and trends that have affected development of
liabilities in the past may not necessarily occur in the future.
Accordingly, it may not be appropriate to extrapolate future
redundancies or deficiencies based on this table.

       Prior to 1992, the Registrant conducted private passenger
operations in New Jersey through Motor Club of America Insurance
Company ("Motor Club") (which continues) and nationwide general
insurance operations through a separate subsidiary, MCA Insurance
Company ("MCAIC") and its insurance subsidiary, Property Casualty
Company of MCA ("PCCMCA"). The operations of Motor Club are
included in the Registrant's loss reserve disclosures.  The
operations of MCAIC and PCCMCA have not been included in the loss
reserve disclosures due to MCAIC's insolvency in that year as a
result of Hurricane Andrew.  Since the Registrant wrote-off its
investment in MCAIC that year, and because the losses attributable
to MCAIC are subject to the control of its Receiver, there is no
additional loss development from those operations which impact the
results of the Registrant since that time.  Accordingly, the loss
reserve disclosures were amended to include only those operations
in which the Registrant is currently involved.
<TABLE>
<CAPTION>

LOSS AND LOSS EXPENSE DEVELOPMENT (In Thousands)
<S>                                 <C>      <C>       <C>      <C>      <C>

Year ended December 31              1990    1991        1992    1993      1994
                                    ------------------------------------------
Liability for unpaid
   losses and loss expenses, net
   of reinsurance recoverables     $27,362  $26,494   $28,469 $ 25,334  $22,356
Net Liability Re-estimated as of:
One year later                      28,770   30,173    27,145   26,253   23,468
Two years later                     29,580   28,954    28,563   26,766   23,813
Three years later                   28,760   29,733    28,454   26,819   24,181
Four years later                    28,636   28,934    28,702   26,572   23,759
Five years later                    28,104   29,071    28,662   26,066   23,221
Six years later                     28,229   28,954    28,516   25,330       -
Seven years later                   28,205   28,920    27,719      -         -
Eight years later                   28,197   28,653       -        -         -
Nine years later                    27,953     -          -        -         -
Net Cumulative Redundancy
 (Deficiency)                     ($   591) ($2,159)  $   750   $     4 ($  865)
                                  ========  =======   =======   ======= =======
</TABLE>
<TABLE>
<CAPTION>

<S>                                <C>      <C>        <C>       <C>     <C>

Cumulative Amount of Liability Paid Through:

One year later                     14,270   11,979     12,314    12,311  11,106
Two years later                    19,593   18,855     20,270    18,992  17,231
Three years later                  23,796   24,161     24,546    23,032  20,821
Four years later                   26,120   26,365     26,878    24,882  22,488
Five years later                   26,900   27,696     27,642    25,373  23,297
Six years later                    27,444   28,207     26,810    25,818      -
Seven years later                  27,739   28,265     27,194       -        -
Eight years later                  27,725   28,394        -         -        -
Nine years later                   27,788      -          -         -        -

Net liability - December 31       $27,362  $26,494    $28,469   $25,334 $22,356
Reinsurance recoverables           20,037   29,003     21,698    20,484  19,309
                                  -------  -------    -------   ------- -------
Gross liability - December 31     $47,399  $55,497    $50,167   $45,818 $41,665
                                  =======  =======    =======   ======= =======
</TABLE>

     The reserve for net losses and loss expenses with respect to North East
is only included in the consolidated net losses and expenses as of
December 31, 1999.  No reserve development is presented herein as these
operations were not owned prior to the third quarter of 1999.

<TABLE>
<CAPTION>

LOSS AND LOSS EXPENSE DEVELOPMENT (In Thousands)
<S>                                 <C>        <C>      <C>      <C>     <C>

Year ended December 31               1995     1996      1997     1998    1999
                                  ---------------------------------------------
Liability for unpaid
   losses and loss expenses, net
   of reinsurance recoverables     $23,409    $28,114  $32,884  $39,814 $52,529
Net Liability Re-estimated as of:
One year later                      24,313     31,887   36,765   43,173   -
Two years later                     25,759     33,848   38,422    -       -
Three years later                   25,680     33,527      -      -       -
Four years later                    25,252        -        -      -       -
Five years later                       -          -        -      -       -
Six years later                        -          -        -      -       -
Seven years later                      -          -        -      -       -
Eight years later                      -          -        -      -       -
Nine years later                       -          -        -      -       -

Net Cumulative Redundancy
 (Deficiency)                     ($ 1,843)  ($ 5,413)($ 5,538)($ 3,359)  -
                                  ========   ======== ======== ======== =====
</TABLE>
<TABLE>
<CAPTION>
<S>                                <C>        <C>      <C>        <C>    <C>

Cumulative Amount of Liability Paid Through:

One year later                     11,414     16,203   17,511   20,288   -
Two years later                    18,357     24,830   28,427     -      -
Three years later                  22,164     30,685      -       -      -
Four years later                   24,586        -        -       -      -
Five years later                      -          -        -       -      -
Six years later                       -          -        -       -      -
Seven years later                     -          -        -       -      -
Eight years later                     -          -        -       -      -
Nine years later                      -          -        -       -      -

Net liability - December 31       $23,409    $28,114  $32,884  $39,814  52,529
Reinsurance recoverables           16,415     19,553   17,363   18,521  18,454
                                  -------    -------  -------  ------- -------
Gross liability - December 31     $39,824    $47,667  $50,247  $58,335 $70,983
                                  =======    =======  =======  ======= =======
</TABLE>

       The reserve for net losses and loss expenses with respect
 to North East is only included in the consolidated net losses and
expenses as of December 31, 1999.  No reserve development
is presented herein as these operations were not owned prior to
the third quarter of 1999.

REINSURANCE

       The Insurance Companies follow the customary industry practice
of reinsuring a portion of their risks and paying to reinsurers a
portion of the premiums received on the policies.  The Insurance
Companies' reinsurance program permits greater diversification of
business and the ability to write larger policies while limiting
maximum net losses; in addition, the reinsurance program is
designed to protect against catastrophic losses.  Reinsurance does
not legally discharge an insurer from its primary liability for the
full amount of the policies, although it does make the reinsurer
liable to the insurer to the extent of the reinsurance ceded.
Therefore, the Insurance Companies are subject to credit risk with
respect to their reinsurers.

       Reinsurance for property losses of Preserver is maintained
under a per risk excess of loss treaty affording recovery to $2
million, in excess of a retention of $100,000.  This retention had
been $75,000 until July 1, 1997. Preserver also maintains a 100%
quota share treaty for boiler and machinery coverage.

       Casualty reinsurance is currently maintained for Motor Club
and Preserver under an excess of loss treaty affording recovery up
to $3 million, in excess of a retention of $150,000.  This
retention was increased to $200,000 on January 1, 2000.  Preserver
also maintains reinsurance coverage for personal and commercial
umbrella policies up to $2 million for personal lines policies and
up to $5 million for commercial lines policies.  Effective March 1,
1998, Preserver entered into reinsurance contracts for the workers'
compensation policies it commenced writing on that date.  An 80%
quota share reinsurance contract on the first $500,000 of workers'
compensation coverage has been implemented; an excess of loss
treaty affording coverage up to $10 million in excess of the
retention of $500,000 has also been implemented.

       Effective January 1, 1999, Preserver purchased aggregate stop
loss reinsurance for all of its lines of business which will
provide $3 million coverage in excess of a loss ratio of 67.5% (in
1999) after the application of all other reinsurance.  The treaty
is subject to experience adjustments over a three-year period. This
treaty affords Preserver protection against elevated levels of
frequency or severity of losses which are not consistent with its
historical experience, and includes, but is not limited to,
weather-related events which may not rise to the level of a
catastrophe, subject to a dollar limit.

       Motor Club and Preserver also maintained an 80% quota share
reinsurance agreement for their non-automobile policies issued
prior to February 19, 1994, until their expiration dates.

       North East's reinsurance protection is provided through two
layers of excess of loss reinsurance.  The first layer assumes
$150,000 of coverage beyond the first $50,000.  The second layer
allows North East to offer policy limits up to $1,000,000 by
assuming $800,000 of coverage beyond the first $200,000.

       In addition, Motor Club, Preserver and North East's
catastrophe reinsurance program presently covers substantially all
of the losses in excess of $500,000 up to $42.5 million.

       The Insurance Companies consider numerous factors in selecting
reinsurers, the most important of which is the financial stability
of the reinsurer.  The Insurance Companies have not experienced any
material collectibility problems for its reinsurance recoverables.

COMPETITION

       The property and casualty insurance industry is generally
highly competitive on the basis of both price and service.

       There are numerous companies competing for the coverages which
Preserver offers in New Jersey, many of which are substantially
larger and have considerably greater resources than Preserver.  In
addition, because Preserver's insurance products are marketed
exclusively through independent insurance agencies, most of which
represent more than one insurance company, Preserver faces
competition within each agency.

       The commercial lines markets that the Registrant's insurance
subsidiaries engage in are highly competitive markets that are
often subject to significant pressures, including but not limited
to the pricing of individual risks.  As the Registrant's insurance
subsidiaries become more involved in the commercial lines markets,
these competitive issues will become more widespread.

       While Motor Club distributes its personal auto policies
similarly and thus faces the same issues as Preserver in concept,
the personal auto regulatory environment in New Jersey,
particularly its "take-all-comers" requirements (see Regulation),
has suppressed competition and effectively eliminated risk
selection.  In addition, the New Jersey market has historically
been subject to regulatory and legislative volatility which has, at
times, adversely affected the profitability of the PPA line of
business, further suppressing competition.  Finally, approximately
24% of Motor Club's appointed independent insurance agencies
represent only Motor Club for PPA coverage and thus, Motor Club has
no competition for this business in those agencies.  New Jersey law
also substantially restricts the ability of an insurer to terminate
its agencies, limiting Motor Club's ability to manage its agency
force for PPA.  Management believes this lack of competition in PPA
presents a significant business risk which must be monitored very
closely on an ongoing basis.

       North East similarly distributes its products through the
independent insurance agency system.

INVESTMENTS AND INFORMATION ABOUT MARKET RISK

       Management has maintained, in its opinion, a conservative
investing philosophy.  The Registrant manages its investment
portfolio with the assistance of investment professionals based on
guidelines established by management and approved by the Board of
Directors.

       The overall goal of the portfolio is to enhance investment
returns within the structure of limited credit risk assumption
which management has utilized, with evaluations of portfolio
duration made in relation to the current interest rate environment.

       During 1998, the Registrant's investment guidelines were
expanded to allow for a higher percentage of investments in
investment grade corporate bonds and mortgage-backed securities and
to include certain investment grade asset-backed securities, which
provide more structured cash flows.   The objectives of these
changes to the Registrant's investment policy were: (1) to reduce
the amount of interest risk in the portfolio; and (2) enhance
portfolio yield without unreasonably increasing credit risk.  The
Registrant believes these objectives have been accomplished.

       The Registrant does not invest in or hold any derivative
financial instruments.

       Tax exempt securities have not been acquired.  Management
believes that the current tax position of the Registrant, which
includes net operating loss carryforwards, dictates the exclusion
of tax exempt securities from the portfolio, which historically
provide substantially lower yields on a before tax basis than
taxable securities.

       Market risk represents the potential for loss due to adverse
changes in the fair value of financial instruments.  The market
risks related to the financial instruments of the Registrant relate
to the investment portfolio, which exposes the Registrant to risks
related to interest rates, and to a lesser extent, credit quality
and prepayment.  The Registrant does not have exposure to foreign
currency exchange rates or equity prices.

       Interest rate risk is the price sensitivity of a fixed income
security to changes in interest rates.  The Registrant views these
potential changes in price within the overall context of asset and
liability management.  The payout pattern of insurance liabilities
are actuarially determined, to determine their duration, which is
the present value of the weighted average payments expressed in
years.  Duration targets are then set for the Registrant's fixed
income investment portfolio after consideration of these
liabilities and other factors, which the Registrant believes
mitigates the overall effect of its exposure to interest rate risk.

       At December 31, 1999 and 1998, the Registrant's investment
portfolio was comprised of the following types of securities:
<TABLE>
<CAPTION>
<S>                        <C>           <C>     <C>          <C>
                           December 31, 1999     December 31, 1998
                           -----------------     -----------------
                           Market                Market
                           Value       Percent   Value     Percent
                           -------------------   ------------------
Taxable Fixed Maturities   $78,242,322   89.9%   $69,594,904  91.6%
Equity Securities               57,053    0.1%         -         -
Short Term Investments       8,528,858    9.8%     5,995,299   7.9%
Mortgage Loans                 153,616    0.2%       361,038   0.5%
                           -----------   ----    -----------  ----
     Total Investment
      Portfolio            $86,981,849  100.0%   $75,951,241 100.0%
                           ===========  =====    =========== =====
</TABLE>

       At December 31, 1999 and 1998, the taxable fixed maturity
portfolio consisted of the following types of securities:
<TABLE>
<CAPTION>
<S>                       <C>          <C>     <C>          <C>
                           December 31, 1999    December 31, 1998
                           -----------------    -----------------
                           Market               Market
                           Value     Percent    Value     Percent
                           -----------------    ------------------

United States Treasuries  $16,247,679  20.8%   $18,669,055  26.8%
United States Government
   Agencies                 3,674,004   4.7%     4,476,576   6.5%
Mortgage-Backed Securities 10,406,357  13.3%    11,213,589  16.1%
Asset-Backed Securities    10,238,852  13.1%    10,805,970  15.5%
Corporate Bonds            37,675,430  48.1%    24,429,714  35.1%
                           ----------- -----    ----------- -----
     Total                 $78,242,322 100.0%   $69,594,904 100.0%
                           =========== =====    =========== =====
</TABLE>

       Mortgage-backed securities ("MBS") consist primarily of
Government National Mortgage Association issues, along with other
MBS issues of the United States Government.  Asset-backed
securities ("ABS") issues are all rated "Aaa" by Moody's and "AAA"
by Standard & Poor's.  The underlying collateral of ABS issues at
December 31, 1999 consists primarily of home equity loans.

       The taxable fixed maturity portfolio duration at December 31,
1999 and 1998 was 3.60 and 3.69 years, respectively.

       United States Treasuries are weighted towards maturities of
five years or less, to reduce interest rate risk and match the
Insurance Companies' claims payout ratios; corporate obligations
are generally weighted towards five to ten year maturities, to take
advantage of the yield curve; the average life of the GNMA
portfolio has been maintained at approximately 10 years to reduce
interest rate risk.

       Please refer to Note C in the Notes to Consolidated Financial
Statements ("Notes") for statistics regarding portfolio maturity
composition.

       The Registrant has not acquired, nor are there plans to
acquire, below investment grade or "junk" bonds.  Ninety-three
percent of the fixed maturity portfolio as of December 31, 1999 was
graded Class 1 according to the National Association of Insurance
Commissioners' valuation system.  This classification is reserved
for only the highest quality securities, generally rated A or
better by two major rating services.

       At December 31, 1999 and 1998, the Registrant's taxable fixed
maturity investment portfolio at market value by Moody's rating
was:
<TABLE>
<CAPTION>
<S>                      <C>          <C>      <C>         <C>
                          December 31, 1999    December 31, 1998
                          -----------------    -----------------
                          Market               Market
                          Value    Percent     Value   Percent
                          ----------------     ----------------
United States
 Government Securities  $29,806,727   38.1%   $34,359,229  49.4%
Aaa                      10,238,852   13.1%    11,311,103  16.2%
Aa                       10,242,675   13.1%     7,504,082  10.8%
A                        23,062,545   29.4%    13,388,045  19.2%
Baa                       4,891,523    6.3%     3,032,445   4.4%
                        -----------  -----    ----------- -----
    Total               $78,242,322  100.0%   $69,594,904 100.0%
                        ===========  =====    =========== =====
</TABLE>

       The following table provides information about the
Registrant's taxable fixed maturity portfolio at December 31, 1999
that are sensitive to changes in interest rates.  The table
presents cash flows of principal amounts and related weighted
average interest rates by expected maturity dates.  The cash flows
are based on the earlier of the call date or the maturity date or,
for mortgage and asset-backed securities, expected payments
patterns.  Actual cash flows could differ from the expected
amounts.
<TABLE>
<CAPTION>

EXPECTED CASH FLOWS OF PRINCIPAL AMOUNTS
 <S>                   <C>         <C>           <C>          <C>

                           2000         2001         2002          2003
                       ------------------------------------------------
Taxable-- Other than
 mortgage- backed
 securities            $5,046,263  $ 6,167,374   $5,723,201   $4,697,212
   Average interest
    rate                     6.3%         7.0%         6.5%          6.1%
Mortgage- backed
 securities               108,869      378,804    1,079,497    1,924,791
   Average interest
    rate                      7.1%         5.7%         6.6%         6.3%
Asset-backed
 securities             1,772,715    3,499,834      999,971    1,997,409
   Average interest
    rate                      6.3%         6.4%         6.4%         6.2%
                       ----------  -----------   ----------   ----------
Total                  $6,927,847  $10,046,012   $7,802,669   $8,619,412
                      ===========  ===========   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>

EXPECTED CASH FLOWS OF PRINCIPAL AMOUNTS
 <S>                     <C>          <C>            <C>          <C>
                                                                    ESTIMATED
                                                       AMORTIZED    MARKET
                           2004         Thereafter      COST        VALUE
                         ----------------------------------------------------
Taxable-- Other than
 mortgage- backed
 securities              $4,423,521   $33,663,944    $59,721,515  $57,600,113
   Average interest
    rate                        6.8%          6.4%           6.5%
Mortgage- backed
 securities               2,726,253     4,460,149     10,678,363   10,406,357
   Average interest
    rate                        7.2%          6.6%           6.7%
Asset-backed
 securities                     -       2,184,957     10,454,886   10,238,852
   Average interest
    rate                        0.0%          6.7%           6.4%
                         ----------   -----------    -----------  -----------
Total                    $7,149,774   $40,309,050    $80,854,764  $78,242,322
                         ==========   ===========    ===========  ===========
</TABLE>

   Management anticipates continuing this minimum risk approach to
investing for the foreseeable future.  Management believes that the
mix of investments in both type and maturity length is appropriate
in order to preserve capital, take advantage of investment
opportunities as they are presented, and provide the Registrant and
its subsidiaries with sufficient liquidity to react to economic and
business circumstances as they evolve.

   The Registrant's investment portfolio yielded 6.43%, 6.30% and
6.41% in 1999, 1998 and 1997, respectively. Including realized
gains and losses, the investment portfolio yielded 6.57%, 6.34% and
6.41% in 1999, 1998 and 1997, respectively.

REGULATION

General
-------

   Insurance companies are subject to supervision and regulation in
the states in which they transact business.  Such supervision and
regulation relate to numerous aspects of an insurance company's
business and financial condition.  The primary purpose of such
supervision and regulation is the protection of policyholders.  The
extent of such regulation varies, but generally derives from state
statutes which delegate regulatory, supervisory and administrative
authority to state insurance departments. Accordingly, the
authority of the state insurance departments includes the
establishment of standards of solvency which must be met and
maintained by insurers; the licensing to do business of insurers
and agents; the nature of and limitations on investments; premium
rates for property and casualty insurance; the provisions which
insurers must make for current losses and future liabilities; the
deposit of securities for the benefit of policyholders; and the
approval of policy forms.  Insurance departments also conduct
periodic examinations of the affairs of insurance companies and
require the filing of annual and other reports relating to the
financial condition of insurance companies.

   State law requires the Insurance Companies to participate in
involuntary insurance programs for automobile insurance, as well as
other property and casualty lines. These programs include joint
underwriting associations, assigned risk plans, fair access to
insurance requirements plans and reinsurance facilities.  These
laws generally require all companies that write lines covered by
these programs to provide coverage (either directly or through
reinsurance) for insureds who cannot obtain insurance in the
voluntary market.  The legislation creating these programs usually
allocates a pro rata portion of risks attributable to such insureds
to each company on the basis of direct written premiums or the
number of automobiles insured.  Generally, state law requires
participation in such programs as a condition to doing business.
The loss ratio on insurance written under involuntary programs
generally has been greater than the loss ratio on insurance in the
voluntary market.

   During 1997, Motor Club began to participate in the New Jersey
Personal Automobile Insurance Plan; fees totaling $153,000,
$254,000 and $191,000 were paid in 1999, 1998 and 1997,
respectively, to a servicing carrier rather than process these
policies and take a risk of further loss.

   State insurance holding company acts regulate insurance holding
company systems.  Each insurance company in the holding company
system is required to register with the insurance supervisory
agency of its state of domicile and furnish certain information
concerning the operations of companies within the holding company
system that may materially affect the operations, management or
financial condition of the insurers within the system.  Such laws
further require disclosure of material transactions including the
payment of "extraordinary dividends" from the insurance
subsidiaries to the Registrant.

   Insurance holding company acts require that all transactions
within the holding company system affecting the insurance
subsidiaries must be fair and equitable.  Further, approval of the
insurance commissioner is required prior to the consummation of
transactions affecting the control of an insurer.

   Motor Club and Preserver are restricted by the insurance laws of
New Jersey as to the amount of dividends they may pay to the
Registrant without prior approval of the Commissioner of Banking
and Insurance.  To the extent that statutorily defined surplus is
available, the maximum dividend that may be paid by either Motor
Club or Preserver during any year without prior regulatory approval
is limited to the greater of 10% of that Company's statutory
surplus as of the prior December 31, or adjusted net income of that
Company, for the preceding year.  Applying current regulatory
restrictions as of December 31, 1999, approximately $1.2 and $1.3
million in dividends would be available for distribution by Motor
Club and Preserver, respectively, to the Registrant without prior
regulatory approval during 2000.  During 1999 and 1998, Motor Club
paid $250,000 and $1,000,000 in dividends to the Registrant,
respectively.  No dividends were paid in 1997.

   North East is restricted by the insurance laws of Maine as to the
amount of dividends it may pay to the Registrant without prior
approval of the Maine Superintendent of Insurance.  To the extent
that statutorily defined surplus is available, the maximum dividend
that may be paid by North East without prior regulatory approval is
limited to the greater of 10% of the Company's statutory surplus as
of the prior December 31 or net investment income.  Based on the
current accumulated statutory unassigned deficit, North East is
prohibited from paying dividends.

   American Colonial is restricted by the insurance laws of New York
as to the amount of dividends it may pay North East without prior
approval of the Insurance Commissioner of the State of New York.
To the extent that statutorily defined surplus is available, the
maximum dividend that may be paid by American Colonial without
prior regulatory approval is limited to 100% of net investment
income.  Applying current regulatory restrictions as of December
31, 1999, approximately $453,000 in dividends would be available
for distribution by American Colonial.  During 1999, American
Colonial paid $499,031 in dividends to North East.  No dividends
were paid in 1998 or 1997.

National Association of Insurance Commissioners ("NAIC")
--------------------------------------------------------

   The Insurance Companies are subject to the general statutory
accounting practices and reporting formats established by the NAIC
as well as accounting practices prescribed or permitted by the
respective Departments of Insurance in the states in which they are
domiciled.  The NAIC has codified SAP to afford preparers and users
of statutory basis financial statements a more uniform application
of SAP by insurers in differing states of domicile.  It is not
known whether regulatory authorities in the State of New York will
recognize SAP as codified by the NAIC as the approved basis of
financial statement preparation for insurers domiciled in that
State.  The States of Maine and New Jersey have adopted
codification of SAP.  The Registrant has not yet determined the
impact of codification of SAP on the Insurance Companies statutory
financial statements.

   The NAIC also promulgates model insurance laws and regulations
relating to the financial and operational regulation of insurance
companies, which includes the Insurance Regulating Information
System ("IRIS"). IRIS identifies eleven industry ratios and
specifies "usual values" for each ratio.  Departure from the usual
values on four or more of the ratios can lead to inquiries from
individual state insurance commissioners as to certain aspects of
an insurer's business.  The Insurance Companies have, in recent
years, met substantially all of the IRIS test ratios.

   NAIC model rules and regulations generally are not directly
applicable to an insurance company until they are adopted by
applicable state legislatures and departments of insurance.
However, NAIC model laws and regulations have become increasingly
important in recent years, due primarily to the NAIC's Financial
Regulations Standards and Accreditation Program. Under this
program, states which have adopted certain required model laws and
regulations and meet various staffing and other requirements are
"accredited" by the NAIC.  Such accreditation reflects an eventual
nationwide regulatory network of accredited states.  The States of
New Jersey, New York and Maine are accredited by the NAIC.

   The NAIC has adopted Risk-Based Capital ("RBC") requirements for
property/casualty insurance companies, to evaluate the adequacy of
statutory capital and surplus in relation to investment and
insurance risks such as asset quality, credit risk, loss reserve
adequacy and other business factors.  The RBC formula is used by
State insurance regulators as an early warning tool to identify,
for the purpose of initiating regulatory action, insurance
companies that potentially are inadequately capitalized.
Regulatory compliance is determined by a ratio of the insurer's
regulatory total adjusted capital to its authorized control level
RBC, as defined by the NAIC.  Insurers below specific trigger
points or ratios are classified within certain levels, each of
which requires specific corrective action.  The ratios of the
Insurance Companies are in excess of that required, therefore
requiring no action.

New Jersey Private Passenger Automobile
---------------------------------------

   The New Jersey PPA market has historically been subject to
regulatory and legislative volatility which has, at times,
adversely affected the profitability of this line of business,
despite New Jersey having among the highest average premium rates
in the United States.  New Jersey insurance law presently requires
insurers to write all eligible PPA coverage presented to them from
drivers with eight points or less on their driving record.  This is
commonly referred to as "take-all-comers".

   The NJ DOBI may grant an insurer relief, by written notification,
from writing new PPA business pursuant to the take-all-comers
provisions of New Jersey law if a showing finds that the insurer's
premium to surplus ("leverage") ratio exceeds 3 to 1.  Motor Club's
present applicable leverage ratio for the year ended December 31,
1999 is 2.90 to 1.

   In June 1997, the State of New Jersey enacted PPA legislation,
which principally: (1) repealed the annual "flex" rate increase
available to insurers, which was required by law to be no less than
3%, and replaced it with an expedited prior approval rate filing
process for rate increase requests up to 3% on an overall basis.
Subsequent to the enactment of this legislation, the Commissioner
of the NJ DOBI froze all PPA insurance rates until March 1998, but
still has not yet promulgated the regulations required for insurers
to file for an expedited rate increase; (2) restricted the ability
of insurers to non-renew at their discretion up to 2% of their
policies; (3) repealed the ability of insurers to non-renew one
policy for every two new policies written in each rating territory;
and (4) replaced the rating system which assessed surcharges to
insureds' policies for specific driving violations and accidents
with a broader-based tiered rating system. Motor Club's tier rating
system was approved by the NJ DOBI and was implemented on all PPA
policies with effective dates on and after November 1, 1998.

   Additional PPA legislation was enacted in 1998 which: 1) allows
insureds to reduce levels of compulsory coverages, including the
option to reduce their coverage for Personal Injury Protection
("PIP") to as low as $15,000, from the presently required $250,000;
2) revises the PIP policy form to set forth the medical treatments
and services, valid diagnostic tests and appropriate health care
protocols which are eligible to be paid; 3) seeks to limit lawsuits
by claimants by redefining of the type of injury which would be
grounds for litigation; 4) replaces the present PIP arbitration
system which utilizes part-time arbitrators who render only oral
decisions without consulting medical professionals with one using
full-time dispute resolution professionals who may refer questions
of medical necessity or diagnosis to medical review organizations
and who must render written decisions; 5) appoints a special fraud
prosecutor to increase enforcement of fraudulent acts committed
against insurance companies; 6) removes the system of territorial
rating caps which have been in place since 1983, enabling insurers
to modify (as appropriate) rates charged in various rating
territories, which will be redefined; and 7) requires up to a 15%
reduction in rates on all PPA policies.

   Implementation of most of the provisions of the 1998 legislation
(with one exception) commenced with new policies issued on March
22, 1999.  The only exception is the redefinition of the
territories and removal of the territorial rating caps, which was
scheduled to be implemented in 2000.  The Registrant believes that
the legislation ultimately will have only a modest net negative
effect on Motor Club's PPA operations and profitability, because
the mandated rate reductions do not appear to be completely cost
justified (based on information presently available) by the cost
savings in the legislation.  However, in 1999, the Registrant did
experience a more adverse negative effect which is discussed in
greater detail in Item 7 - Management's Discussion and Analysis.

   Consistent with New Jersey's regulatory and legislative history,
the enacted and proposed legislation, current rate freeze and
ongoing volatility could adversely affect the Registrant's long-
term profitability in the PPA line of business.

   The State of New Jersey also maintains an excess profits law
which provides that PPA insurers whose profits exceed a statutorily
computed maximum over a three year period will be required to pay
such excess to its policyholders.  Motor Club has never reported
any  excess profits under this law and the Registrant believes that
in 2000 none will be reported.
   The Insurance Companies were subject to certain assessments in
the State of New Jersey, the most substantial of which had been the
FAIR Act surtaxes and assessments commencing in 1990; the surtaxes
expired after 1992 and the assessments expired after 1997.  FAIR
Act assessments totaled $971,000 in 1997.
Year 2000

   The computer systems of the Registrant and its subsidiaries
successfully made the transition to the Year 2000.  The
Registrant's internal operating systems (hardware and software),
infrastructure elements, communications systems, and personal
computer hardware and software continued to function properly in
the Year 2000.  No external vendor or business partner experienced
century change disruptions that materially affected the Registrant
or its subsidiaries.  The Registrant did not experience any
business interruptions related to the Year 2000.  The Company's
total cost of testing, contingency planning and administrative
support, including cost of personnel involved, cost to construct
the technical test environment and cost of consulting resources was
less than $250,000.  All Year 2000 related costs have been expensed
as incurred.  The related costs incurred in 2000 are not expected
to be material.

Employees
---------

   At December 31, 1999, the Motor Club of America Group had
approximately 132 employees.

Item 2. Properties
------------------

   Effective January 1, 1996, the Registrant entered into a lease at
95 Route 17 South, Paramus, New Jersey.  The Registrant's home
office is located at this facility.  The lease expires on December
31, 2005.  The Registrant has an option to terminate the lease
after six years, and an option to extend the lease for an
additional five years after the initial lease term expires.

   North East leases its home office located in Scarborough, Maine.
The lease expires on December 31, 2000 and North East pays annual
rent of $145,000.

Item 3.  Legal Proceedings
--------------------------

   The Insurance Companies are a party to numerous lawsuits arising
in the ordinary course of their insurance business.  The Registrant
believes that the resolution of these lawsuits will not have a
material adverse effect on its results of operations, financial
condition, or cash flows.

Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

   No matter was submitted to a vote of security holders in the
fourth quarter of 1999.

Item Pursuant to Instruction 3 to Paragraph (b) of Item 401 of
--------------------------------------------------------------
Regulation S-K. Executive Officers of the Registrant.
----------------------------------------------------
<TABLE>
<CAPTION>

   At December 31, 1999, the executive officers of the Registrant
and their offices with the Registrant and principal occupations
were as follows:
<S>                     <C>     <C>                        <C>

                                                                Years in
                                                             Which Officer
                                                               Has Served
                                 Office and Principal             as
     Name               Age           Occupation                 Such(3)
--------------------   -----    ----------------------       ---------------
Archer McWhorter (1)     78     Chairman of the Board of
                                Directors and Director of
                                the Registrant and Companies
                                in the Motor Club of America
                                Group                          1986-1999

Stephen A. Gilbert (2)   60     President, Chief Executive
                                Officer, General Counsel and
                                Director of the Registrant and
                                Companies in the Motor Club of
                                America Group; Chairman of the
                                Board, Chief Executive Officer
                                and Director of North East
                                Insurance Company              1975-1999

Patrick J. Haveron (2)   38     Executive Vice President, Chief
                                Executive Officer, Chief
                                Financial Officer and
                                Director of the Registrant and
                                Companies in the Motor Club of
                                America Group; Treasurer of
                                Motor Club of America Insurance
                                Company and Preserver Insurance
                                Company                        1988-1999

Peter K. Barbano         49     Vice President, Secretary
                                and Associate General Counsel  1993-1999

Myron Rogow              56     Vice President                 1987-1999

G. Bruce Patterson       55     Vice President                 1989-1999

Charles J. Pelosi        54     Vice President                 1983-1999

Norma Rodriguez          50     Treasurer                      1984-1999

</TABLE>

(1)       Chairman of the Board of Directors of Companies in the Motor
          Club of America Group; from 1995 to March 1997, Director of
          National Car Rental Systems, Inc. and affiliated
          corporations, a car rental enterprise ("NCR"); from 1995 to
          February 1997, one-third owner of Santa Ana Holdings, Inc.,
          which exchanged its 90% stock interest in NCR for stock in
          Republic Industries, Inc.; from February 1997 to February
          1998, consultant to NCR; President (to January 1996) of
          Acceptance Inc., a finance company.

(2)       Member of Finance Committee.

(3)       Includes years during any portion of which the officer
          served as such.  All terms of office are until the date of the
          2000 Annual Meetings of Stockholders and Directors.

   Except for Archer McWhorter, each of the officers devoted
substantially all of their business time to the affairs of the
Registrant or one or more other companies in the Motor Club of
America Group.

                              PART II
                              -------

Item 5.  Market for the Registrant's Common Equity and Related
---------------------------------------------------------------
Stockholder Matters
-------------------

   The Registrant's Common Stock trades on the NASDAQ Stock Market
under the symbol MOTR.  The following are the high and the low
selling prices for each quarter of 1998 and 1999, as reported by
the NASDAQ:
<TABLE>
<CAPTION>
          <S>                                   <C>      <C>

          1998
          Quarter                               High     Low
          -------                               ----     ----
          I    ..............................   17 1/2   13 5/8
          II   ..............................   17 5/8   15
          III  ..............................   15 3/4   10
          IV   ..............................   15 1/4   11 1/2

          1999
          Quarter                               High     Low
          -------                               ----     ---
          I    ..............................   14 7/8   13
          II   ..............................   14       12
          III  ..............................   13 1/2   10
          IV   ..............................   10 7/8    7 1/2
</TABLE>

   There were approximately 460 holders of record of the Common
Stock of the Registrant as of December 31, 1999.  The Registrant
paid no dividends in 1998 and 1999.

<TABLE>
<CAPTION>

Item 6.  Selected Financial Data
<S>                          <C>         <C>        <C>        <C>      <C>

                                             Years ended December 31,
                                1999*      1998        1997       1996   1995
                                -----------------------------------------------
                                   (in thousands, except as to per share data)
Operating Results:
Revenues from operations     $   55,951  $ 53,347   $ 51,102   $46,525  $36,703
Realized gains on sale
 of investments                      36        28        -           5       57
Realized gain on sale of
 subsidiary                         -         -          -         702      -
Net investment income             5,081     4,305      3,595     3,087    2,764
                             ----------  --------   --------   -------  -------
Total revenues               $   61,068  $ 57,680   $ 54,697   $50,319  $39,524
                             ----------  --------   --------   -------  -------
Income before
  federal income taxes       $      102  $  5,719   $  4,630   $ 3,297  $ 2,455
                             ----------  --------   --------   -------  -------
Net income                   $    1,277  $  4,256   $  3,483   $ 5,330  $ 2,417
                             ==========  =======    ========   =======  =======
Financial Condition:
Total assets                 $  157,238  $131,013   $101,347   $95,533  $81,959
Convertible subordinated
 debentures                      10,000       -          -         -        -
Shareholders' equity         $   27,559  $ 27,824   $ 23,001   $18,786  $14,081
Per Common Share:
Net income - Basic           $      .60  $   2.02   $   1.68   $  2.61  $  1.18
Net income - Diluted         $      .60  $   2.01   $   1.66   $  2.56  $  1.17
Book Value                   $    12.97  $  13.15   $  10.98   $  9.17  $  6.89

Weighted average number of
  shares outstanding:
  Basic                       2,117,912 2,108,722 2,074,473 2,045,590 2,043,197
  Diluted                     2,121,697 2,121,366 2,102,395 2,081,080 2,061,791

Significant Insurance Indicators:
Net premiums written           $54,508   $ 64,303   $51,680   $47,337   $38,073

Loss and loss expense ratio       72.8%      68.6%     65.1%     64.5%    58.7%
Expense ratio                     36.4%      29.1%     33.3%     37.9%    43.9%
                                 -----       ----      ----     -----    -----
Combined ratio                   109.2%      97.7%     98.4%    102.4%   102.6%
                                 =====       ====      ====     =====    =====
</TABLE>

* Includes North East's balance sheet as of December 31, 1999 and results of
operations for the three months ended December 31, 1999.

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

OVERVIEW OF BUSINESS OPERATIONS
-------------------------------

   The Registrant and a group of affiliated corporations provide
property and casualty insurance related services.

   The Registrant has four subsidiaries which write property and
casualty insurance. Motor Club writes PPA business in the State of
New Jersey. Preserver writes small commercial, homeowners and
ancillary coverages in that State.

   The Registrant is pursuing a strategy to: (1) increase its
identification as a provider of small commercial lines insurance
and has continued to expand its product line in support of this
objective; and (2) expand and diversify its insurance operations
outside the State of New Jersey. The Registrant believes that both
of these objectives can be attained through the acquisition of
other insurance companies which present opportunities to write
these product lines in different geographic areas. The Registrant
expects to continue to follow this strategy.

   On September 24, 1999, the Registrant acquired North East and its
subsidiaries for $10,483,000, principally in cash. North East
writes private passenger and commercial automobile as well as small
commercial and ancillary coverages in the State of Maine. American
Colonial, a wholly-owned subsidiary of North East, has not written
any insurance coverage since March 1990.

   On March 1, 2000, the Registrant completed the acquisition of
Mountain Valley Indemnity Company ("Mountain Valley") from Unitrin,
Inc. for $7.5 million in cash. Mountain Valley was incorporated in
1995 in the State of New Hampshire and writes small and mid-sized
commercial coverages in New York and all of the New England states
except Connecticut.  The Registrant believes that these
acquisitions fully establish it as a regional  commercial lines
company in New England and the Mid-Atlantic regions.

   The Registrant anticipates continuing its emphasis of the small
commercial and ancillary coverages written by Preserver in the
State of New Jersey and through newly acquired American Colonial in
New York and Mountain Valley in the States of New York,
Massachusetts, New Hampshire, Vermont, Rhode Island and Maine.
North East is expected to increase its emphasis of small commercial
coverages as well.  Motor Club and North East write PPA business in
the States of New Jersey and Maine, respectively. PPA business is
expected to increase.

   The Registrant also anticipates continued reductions in its
operating expenses, namely through the implementation of operating
efficiencies which should reduce other overhead expenditures.

   Historically, the Insurance Companies' results of operations have
been influenced by factors affecting the property and casualty
insurance industry in general and the New Jersey PPA market in
particular.  The operating results of the U.S. property and
casualty insurance industry have been subject to significant
variations due to competition, weather, catastrophic events,
regulation, general economic conditions, judicial trends,
fluctuations in interest rates and other changes in the investment
environment.

Results of Operations
---------------------
1999 COMPARED TO 1998

   On September 24, 1999 the Registrant acquired North East.
Accordingly, the consolidated results of operations include, using
the purchase method of accounting, the results of operation of
North East for the three months ended December 31, 1999. The table
below details the North East results from September 24 through
December 31, 1999:
<TABLE>
<CAPTION>
<S>                                            <C>

Insurance premiums                             $4,184,755
Net investment income                             246,204
Realized gains on sales of investments (net)       31,382
                                               ----------
Total revenues                                  4,462,341
                                               ----------
Losses and loss expenses incurred               2,373,245
Amortization of deferred policy
  acquisition costs                               981,149
Other operating expenses                          857,655
                                               ----------
Total losses and expenses                       4,212,049
                                               ----------
Income before federal income taxes                250,292
Provision for federal income taxes                 79,371
                                               ----------
Net income                                     $  170,921
                                               ==========
</TABLE>

   In addition, the Registrant incurred $800,000 in expenses related
to the acquisition of North East.  For purposes of this discussion,
the  North East results and non-recurring merger expenses are
excluded in order to afford comparability.

   Excluding these items, net income decreased $2,621,779 to
$1,634,012 in 1999 from the $4,255,791 reported in 1998. The
decrease was the result of significantly higher New Jersey PPA
losses occurring in 1999, specifically PIP (No Fault) first party
claims.  The provision for current year claims was $2,301,000
higher in 1999 than 1998.  The Company believes that this
development is attributable to the 1999 implementation of the New
Jersey Automobile Cost Reduction Act ("AICRA"), which was designed
to reduce both premium and losses in that line of business in that
State.

   The Registrant's net income was also reduced by $511,000 of
losses and expenses incurred as a result of Hurricane Floyd which
struck New Jersey in September 1999 and $217,000 in losses from
severe storms which struck New Jersey in September 1998.

   Insurance premiums declined by $1,553,000 or 3% in 1999 as
compared to 1998, due principally to the rate rollback provisions
of AICRA which were implemented commencing in 1999.  These amounts
were offset by increases in Preserver insurance premiums,
particularly those generated by its commercial lines business.  The
following table details the annual changes in the 1999 Insurance
Premiums and underlying in force policy counts as compared to 1998:
<TABLE>
<CAPTION>
<S>                    <C>           <C>       <C>          <C>

                                                    Change in
                           Change in            Policy      Change
Class of Business     Net Premium   Percent    Count     in Percent
-----------------     ---------------------    --------------------
Private Passenger
 Automobile          ($2,069,000)     (5%)         14          0%
Commercial Lines         537,000       7%         404          7%
Personal Property        (21,000)      0%        (268)        (2%)
                     -----------      --         ----         --
     Total           ($1,553,000)     (3%)        150          0%
                     ===========      ===        ====         ==
</TABLE>

   As the table identifies, the decrease in PPA business written by
Motor Club was attributable to the rate rollback and not a
significant change in the number of policies inforce at December
31, 1999 as compared to 1998.  The increase in Commercial Lines
insurance premiums is reflective of the increased number of
policies that Preserver wrote during 1999.  Personal Property
insurance premiums written by Preserver reflect modest amounts of
new business written offset by a slightly higher attrition rate on
existing policies in 1999 as compared to 1998.

   Net investment income increased $530,000 or 12% resulting from an
increase in invested assets. Average assets (at amortized cost)
were $73,420,000 during 1999 compared to $68,374,000 during 1998.
The average rate of return on invested assets increased to 6.6% in
1999 from 6.3% in 1998.

   Losses and loss expenses increased by $1,778,217 or 5%, which
produced the following loss and loss expense ratios:

             1999     1998
             -----    -----
Motor Club   76.8%     71.6%
Preserver    66.7%     59.6%
             ----      ----
             74.1%     68.6%
             ====      ====

   As noted, the increase in the Motor Club loss ratio was largely
driven by significantly higher PIP (No Fault) first party medical
claims occurring in 1999 ("Accident Year 1999").  The provision for
Accident Year 1999 PPA claims was $1,723,000 higher in 1999 as
compared to 1998, accounting for 75% of the consolidated increase.
These losses did not increase until after the rate rollback and
other provisions of AICRA were implemented.  The Registrant
believes that claimants filing more severe claims on an accelerated
basis than historical patterns dictated caused this increase.  The
Registrant further believes that this acceleration was caused by
the implementation of regulations tightening the fee schedule,
allowing pre-certification methodologies and permitting a revised
arbitration system, all of which should serve to ultimately reduce
PIP claim costs.

   While this acceleration increased the level of reported losses
incurred by Motor Club in 1999, the Registrant reserved for its
projected ultimate losses for Accident Year 1999 in this coverage,
generally using historical loss development patterns which indicate
longer development patterns than those which may occur in Accident Year 1999.
Therefore the Registrant increased the amount of incurred but not
reported reserves for this coverage by $317,000 or 19% in 1999 as
compared to 1998.

   The Registrant does not believe that the Motor Club Accident Year
1999 loss experience is indicative of longer-term trends in PPA.
The Registrant expects to closely monitor loss development patterns
in 2000 and beyond to ensure that the level of reserves carried for
PPA is adequate and appropriate as dictated by actual loss
development.

   In addition, elements of AICRA and other statutory amendments
have yet to be implemented, and as such, may still have an impact
on Motor Club's operations. The New Jersey PPA market continues to
be subject to volatility, and consistent with the Registrant's
long-stated goal to increase its identification as a provider of
small commercial lines insurance and expand and diversify its
operations outside the State of New Jersey, the Registrant is
reviewing strategies to improve the profitability of its PPA
business and to otherwise add more value to its shareholders.

   The net loss ratio for Preserver in 1998 was historically low;
therefore the increase in Preserver's net loss ratio in 1999 as
compared to 1998 was partially caused by the net loss ratios
returning to more representative experience.  However, Preserver's
direct loss ratio actually declined in 1999 as compared to 1998, as
the table below shows:

                      1999    1998
                      ----    ----
Direct Loss Ratio     56.7%    69.2%
Ceded Loss Ratio      16.7%   117.2%
                      ----    -----
Net Loss Ratio        66.7%   59.6%
                      ====    ====

   With Preserver's reinsurance rates essentially unchanged during
1999 as compared to 1998, the remainder of the increase in the net
loss ratio was attributable to an increased number of severe losses
that did not have any reinsurance recoveries, as compared to 1998.
Given the relatively small size of the Preserver book of business,
a limited number of severe losses can adversely affect Preserver's
net loss ratio results, depending on whether these losses were
severe enough to generate a reinsurance recovery. There were no
trends or indications in 1999 that Preserver's reinsurance programs
were ineffective or that loss experience was adverse.

   The increase in amortization of deferred policy acquisition costs
relates to the amortization of expenses associated with the Policy
Term Conversion which began in 1998 and was completed in 1999.

   The 30% increase in other operating expenses is primarily due to
the write off of uncollectible premium balances, which should be
non-recurring. Expenses for 1999 also include  $800,000 of general
merger and acquisition expense and $448,000 of interest expense.

   The Registrant continues to place emphasis on reducing overhead
expenses relative to premium volume. Though the expense ratio
increased to 34.3% in 1999 from 29.1% in 1998, the increase is
primarily related to nonrecurring events. The Policy Term
Conversion, completed in 1999, will provide greater consistency in
the amount of expense amortized related to acquisition expenses in
2000. Expenses associated with merger and acquisition efforts, by
definition are included in the expense ratio, and are part of the
Registrant's ongoing efforts to expand and diversify its operations
beyond the State of New Jersey.

   The Registrant's book value decreased to $12.97 per share at
December 31, 1999 from $13.15 per share at December 31, 1998.

   The principal sources of the net decrease were: (1) net income of
$1,277,000 or $.60 per share described previously; (2) an increase
of $1,420,500 or $.67 per share due to the decrease of the minimum
required pension liability for the defined benefit pension plan
sponsored by the Registrant as a result of asset gains and higher
interest rates; offset by (3) a decrease of $2,894,600 or $1.36 per
share due to the decrease (net of applicable deferred taxes) in the
fair value of fixed maturity investments accounted for as
available-for-sale securities under SFAS No. 115 ("Accounting for
Certain Investments in Debt and Equity Securities").

   As a company with insurance subsidiaries that invests substantial
sums in fixed income securities, the Registrant is accustomed to
fluctuations in the value of its fixed income investments.  As
noted, it has also identified one hundred percent of those
investments as available for sale pursuant to SFAS 115.
Accordingly, changes in the value of those investments are recorded
as other comprehensive income.  Because the Registrant and the
Insurance Companies' investment portfolios are composed completely
of securities which are generally highly liquid (i.e., U.S.
government securities and investment grade corporate bonds), and
that no default notices have been received on any of those
securities, there are no grounds to believe that the unrealized
losses incurred in 1999 are other than temporary.  In addition, the
combination of the duration of the portfolio being sufficiently
short (approximately 3.60 years at December 31, 1999), combined
with the highly liquid nature of those securities and the
Registrant's proclivity to hold those bonds to maturity (although
they are classified as available to sale), the par value of those
bonds should be fully realized at maturity, resulting in those
unrealized losses being temporary.

   In addition, the Registrant generally believes that the longer-
term trend for future movements in interest rates is toward lower
interest rates, which would positively effect the value of fixed
income investments and reduce those unrealized losses and possibly
convert those losses to unrealized gains, which were experienced as
recently as twelve to eighteen months ago.  The Registrant believes
the combination of economic circumstances, which should result in
slower overall economic growth, modest inflation and real long-term
interest rates that remain historically high, all combines to
result in lower longer-term interest rate trends.  The Registrant
therefore would expect the unrealized losses experienced in 1999 to
be temporary.

   Book value was also reduced by the dilutive effects ($.09 per
share) of the issuance of 7,958 shares of common stock upon the
acquisition of North East.

1998 COMPARED TO 1997

       The 22% increase in net income was largely due to the
elimination of FAIR Act assessments paid through 1997, when
$971,000 in expenses were incurred for this assessment.  Absent the
FAIR Act assessments in 1997, pre-tax income increased $118,000 or
2% in 1998 as compared to 1997, due to continuing improvements in
the combined ratio and higher revenues for Preserver, higher
investment income, offset by higher combined ratios for Motor Club
due to the increasing effects of the new PPA business which it has
written.

       Insurance premiums increased by $2,298,000 or 5% during the
year, due primarily to commercial lines premiums written by
Preserver and savings on reinsurance programs. The following table
details the annual increases in the 1998 Insurance Premiums and
underlying in force policy counts as compared to 1997:
<TABLE>
<CAPTION>
    <S>                      <C>            <C>     <C>      <C>

                                Increase in           Change in
                                  Net               Policy
  Class of Business           Premium    Percent    Count   Percent
  -----------------          -------------------    ---------------
  Private Passenger
    Automobile               $  659,000     2%      (36)     0%
  Commercial Lines              951,000    14%      476      9%
  Personal Property             688,000    14%      140      1%
                             ----------    --       ---     --
       Total                 $2,298,000     5%      580      1%
                             ==========    ==       ===     ==
</TABLE>

       The Registrant continued to write new amounts of personal
lines business, both PPA by Motor Club and Homeowners by Preserver.
However, the growth in those respective lines of business was at
a slower rate than the Commercial Lines business written by
Preserver.

       Net investment income increased $710,000 or 20% resulting from
an increase in invested assets. Average invested assets (at
amortized cost) were $68,374,000 during 1998 as compared to
$56,239,000 during 1997. The increase in insurance premiums noted
above, combined with the Note Payable discussed in Liquidity and
Capital Resources, provided the increase in invested assets. Other
revenues decreased $53,000 or 24%, due to declines in mortgage loan
revenue, servicing fee income and other miscellaneous income items.

       Losses and loss expenses incurred increased by $3,338,000 or
10%, which produced the following loss and loss expense ratios:

                     1998        1997
                     ----        ----
Motor Club           71.6%       66.8%
Preserver            59.6%       59.7%
                     ----        ----
   Total             68.6%       65.1%
                     ====        ====

       Despite the higher loss and loss expense ratio on a
comparative basis, no significant adverse trends were experienced
or identified during 1998.

       The increase in Motor Club's PPA loss and loss expense ratio
was largely due to the new business written by Motor Club since
January 1995 which constituted 53% of Motor Club's total PPA
business as of December 31, 1998.

       As the Registrant continues to write additional new PPA
business, PPA loss and loss expense ratios should generally
continue to trend higher, although within levels that should remain
profitable. However, the effects of the 1997 and 1998 PPA reforms
continue to be uncertain as to their ultimate outcome.  As noted
previously, the Registrant believes that the collective effect of
these reforms to be a modest net negative.  During 1999 however,
PPA revenue may decline on a per policy basis and its combined
ratio may increase as a result of the reforms.

       Preserver continues to experience stable loss and loss
expenses and loss ratios.  During September 1998, severe storms
struck New Jersey, resulting in $217,000 in losses to Preserver
which increased its loss ratio by 2 points during 1998.  Frequency
of losses remains at acceptable levels for all lines of Preserver's
business.

       More than half of the $1,787,000 or 12% decrease in
acquisition costs was attributable to the 1998 elimination of the
FAIR Act assessments previously paid, which totaled $971,000 in
1997. The remainder of the decrease was attributable to the
temporary effects of the Policy Term Conversion, which has resulted
in additional expenses being deferred to reflect the increase in
unearned premiums through December 31, 1998.  This circumstance was
temporary as noted, and the amount of expense amortized in 1999
related to acquisition expenses was expected to rise in conjunction
with the completion of the Policy Term Conversion.

       The $343,000 or 20% increase in other operating expenses was
due to increased expenditures related to the Registrant's merger
and acquisition efforts along with expenditures to comply with the
PPA reforms being implemented in New Jersey.

       This decrease in net expenses is the realization of the
Registrant's previously stated strategy to increase its revenue
while decreasing its overhead expenditures and resulted in a
decrease in the expense ratio to 29.1% in 1998 as compared to 31.4%
in 1997 (as adjusted for the FAIR Act assessments described above).

       The Registrant expects to reduce its expenses and expense
ratio further in the long-term by pursuing further automation of
its policy processing functions, particularly as relates to data
provided by and to its independent agents.  During 1997, the
Registrant converted its information systems to a smaller, more
contemporary computing platform which will allow for more efficient
operations and lower maintenance costs.  The Registrant expects to
continue the efforts made previously to reduce all unnecessary
overhead expenditures.

       However, during 1999, the aforementioned completion of the
Policy Term Conversion, in conjunction with the rate rollback
required under the 1998 PPA reforms, increased the Registrant's
expense ratio.  Although the Registrant continues to anticipate
that the net impact of these reforms will be a modest net negative,
the impact of these reforms on premiums, losses, expenses or
related financial ratios cannot be completely quantified.

       The Registrant's book value increased to $13.15 per share at
December 31, 1998 from $10.98 per share at December 31, 1997.  The
principal sources of the net increase were:  (1) net income of
$4,256,000 or $2.02 per share described previously; (2) $159,400 or
$.08 decrease per share due to the increase of the minimum required
pension liability for the defined benefit pension plan sponsored by
the Registrant; and (3) $668,400 or $.32 per share increase due to
the increase (net of applicable deferred taxes) in the fair value
of the fixed maturity investments accounted for as available-for-
sale securities under SFAS No. 115 ("Accounting for Certain
Investments in Debt and Equity Securities").

       These increases in book value were offset by the dilutive
effects ($.09 per share) of the issuance of 22,000 shares of common
stock upon exercise of employee stock options granted under the
1987 and 1992 Stock Option plans.  See Note P of the Notes for
additional information regarding the Registrant's stock option
plans.

       The increase in the minimum pension liability was the result
of a decrease in the discount rate used to compute Plan liabilities
to 6.75% at December 31, 1998, from 7.25% at December 31, 1997,
offset by the performance of the Plan assets in excess of the
expected return on these assets. See Note L of the Notes for
additional information regarding the Registrant's minimum pension
liability.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

       The Insurance Companies' need for liquidity arises primarily
from the obligation to pay claims.  The primary sources of
liquidity are premiums received, collections from reinsurers and
proceeds from investments.

       Except as noted in Motor Club's PPA business, reserving
assumptions and payment patterns of the Insurance Companies did not
materially change from the prior year and there were no unusually
large retained losses resulting from claim activity.  Unpaid losses
are not discounted.

OPERATING AND INVESTING ACTIVITIES

       Net cash provided by operating activities was $910,000,
$10,547,000 and $10,389,000 in 1999, 1998 and 1997, respectively.
The lower amount for 1999 is attributable to the reduction in
insurance premiums in 1999 as a result of the New Jersey PPA rate
rollback and increased payment of PIP losses for the 1999 Accident
Year.

       Net cash utilized in investing activities was $10,313,000,
$11,054,000 and $13,886,000 in 1999, 1998 and 1997, respectively.
The amounts used in 1999 reflect the investment of cash provided by
operating and finance activities.  The amounts used in 1998 and
1997 reflect the investment of cash provided by operating
activities.

       Aside from the changes in operating expenditures noted
previously, particularly the expenditures associated with the
acquisition of North East, no unusual or nonrecurring operating
expenditures have been incurred over this period.

       The payout ratio of losses, other than PIP, has not fluctuated
substantially over this period.  Cash flow from operations is
expected to increase as the Registrant increases its revenue
through additional premium writings, specifically commercial lines
and PPA, and continues to reduce its expenses and expense ratio.
This will be offset somewhat by the development and payment of
losses on the new PPA which Motor Club is writing.

FINANCING ACTIVITIES

       The Registrant paid no dividend on its common stock in 1999,
1998 and 1997.

       In connection with its acquisition of North East, on September
23, 1999, the Registrant issued $10 million of Convertible
Subordinated Debentures ("Debentures"), in one series, under a plan
previously approved by its shareholders.  For more information on
the Debentures, please refer to Note H in the Notes to Consolidated
Financial Statements.

       On December 27, 1999, the Registrant repaid the $3 million
borrowed from Dresdner Bank, AG ("Dresdner") in September 1998.  As
of September 30, 1999, the Registrant had been in violation with
one covenant and one term of its Loan Agreement with Dresdner.  The
Registrant had received a waiver of both conditions from Dresdner
and the parties mutually agreed to have the loan repaid and the
facility closed.

       In connection with its acquisition of Mountain Valley, on
February 29, 2000 the Registrant borrowed $11.5 million ("Debt")
from its three Executive Committee members, who presently own 42%
of the Registrant's outstanding shares.  For more information on
the Debt, please refer to Note T in the Notes to Consolidated
Financial Statements.

RECENT ACCOUNTING PRONOUNCEMENTS

       In October 1998, AcSEC issued SOP 98-7, "Deposit Accounting:
Accounting for Insurance and Reinsurance Contracts That Do Not
Transfer Insurance Risk."  This Statement identifies several
methods of deposit accounting and provides guidance on the
application of each method.  This Statement classifies insurance
and reinsurance contracts for which the deposit method is
appropriate as contracts that (i) transfer only significant timing
risk, (ii) transfer only significant underwriting risk, (iii)
transfer neither significant timing nor underwriting risk, and (iv)
have an indeterminate risk. This Statement is effective for
financial statements for the year commencing January 1, 2000.
Restatement of previously issued financial statements is not
permitted.  The Registrant does not believe the Insurance
Companies' reinsurance contracts would require the deposit method
of accounting.

Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------
               See Item 14 (a).

Item 9.  Disagreements with Accountants on Accounting and Financial
-------------------------------------------------------------------
Disclosures
-----------
       None

                                  PART III
                                  --------
     Items 10, 11, 12 and 13 are omitted from this Report on
Form 10-K; the Registrant shall file a definitive proxy statement
pursuant to Regulation 14A not later than May 1, 2000, which is 120
days after the close of the fiscal year of the Registrant.

                                   PART IV
                                   ------
Item 14.  Exhibits, Financial Statements Schedules and Reports on
-----------------------------------------------------------------
Form 8-K
--------
(a)    (1)     The following financial statements are included in Part
               II, Item 8:

                                                Page (s)
                                                --------
Report of Independent Accountants
Consolidated Balance Sheets at December 31,
   1999 and 1998
Consolidated Statements of Operations for
  the years ended December 31, 1999, 1998
  and 1997
Consolidated Statements of Shareholders'
  Equity for the years ended December 31,
  1999, 1998 and 1997
Consolidated Statements of Cash Flows
 for the years ended December 31, 1999,
 1998 and 1997
Notes to Consolidated Financial Statements

       (2)     The following financial statement schedules for the
               years 1999, 1998 and 1997 (pursuant Rule 5-04 of
               Regulation S-X) are presented herewith:

Schedule I -  Summary of Investments- Other than
               Investments in Related Parties*
Schedule II - Condensed Financial Information
               of Registrant
Schedule IV - Reinsurance*
Schedule V -  Valuation and Qualifying
               Accounts and Reserves
Schedule VI - Supplemental Information
              Concerning Property/Casualty
              Insurance Operations*

*Presented pursuant to Rule 7-05 of Regulation S-X.

Schedules other than those mentioned above are omitted because
the conditions requiring their filing do not exist, or because
the information is given in the financial statements filed
herewith, including the notes thereto.

         (b)  Exhibits:

Exhibit No.         Description                      Reference

 2-a        Agreement and Plan of Merger        Exhibit 2 to Motor Club
            between Motor Club of America and   of America's Form 8-K
            North East Insurance Company,       dated March 17, 1999
            dated as of March 16, 1999

 3-a        Restated and Amended Certificate    Exhibit 1(i) to Motor
            of Incorporation of Motor Club of   Club of America's
            America, dated June 12, 1972        Annual Report on Form
                                                10-K for fiscal year
                                                ended December 31, 1972

 3-b        By-Laws of Motor Club of America,   Exhibit 3-l to Motor
            effective March 15, 1989            Club of America's
                                                Annual Report on Form
                                                10-K for fiscal year
                                                ended December 31, 1988

 3-c        By-law Amendment of Motor           Exhibit 3-m to Motor
            Club of America, effective          Club of America's
            August 3, 1994                      Form 8-K dated
                                                July 21, 1994

 4-a        Specimen Certificate                Exhibit 4 to File
            representing Common Stock,          No. 2-39996 on
            $.50 par value                      Form S-1

10-a        Motor Club of America 1987 Stock    Exhibit 10-o to Motor
            Option Plan                         Club of America's
                                                Annual Report on Form
                                                10-K for fiscal year
                                                ended December 31,
                                                1987

10-b        Specimen copy of Motor Club of      Exhibit 10-p to Motor
            America 1987 Stock Option           Club of America's
            Agreement                           Annual Report on Form
                                                10-K for fiscal year
                                                ended December 31, 1987

10-c        Motor Club of America 1992          Exhibit A to Motor
            Stock Option Plan                   Club of America's
                                                Proxy Statement for
                                                fiscal year ended
                                                December 31, 1991

10-d        Motor Club of America 1999          Exhibit A to Motor
            Stock Option Plan                   Club of America's
                                                Proxy Statement for
                                                the fiscal year ended
                                                December 31, 1998

10-e        Specimen copy Motor Club of         Exhibit 10-r to
            America 1992 Stock Option           Motor Club of
            Plan Agreement                      America's Annual
                                                Report on Form 10-K
                                                for fiscal year
                                                ended December 31, 1992

10-f        Settlement Agreement between        Exhibit 99 to Motor
            Motor Club of America et als.       Club of America's
            and Receiver of MCA Insurance       Form 8-K dated
            Company in Liquidation et als.      December 20, 1994
            and related documents

10-g        Order dated December 30, 1994       Exhibit 99-C to Motor
            Approving Settlement between        Club of America's
            Motor Club of America et als and    Form 8-K dated
            Receiver of MCA Insurance           December 30, 1994
            Company in Liquidation et als
            and related conformed documents

10-h       Stock Purchase Agreement             Exhibit 99-F to Motor
           between Motor Club of America        Club of America's
           and JVL Holding Properties, Inc      Form 8-K dated
                                                December 2, 1996

10-i        Agreement dated December 2, 1996    Exhibit 99-G to Motor
            between Motor Club of America       Club of America's
            and Motor Club of America           Form 8-K dated
            Enterprises, Inc                    December 2, 1996

10-j        $3 Million Senior Unsecured         Exhibit 10-i to Motor
            Revolving Credit Facility between   Club of America's Annual
            Motor Club of America and Dresdner  Report on Form 10-K
            Bank, AG and related documents      for fiscal year ended
                                                December 31, 1998

10-k        Purchase Agreement dated as of      Exhibit 10.1 to Motor
            December 16, 1999 between Valley    Club of America's Form
            Insurance Company and Motor Club    8-K dated December 16,
            of America                          1999

10-l        Specimen copy of Form of            Exhibit 1 to Form 13D of
            Convertible Subordinated            Archer McWhorter dated
            Debentures                          September 23, 1999

10-m        Specimen copy of Promissory Note    Page

22          Subsidiaries of Motor Club of
            America                             Page

       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.

                                             MOTOR CLUB OF AMERICA
                                                    (Registrant)




Dated:  March 29, 2000                       By  s/Stephen A. Gilbert
                                             Stephen A. Gilbert
                                             President, Chief Executive
                                             Officer, General Counsel
                                             and Director

Dated:  March 29, 2000                       By  s/Patrick J. Haveron
                                             Patrick J. Haveron
                                             Executive Vice President,
                                             Chief Executive Officer, Chief
                                             Financial Officer and Chief
                                             Accounting Officer

     Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.


Dated:  March 29, 2000                       By  s/Archer McWhorter
                                             Archer McWhorter
                                             Chairman of the Board
                                             and Director


Dated:  March 29, 2000                       By  s/Alvin E. Swanner
                                             Alvin E. Swanner
                                             Director


Dated:  March 29, 2000                       By  s/William E. Lobeck,Jr.
                                             William E. Lobeck, Jr.
                                             Director



                      MOTOR CLUB OF AMERICA

       Exhibit (22) Subsidiaries of the Registrant.

       The following are the subsidiaries of the Registrant as of
March 24, 2000:
                                                                   State of
               Name                                              Organization

       Motor Club of America Insurance Company                     New Jersey

       Preserver Insurance Company                                 New Jersey

       North East Insurance Company                                Maine

       American Colonial Insurance Company                         New York

       Mountain Valley Insurance Company                           New Hampshire































                             REPORT OF INDEPENDENT ACCOUNTANTS

                                     ____________


To the Board of Directors of
Motor Club of America:


       In our opinion, the consolidated financial statements listed
in the index appearing under Item 14(a)(1) on page 59 present
fairly, in all material respects, the financial position of Motor
Club of America and Subsidiaries at December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the
United States. In addition, in our opinion, the financial statement
schedules listed in the index appearing under Item 14(a)(2) on page
59 present fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements.  These financial statements and
financial statement schedules are the responsibility of the
Company's management; our responsibility is to express an opinion
on these financial statements and financial statement schedules
based on our audits.  We conducted our audits of these statements
in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



PricewaterhouseCoopers LLP



New York, New York
March 14, 2000.

<TABLE>
<CAPTION>


                      MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                                    __________

   <C>                                     <C>             <C>

                                                  December 31,
                                             1999            1998
        ASSETS
Investments:
 Fixed maturity securities, available-
   for-sale, at fair value (amortized
   cost $80,854,764 -1999 and
   $67,676,411 -1998)                      $ 78,242,322    $ 69,594,904
 Equity securities, at fair value
   (cost $43,346 -1999)                          57,053         -
 Mortgage loans on real estate - at the
   unpaid principal amount                      153,616         361,038
 Short-term investments, at fair value
   which approximates cost                    8,528,858       5,995,299
          Total investments                  86,981,849      75,951,241
Cash and cash equivalents                       443,733       2,773,427
Premiums receivable                          27,132,246      20,401,069
Reinsurance recoverable on paid
 and unpaid losses and loss expenses         21,163,574      19,234,277
Notes and accounts receivable                   212,598         125,444
Deferred policy acquisition costs            10,560,763       8,708,329
Fixed assets - at cost, less accumulated
  depreciation                                1,858,621       1,671,902
Federal income tax recoverable                   54,026          26,724
Prepaid reinsurance premiums                  1,485,450       1,015,581
Deferred tax asset                            4,128,766         -
Goodwill, less accumulated amortization       1,745,848         -
Other assets                                  1,470,744       1,104,782
          Total Assets                     $157,238,218    $131,012,776
</TABLE>
<TABLE>
<CAPTION>
<S>                                        <C>             <C>

        LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Losses and loss expenses                   $ 70,983,383    $ 58,335,143
Unearned premiums                            38,698,028      30,733,144
Commissions payable                           2,802,516       2,835,408
Accounts payable                              1,397,263         875,327
Accrued expenses                              3,112,157       4,763,950
Drafts outstanding                            2,685,423       1,688,835
Note payable                                    -             3,000,000
Convertible subordinated debentures          10,000,000         -
Deferred tax liability                         -                957,440
    Total liabilities                       129,678,770     103,189,247

Shareholders' Equity:
Common Stock, par value $.50 per share:
 Authorized - 10,000,000 shares;
 issued and outstanding shares 2,124,387
 - 1999 and 2,116,429 - 1998                  1,062,194       1,058,215
Paid in additional capital                    2,066,089       1,996,954
Accumulated other comprehensive loss         (5,036,515)     (3,422,387)
Retained earnings                            29,467,680      28,190,747
    Total Shareholders' Equity               27,559,448      27,823,529
    Total Liabilities and
      Shareholders' Equity                 $157,238,218    $131,012,776

</TABLE>

                       The accompanying notes are an integral part of
                          these consolidated financial statements.

<TABLE>
<CAPTION>
                               MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                             __________
<S>                                   <C>            <C>           <C>

                                      For the years ended December 31,
                                      1999           1998          1997

  REVENUES

Insurance premiums (net of premiums
 ceded totaling $8,358,946,
 $6,776,174 and $7,151,207)       $55,807,330    $53,175,663   $50,877,890
Net investment income               5,080,939      4,304,507     3,594,509
Realized gains on
 sales of investments (net)            36,040         28,545         -
Other revenues                        143,410        171,171       224,271
     Total revenues                61,067,719     57,679,886    54,696,670
</TABLE>
<TABLE>
<CAPTION>

<S>                                 <C>            <C>           <C>

  LOSSES AND EXPENSES

Losses and loss expenses
  incurred (net of reinsurance
  recoveries totaling $1,544,026,
  $4,736,671 and $3,650,474)       40,631,053     36,479,591    33,141,691
Amortization of deferred
  policy acquisition costs         14,305,501     13,375,221    15,162,320
Other operating expenses            4,780,902      2,105,668     1,762,192
Merger-related expenses               800,000        -             -
Interest expense                      448,117        -             -
     Total losses and expenses     60,965,573     51,960,480    50,066,203
Income before Federal income
  taxes                               102,146      5,719,406     4,630,467
Benefit (provision) for Federal
  income taxes: current                21,865       (193,121)      (37,573)
                deferred            1,152,922     (1,270,494)   (1,110,192)
Total Federal income tax            1,174,787     (1,463,615)   (1,147,765)

Net income                        $ 1,276,933   $  4,255,791   $ 3,482,702

Net Income per common share:
Basic                                   $ .60          $2.02         $1.68
Diluted                                 $ .60          $2.01         $1.66

Weighted average common and potential common shares outstanding:

Basic                               2,117,912      2,108,722     2,074,473
Diluted                             2,121,697      2,121,366     2,102,395
</TABLE>

                           The accompanying notes are an integral part of
                              these consolidated financial statements.

<TABLE>
<CAPTION>


                               MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                              ________
   <S>                             <C>         <C>           <C>

                                    Common Stock (a)          Paid-In
                                      Shares                 Additional
                                    Issued        Amount      Capital

   Balance at December 31, 1996    2,047,504   $1,023,752    $1,730,508
Net income
Other comprehensive income, net
 of tax:
Unrealized investment gains, net
  of reclassification adjustment
Minimum pension liability
  adjustment
Comprehensive income
Common stock issued                   46,925       23,463       219,696
   Balance at December 31, 1997    2,094,429    1,047,215     1,950,204

Net income
Other comprehensive income, net
 of tax:
Unrealized investment gains, net
  of reclassification adjustment
Minimum pension liability
  adjustment
Comprehensive income
Common stock issued                   22,000       11,000        46,750
   Balance at December 31, 1998    2,116,429    1,058,215     1,996,954

Net income
Other comprehensive income, net
 of tax:
Unrealized investment losses, net
  of reclassification adjustment
Minimum pension liability
  adjustment
Comprehensive loss
Common stock issued                    7,958        3,979        69,135
   Balance at December 31, 1999    2,124,387   $1,062,194    $2,066,089
</TABLE>
<TABLE>
<CAPTION>

                               MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                               _______
   <S>                                 <C>              <C>          <C>

                                      Accumulated Other
                                      Comprehensive     Retained
                                       Income (Loss)(b)   Earnings      Total

   Balance at December 31, 1996        ($4,420,863)     $20,452,254  $18,785,651
Net income                                                3,482,702    3,482,702
Other comprehensive income, net
 of tax:
Unrealized investment gains, net
  of reclassification adjustment           327,721                       327,721
Minimum pension liability
  adjustment                               161,800                       161,800
Comprehensive income                                                   3,972,223
Common stock issued                                                      243,159
   Balance at December 31, 1997         (3,931,342)      23,934,956   23,001,033

Net income                                                4,255,791    4,255,791
Other comprehensive income, net
 of tax:
Unrealized investment gains, net
  of reclassification adjustment           668,355                       668,355
Minimum pension liability
  adjustment                              (159,400)                     (159,400)
Comprehensive income                                                   4,764,746
Common stock issued                                                       57,750
   Balance at December 31, 1998         (3,422,387)      28,190,747   27,823,529

Net income                                                1,276,933    1,276,933
Other comprehensive income, net
 of tax:
Unrealized investment losses, net
  of reclassification adjustment       (3,034,628)                    (3,034,628)
Minimum pension liability
  adjustment                            1,420,500                      1,420,500
Comprehensive loss                                                      (337,195)
Common stock issued                                                       73,114
  Balance at December 31, 1999        ($5,036,515)      $29,467,680  $27,559,448
</TABLE>

(a)    Par value $.50 per share; authorized - 10,000,000 shares.
(b)    Net of deferred taxes.

The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
<CAPTION>


                 MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
  <S>                                  <C>            <C>           <C>
                                                For the years ended December 31,
                                             1999           1998          1997
  Net income                           $ 1,276,933    $ 4,255,791   $ 3,482,702

  Adjustments to reconcile net income
    to cash provided by
    operating activities:
    Depreciation expense                    639,119        527,644       461,845
    Amortization of bond
      premium - net                          50,354         35,375       103,308
    Amortization of goodwill                 21,156         -             -
    Gain on sale of investments             (36,040)       (28,545)       -
    Deferred tax provision (benefit)     (1,155,409)     1,270,494     1,110,192

  Changes in:
    Premiums receivable                     575,790    (12,591,502)       (7,984)
    Notes and accounts receivable           (87,154)          (775)      124,206
    Deferred policy acquisition costs       434,040     (2,849,679)      (97,154)
    Federal income tax - current            (18,060)       (39,575)      (13,118)
    Reinsurance recoverable on paid and
      unpaid losses and loss expenses     1,071,741       (568,211)    3,101,263
    Prepaid reinsurance premiums            353,015       (320,336)      450,699
    Other assets                             59,760        116,941      (100,563)
    Losses and loss expenses              1,435,399      8,088,365     2,579,922
    Unearned premiums                    (1,652,130)    11,447,387       351,557
    Commissions payable                     (32,892)     1,512,739      (121,991)
    Accounts payable                        521,936        312,874       (33,332)
    Accrued expenses                     (3,544,396)      (914,385)   (1,089,809)
    Drafts outstanding                      996,588        292,620        86,778
  Total cash provided by (utilized in)
    operating activities                   (909,750)    10,547,222    10,388,521

</TABLE>

                      The accompanying notes are an integral part of
                          these consolidated financial statements.
<TABLE>
<CAPTION>
                     MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (CONTINUED)
    <S>                                  <C>           <C>            <C>

                                             For the years ended December 31,
                                            1999             1998          1997

  Investing activities:
  Proceeds from:
    Maturities of fixed maturities       8,074,333     17,444,834     4,852,707
    Sales of fixed maturities            1,205,824      2,000,000     2,700,000
    Sale of equity securities              630,612        -             -
    Payments received on mortgage
      loan principal                       207,422        161,517       111,937
    Sale or maturities of short-
      term investments                  89,390,755    245,390,264    86,804,893
  Purchase of:
    Fixed maturities                    (9,343,352)   (31,304,235)  (15,927,470)
    Short-term investments             (87,656,130)  (244,133,789)  (92,206,193)
    Acquisition of North East,
      net of cash acquired             (12,200,953)       -             -
    Fixed assets                          (621,069)      (612,897)     (221,741)
  Total cash utilized in
   investing activities                (10,312,558)   (11,054,306)  (13,885,867)
  Financing activities:
    Convertible subordinated
     debentures                         10,000,000        -             -
    Note payable                        (3,000,000)     3,000,000       -
    Common stock issued                     73,114         57,750       243,159
  Total cash provided by financing
    activities                           7,073,114      3,057,750       243,159
  Net increase (decrease) in cash       (2,329,694)     2,550,666    (3,254,187)
  Cash and cash equivalents
    at beginning of year                 2,773,427        222,761     3,476,948
  Cash and cash equivalents
    at end of year                     $   443,733   $  2,773,427  $    222,761
</TABLE>

Supplemental Disclosures of Cash Flow Information

        (1)    Total interest paid was $448,782 (1999) $60,389 (1998), and
               $8,890  (1997).
        (2)    Total Federal income taxes paid was $0 (1999), $212,738
               (1998), and $50,691 (1997).

                    The accompanying notes are an integral part of
                       these consolidated financial statements.


                            MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note A - Summary of Significant Accounting Policies:

       (a)     Basis of Presentation and Principles of Consolidation:

               The consolidated financial statements of Motor Club of
               America (the "Company") include its accounts and those of
               its directly or indirectly wholly-owned subsidiary
               companies.  The financial statements have been prepared
               on the basis of generally accepted accounting principles
               ("GAAP").  The preparation of financial statements in
               conformity with these practices requires management to
               make estimates and assumptions that affect the reported
               amounts of assets and liabilities and disclosure of
               contingent assets and liabilities at the date of the
               financial statements and the reported amounts of revenues
               and expenses during the period.  Actual results could
               differ from those estimates.

               The Company's insurance subsidiaries, Motor Club of
               America Insurance Company ("Motor Club"), Preserver
               Insurance Company ("Preserver"), North East Insurance
               Company ("North East") and its subsidiary American
               Colonial Insurance Company ("American Colonial") are
               collectively referred to as the "Insurance Companies".
               All material intercompany items and transactions have
               been eliminated in consolidation.  With respect to North
               East, certain accounts have been reclassified in the
               financial statements to conform to the Company's
               presentation.

       (b)     Nature of Operations:

               The Company is a New Jersey corporation which owns the
               Insurance Companies. The Company acquired North East and
               its subsidiaries on September 24, 1999; see Note B for
               more information on this transaction.  The Insurance
               Companies engage in property and casualty insurance,
               principally private passenger automobile, small
               commercial and homeowners insurance, produced by
               independent agents. The Company generates substantially
               all of its revenues from its insurance operations.


                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note A - Summary of Significant Accounting Policies (Continued):

               Motor Club and Preserver's operations are in the State of
               New Jersey.  North East's operations are in the State of
               Maine.  American Colonial, which has not written any
               business since March 1990, plans to recommence operations
               in the State of New York in 2000.

       (c)     Insurance Premiums:

               Insurance premiums are credited to income by the monthly
               pro rata method over the terms of the contracts.
               Beginning July 1, 1998, Motor Club began converting its
               contracts for private passenger automobile insurance from
               six month to twelve month policies ("Policy Term
               Conversion").  While the Policy Term Conversion
               temporarily increased, for a one year period commencing
               July 1, 1998, the amount of premiums written by Motor
               Club, it did not effect the amount of premiums earned.
               Insurance contracts for policies other than private
               passenger automobile are for terms of twelve months.

       (d)     Investments:

               All of the Company's fixed maturity and equity securities
               are classified as available-for-sale securities, and are
               therefore reported at fair value, with unrealized gains
               and losses excluded from earnings and reported as a
               separate component of shareholders' equity, net of
               applicable deferred taxes.

               The Company does not invest in, hold or issue any
               derivative financial instruments.

               Premium and discount amounts are amortized into income
               based on the stated contractual life of the securities.
               The Company recognizes income for the mortgage-backed and
               asset-backed bond portion of its fixed maturity
               securities portfolio using the constant effective yield
               method.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note A - Summary of Significant Accounting Policies (Continued):

               When actual prepayments differ from this assumption, the
               effective yield is recalculated to reflect actual
               payments to date.  The net investment in the security is
               adjusted to the amount that would have existed had the
               new effective yield been applied since the acquisition of
               the security.  That adjustment is included in net
               investment income.

               Gains and losses on investments are recognized when
               investments are sold or redeemed on a specific
               certificate basis.

       (e)     Other Revenues:

               Other revenues consist principally of interest on
               mortgage loans and servicing fees from motor club
               membership fees.

       (f)     Losses and Loss Expenses:

               The estimated liability for losses is based on (1) the
               accumulation of cost estimates for unpaid losses reported
               prior to the close of the accounting period; and (2)
               estimates of incurred but not reported losses based upon
               past experience; less (3) estimates of anticipated
               salvage and subrogation recoveries. In the normal course
               of business, the Company seeks to reduce the loss that
               may arise from catastrophes or other events that cause
               unfavorable underwriting results by reinsuring certain
               levels of risk in various areas of exposure with other
               insurance enterprises or reinsurers.

               Changes to the estimated liabilities are reflected in the
               results of operations currently.

               The liability for loss expenses is based on estimates of
               expenses to be  incurred in the settlement of claims.

                                           (Continued)


                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note A - Summary of Significant Accounting Policies (Continued):

       (g)     Deferred Policy Acquisition Costs:

               Deferred policy acquisition costs are costs that vary
               with and are primarily related to the production of new
               and renewal business.  Such costs include commissions,
               premium taxes, certain State mandated assessments and
               certain underwriting and policy issuance costs which are
               deferred when incurred (subject to a maximum) and
               amortized to income as the related written premiums are
               earned.  Investment income is anticipated in determining
               whether a premium deficiency relating to these costs
               exists.

       (h)     Fixed Assets:

               Depreciation on leasehold improvements is computed by the
               straight-line method over the remaining lease term.
               Depreciation on furniture and fixtures, data processing
               and other equipment, is computed by the straight-line
               method over the estimated useful lives, ranging from
               three to twenty years.

               Expenditures for major renewals and betterments are
               capitalized, and expenditures for maintenance and repairs
               are charged to income as incurred.  When property units
               are retired, or otherwise disposed of, the cost thereof
               and related accumulated depreciation are eliminated from
               the accounts.  Any gain or loss on disposal is credited
               or charged to operations.

       (i)     Federal Income Taxes:

               Deferred Federal income taxes are provided for temporary
               differences between the financial statement and tax basis
               of assets and liabilities using enacted tax rates
               expected to apply in the years in which the differences
               are expected to reverse.


                                          (Continued)


                      MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note A - Summary of Significant Accounting Policies (Continued):

       (j)     Goodwill:

               Under the purchase method of accounting for business
               combinations, the total purchase price is allocated to
               the acquired assets and liabilities based on their fair
               values.  Any differences between the excess of the cost
               of the transaction and the fair value of net assets
               acquired is recorded as goodwill, which will be amortized
               on a straight-line basis over twenty years after the
               merger.

       (k)     Statement of Cash Flows:

               For purposes of the statement of cash flows, the Company
               considers demand deposits held with financial
               institutions and money market mutual fund holdings to be
               cash equivalents.

       (l)     Per Share Data:

               Basic earnings per share are computed based upon the
               weighted average number of common shares outstanding
               during each year.  Diluted earnings per share are
               computed based upon the weighted average number of common
               shares outstanding including outstanding stock options.
               See Note P for more information on outstanding stock
               options and Note R for more information on the
               computation of Earnings per Share.

       (m)     Comprehensive Income:

               In 1998, the Company adopted SFAS No. 130 ("Comprehensive
               Income"), which established standards for the reporting
               and disclosure of comprehensive income and its
               components.  Comprehensive income consists of net income,
               the unfunded accumulated benefit obligation in excess of
               plan assets and net unrealized investment gains or losses
               and is presented separately.  The adoption of SFAS No.
               130 had no impact on shareholders' equity.  Prior year
               financial statements have been reclassified to conform to
               these requirements.
                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note B - Acquisition of North East:

               On September 24, 1999, the Company acquired North East,
               headquartered in Scarborough, Maine, through a merger of
               a wholly-owned subsidiary of the Company with and into
               North East.

               Under the terms of the merger, certain North East
               shareholders elected and received 7,958 shares of the
               Company's common stock representing 41,781 shares of
               North East common stock; the remaining shareholders and
               holders of North East stock options elected and were paid
               $10,409,678 in cash.  The aggregate purchase price for
               the transaction was $10,482,796.

               The acquisition has been accounted for using the purchase
               method of accounting and, based on the fair value of the
               net assets acquired at September 24, 1999, the Company
               recorded $1,767,004 of goodwill associated with the
               purchase which is being amortized on a straight-line
               basis over twenty years.  The consolidated results of
               operations include the results of operations of North
               East for the three months ended December 31, 1999.  The
               amount of goodwill amortization expense recorded in 1999
               was $21,156.

               The following unaudited pro forma consolidated results of
               operation for the years ended December 31, 1999 and 1998
               assume the North East acquisition occurred as of January
               1, 1998:
<TABLE>
<CAPTION>
<S>                            <C>          <C>
                                   1999        1998

Insurance premiums             $66,002,646  $65,756,095
Net investment income            5,695,332    5,175,055
Realized gains on sales of
 investments (net)                   3,102       82,817
Other revenue                      143,410      171,171
Total revenues                  71,844,490   71,185,138
Losses and loss expenses
 incurred                       47,398,423   44,837,264
Other operating expenses        25,860,049   21,339,295
Total losses and expenses       73,258,472   66,176,559
Income (loss) before federal
  income taxes                  (1,413,982)   5,008,579
Benefit (provision) for
  federal income taxes           1,674,072   (1,210,452)
Net income                     $   260,090  $ 3,798,127
Earnings per share:
Basic                                  .12         1.79
Diluted                                .12         1.57
</TABLE>
                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note C - Investments:

       (a)     The amortized cost and estimated fair value of
               investments in fixed maturity securities at December 31,
               1999 were as follows:
<TABLE>
<CAPTION>
        <S>               <C>          <C>          <C>         <C>

                                           Gross        Gross
                            Amortized   Unrealized   Unrealized      Fair
                               Cost       Gains        Losses        Value

       U.S. Government
        securities        $20,031,827  $128,984    ($  239,128)  $19,921,683
       Mortgage-backed
        securities         10,678,363    29,476       (301,482)   10,406,357
       Asset-backed
        securities         10,454,886     -           (216,034)   10,238,852
       Corporate
        securities         39,689,688     9,436    ( 2,023,694)   37,675,430
        Total             $80,854,764  $167,896    ($2,780,338)  $78,242,322
</TABLE>

               The amortized cost and estimated fair value of
               investments in fixed maturity securities at December 31,
               1998 were as follows:
<TABLE>
<CAPTION>
        <S>               <C>          <C>          <C>          <C>
                                           Gross        Gross
                            Amortized   Unrealized   Unrealized      Fair
                               Cost       Gains        Losses        Value

       U.S. Government
        securities        $22,027,700  $1,128,251   ($ 10,320)   $23,145,631
       Mortgage-backed
        securities         11,053,686     165,978      (6,075)    11,213,589
       Asset-backed
        securities         10,698,352     107,618        -        10,805,970
       Corporate
        securities         23,896,673     558,555     (25,514)    24,429,714
        Total             $67,676,411  $1,960,402   ($ 41,909)   $69,594,904
</TABLE>

               The amortized cost and fair value of investments in fixed
               maturity securities at December 31, 1999, by contractual
               maturity, were as follows:
<TABLE>
<CAPTION>
       <S>                              <C>            <C>
                                         Amortized        Fair
                                            Cost          Value

       Due in one year or less          $ 4,943,415    $ 4,928,712
       Due after one year through
         five years                      21,037,686     20,953,774
       Due after five years through
         ten years                       30,933,494     29,040,693
       Due after ten years               23,940,169     23,319,143
                                        $80,854,764    $78,242,322
</TABLE>

                                          (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note C - Investments (Continued):

               The above maturity tables include $20,645,209 (at fair
               value) of mortgage-backed and asset-backed securities,
               which were classified as due after ten years based on the
               contractual life of the securities.

               Expected maturities may differ from contractual
               maturities because borrowers may have the right to call
               or prepay obligations with or without call or prepayment
               penalties.  Gross gains of $6,213 and $50,099 were
               realized on proceeds of $546,789 and $10,434,411 in 1999
               and 1998, respectively, on those sales and calls.  Gross
               losses of $595 and $21,554 on fixed maturities were
               realized on proceeds of $250,000 and $5,391,130 in 1999
               and 1998 on those sales and calls.  There were no gross
               gains or gross losses in 1997.

       (b)     Net investment income by category of investments
               consisted of the following:
<TABLE>
<CAPTION>
    <S>                   <C>          <C>          <C>

       Category               1999        1998         1997

    Fixed maturities      $4,665,066   $3,950,500   $3,387,140
    Other, principally
     short-term
     investments             593,366      498,253      431,932
      Total investment
        income             5,258,432    4,448,753    3,819,072
    Investment
     expenses                177,493      144,246      224,563
      Net investment
        income            $5,080,939   $4,304,507   $3,594,509
</TABLE>

       (c)     At December 31, 1999 and 1998, fixed maturity investments
               (at fair value) deposited with the various states where
               the Insurance Companies conduct business amounted to
               $2,986,560 and $222,784, respectively.

       (d)     There were no investments in any persons and its
               affiliates in excess of ten percent of shareholders'
               equity.

                                           (Continued)


                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note C - Investments (Continued):

       (e)     The change in net unrealized gains (losses) on
               investments are as follows:

                              Years Ended December 31,
                             1999          1998       1997
         Fixed
        maturities       ($4,517,228)   $1,012,666   $635,790

       (f)     In the opinion of management there has been no
               permanent impairment in the carrying amount of
               investments.

Note D - Unpaid Losses and Loss Expenses:

       (a)     The following table provides a reconciliation of the
               beginning and ending balances for unpaid losses and loss
               expenses for 1999, 1998 and 1997:
<TABLE>
<CAPTION>
<S>                     <C>          <C>          <C>

                          1999           1998       1997
Balance at January 1   $58,335,143  $50,246,778  $47,666,856
Less: Reinsurance
 recoverables           18,520,866   17,363,319   19,553,223
Net balance at
 January 1              39,814,277   32,883,459   28,113,633
Acquired in 1999         8,820,265      -            -
Incurred losses and
 loss expenses:
 Provision for current
  year claims           37,271,781   32,598,287   29,368,738
 Increase in provision
  for prior years'
  claims                 3,359,272    3,881,304    3,772,953
Total incurred losses
  and loss expenses     40,631,053   36,479,591   33,141,691
Payment for losses and
 loss expenses:
 Payment on current
  year claims           16,447,458   12,038,000   12,169,000
 Payment on prior
    years' claims       20,288,404   17,510,773   16,202,865
Total payments for
  losses and loss
  expenses              36,735,862   29,548,773   28,371,865
Net balance at
  December 31           52,529,733   39,814,277   32,883,459
Plus: Reinsurance
 recoverables           18,453,650   18,520,866   17,363,319
Balance at December 31 $70,983,383  $58,335,143  $50,246,778
</TABLE>

                                   (Continued)

                      MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note D - Unpaid Losses and Loss Expenses (Continued):

               The reconciliation shows a 1999 deficiency of $3,359,272
               in the liability recorded at December 31, 1998.  The
               deficiency is primarily the result of initial adverse
               development of reserves at December 31, 1998 and 1997
               which is consistent with the Company's loss development
               history.

       (b)     Losses incurred are reduced by salvage and subrogation
               approximating $3,144,175, $2,661,000 and $2,801,000 for
               the years ended December 31, 1999, 1998 and 1997,
               respectively.

Note E - Fixed Assets:

               Fixed assets consist of the following:
<TABLE>
<CAPTION>
      <S>                            <C>           <C>

                                         1999          1998
      Leasehold improvements         $  202,275    $  191,937
      Office furniture, fixtures and
       data processing equipment      3,984,231     3,287,546
                                      4,186,506     3,479,483
          Less accumulated depre-
           ciation                    2,327,885     1,807,581
                                     $1,858,621    $1,671,902
</TABLE>

Note F - Reinsurance:

       (a)     Unearned premiums and unpaid loss and loss expenses are
               stated gross of the effects of reinsurance.

       (b)     Ceded premiums are earned in a manner consistent with the
               coverage provided.  Amounts recoverable from reinsurers
               are estimated in a manner consistent with the claims
               liabilities associated with the reinsurance.

                                    (Continued)


                         MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note F - Reinsurance (Continued):

       (c)     Reinsurance contracts do not relieve the Insurance
               Companies from their obligations to policyholders.
               Failure of reinsurers to honor their obligations could
               result in losses to the Insurance Companies.  Generally,
               for Motor Club and Preserver all risks in excess of
               $150,000 for liability lines and $100,000 for property
               lines are reinsured.  Prior to July 1, 1997 the property
               retention was $75,000.

               North East's reinsurance protection is provided through
               two layers of excess of loss reinsurance.  The first
               layer assumes $150,000 of coverage beyond the first
               $50,000.  The second layer allows North East to offer
               policy limits up to $1,000,000 by assuming $800,000 of
               coverage beyond the first $200,000.

               The Insurance Companies evaluate the financial condition
               of their reinsurers and monitor concentrations of credit
               risk arising from activities or economic characteristics
               of the reinsurers to minimize their exposure to
               significant losses from reinsurer insolvencies.

               As referred to in Note A, Motor Club and Preserver's
               operations are presently located in the State of New
               Jersey, the laws of which require participation in
               certain reinsurance funds.

               Reinsurance recoverable on paid and unpaid loss and loss
               expenses include amounts recoverable from the Unsatisfied
               Claim and Judgment Fund ("UCJF") of the State of New
               Jersey, which pertains to New Jersey Personal Injury
               Protection claims in excess of Motor Club's statutory
               retention limit of $75,000.  Reinsurance recoverable from
               the UCJF was $8,672,127 and $9,139,160 as of December 31,
               1999 and 1998, respectively.

                                      (Continued)


                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note F - Reinsurance (Continued):

               Motor Club is required to participate in the New Jersey
               Automobile Insurance Risk Exchange ("NJ AIRE").  NJ AIRE
               is designed to balance differences between Motor Club's
               bodily injury exposures and loss payments as compared to
               industry exposures and loss payments under New Jersey's
               dual tort threshold system.

               Assessments paid to NJ AIRE based on subject bodily
               injury exposures are accounted for as ceded premiums
               written and totaled $1,805,185, $1,113,756 and $1,728,341
               in 1999, 1998 and 1997, respectively.  Reimbursements
               from NJ AIRE based on subject claim payment experience
               are accounted for as ceded losses incurred and totaled
               $1,347,565, $548,415 and $500,657 in 1999, 1998 and 1997,
               respectively.

               Prepaid reinsurance premiums of $1,485,450 and $1,015,581
               as of December 31, 1999 and 1998, respectively, are
               mainly attributable to Preserver's workers' compensation
               program and excess of loss reinsurance treaties.

               The effect of reinsurance on premiums written and earned
               is as follows:
<TABLE>
<CAPTION>
    <S>       <C>           <C>           <C>           <C>

                           1999                        1998
                  Written        Earned       Written        Earned
    Direct    $62,467,203   $64,151,936   $71,399,224   $59,951,837
    Assumed        46,946        14,340       -             -                 -
    Ceded      (8,005,934)   (8,358,946)   (7,096,511)   (6,776,174)
    Net       $54,508,215   $55,807,330   $64,302,713   $53,175,663

</TABLE>
<TABLE>
<CAPTION>
    <S>      <C>             <C>

                        1997
               Written         Earned
    Direct   $58,380,651     $58,029,094
    Assumed      -               -
    Ceded     (6,700,505)     (7,151,204)
    Net      $51,680,146      50,877,890
</TABLE>

Note G - Note Payable:

               On September 14, 1998, the Company entered into a $3
               million revolving credit facility (the "Loan") and drew
               on the entire amount of the Loan on September 30, 1998.
               The Loan was repaid in full on December 27, 1999. The
               weighted-average effective rate of interest on the loan
               was 7.28% and 7.0625% in 1999 and 1998, respectively.
               Interest paid on the loan in 1999 and 1998 was $216,017
               and $54,146, respectively.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note H - Convertible Subordinated Debentures:

               In  connection with its acquisition of North East, on
               September  23,  1999, the Company issued $10  million of
               Convertible Subordinated Debentures ("Debentures"),  in
               one series, under a plan previously approved by its
               shareholders.

               The Debentures are due on September 23, 2009 and bear an
               interest  rate of 8.44%, which is 2.5% over  the London
               Interbank Offered Rate, fixed as of September 23, 1999,
               the date the series was issued.

               At each holder's option, the Debenture is convertible at
               any time, in whole or in part, into 645,578 of the
               Company's common shares ($10 million divided by  130%  of
               the average trading price of the Company's common stock
               over the twenty day period immediately prior to
               September 23, 1999 ("Conversion Price")).  The applicable
               Conversion Price is $15.49.

               Three of the Company's directors ("Ownership Group")
               purchased  $9,253,785  of  the  $10  million in
               Debentures issued.   If the members of the Ownership
               Group convert those Debentures, their percentage
               ownership in the Company's common stock will
               substantially   increase.  Based on the Company's common
               shares outstanding as of December 31, 1999, the Ownership
               Group could increase its collective percentage stock
               ownership from the current 42.0% to 53.8%.

               Interest paid on the Debentures was $232,100 in 1999.

Note I - Taxes:

       (a)     The Company and its subsidiaries (including MCA Insurance
               Company ("MCAIC") and its subsidiaries, former
               affiliates) file a consolidated Federal income tax
               return.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note I - Taxes (Continued):

       (b)     The tax effects of temporary differences that give rise
               to significant portions of the deferred tax assets and
               liabilities were as follows:
<TABLE>
<CAPTION>
            <S>                             <C>           <C>
                                                December 31,
                                              1999          1998

          Deferred tax assets:
            Net operating loss ("NOL")
             carryforward                  $3,234,154   $   606,807
            Unpaid losses and loss
             expenses                       2,046,251     1,637,930
            Unearned premium                2,530,457     2,020,795
            Unrealized loss on debt
             securities                       896,828       -
            Alternative minimum tax and
             general business credit carry-
             forwards                         311,010       107,677
            Capital loss carryforward          52,912       -
            Other deferred tax assets         309,530       -
          Total deferred tax assets         9,381,142     4,373,209
          Deferred tax liabilities:
            Deferred acquisition costs     (3,590,659)   (2,960,832)
            Unrealized gain on debt
            securities                        -            (652,288)
            Prepaid pension cost           (1,119,429)   (1,370,837)
            Other deferred tax liabilities   (275,256)     (251,462)
          Total deferred tax liabilities   (4,985,344)   (5,235,419)
          Less: valuation allowance for
            deferred tax assets              (267,032)      (95,230)
          Net deferred tax (liability)
            asset                          $4,128,766   ($  957,440)
</TABLE>

               The NOL carryforward of $9,512,218 expires beginning in
               2009.  The NOL carryforward includes $6,327,667 of
               attributable to North East, which expire in 2014.  Under
               the prevailing tax laws, these losses must be used to
               offset taxable income of North East only, are not
               available to offset taxable income of other operations
               and are subject to an annual limitation of $587,000.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note I - Taxes (Continued):

               The Company believes it is more likely than not that it
               will generate future taxable income to realize the
               benefits of the net deferred tax asset, including those
               net deferred tax assets attributable to North East only.
               The Company has provided a valuation allowance at
               December 31, 1999 for those deferred tax assets related
               to NOL carryforwards of MCAIC and its subsidiaries as a
               percentage of the total NOL carryforward in the
               Consolidated return and the capital loss carryforward of
               North East, including the temporary difference.  The
               ultimate amounts realized, however, could be reduced if
               actual amounts of future taxable income differ from
               projected future taxable income.

       (c)     The provision for Federal income taxes resulted in
               effective tax rates lower than the statutory Federal
               income tax rates, as follows:
<TABLE>
<CAPTION>
 <S>                       <C>           <C>          <C>

                               1999         1998        1997
Tax provision
 computed at statutory
 federal income tax rates  ($   34,730)  ($1,944,598) ($1,574,359)
Change in valuation
 allowance                     108,901    (1,820,972)  (1,110,192)
Effect of net operating
 loss carryforward             793,676     1,830,513    1,548,594
Other-net                      306,940       471,442      (11,808)
Benefit (provision)         $1,174,787   ($1,463,615) ($1,147,765)
</TABLE>


       (d)     The Consolidated Statements of operations for the years
               ended December 31, 1999, 1998 and 1997 include state
               taxes based on insurance premiums of $230,606, $189,346
               and $153,333.

Note J - Shareholders' Equity:

       (a)     The Insurance Companies prepare their statutory financial
               statements in accordance with accounting practices
               prescribed or permitted by the respective Departments of
               Insurance in which they are domiciled ("SAP").

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note J - Shareholders' Equity (Continued):

               Prescribed statutory accounting practices include a
               variety of publications of the National Association of
               Insurance Commissioners, as well as state laws,
               regulations and general administrative rules.  Permitted
               statutory accounting practices encompass all accounting
               practices not so prescribed.

               The maximum amount of dividends which the Motor Club and
               Preserver can pay to shareholders without approval of the
               Insurance Commissioner of the State of New Jersey is
               subject to restrictions. To the extent that surplus as
               defined is available, the maximum amount distributable is
               limited to the greater of: (1) ten percent of statutory
               surplus as regards policyholders; or (2) net income,
               excluding realized capital gains.  Accordingly, the
               maximum dividend which may be paid to the Company without
               prior approval in 2000 is $1.2 million and $1.3 million
               for Motor Club and Preserver, respectively.  Motor Club
               paid $250,000 and $1 million in dividends to the Company
               in 1999 and 1998, respectively.

               The maximum amount of dividends that North East can pay
               without the prior approval of the Superintendent of the
               Maine Bureau of Insurance is limited by Maine regulation
               to not more than the greater of: (a) 10% of its statutory
               surplus as reported on its last annual statement, or (b)
               100% of its net investment income as reported on its last
               annual statement.  North East is presently unable to pay
               dividends to the Company and did not pay any dividends in
               1999.

               The amount of dividends that North East's New York-
               domiciled subsidiary, American Colonial, can pay without
               the prior approval of the New York Superintendent of
               Insurance is limited to the lesser of:(a) 10% of its
               statutory surplus as reported on its last annual
               statement, or (b) 100% of its adjusted net investment
               income during such period.  At December 31, 1999, the
               maximum dividend North East could receive from American
               Colonial was $453,000.  American Colonial paid $499,000
               in dividends to North East in 1999.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note J - Shareholders' Equity (Continued):

       (b)     The consolidated financial statements of the Company's
               insurance subsidiaries have been prepared in accordance
               with GAAP, which differ in certain respects from SAP.

               The principal differences relate to (1) acquisition costs
               incurred in connection with acquiring new business which
               are charged to expense under SAP but under GAAP are
               deferred and amortized as the related premiums are
               earned; (2) anticipated salvage and subrogation
               recoveries which have not been credited to losses
               incurred for SAP; (3) net deferred tax assets created by
               the tax effects of temporary differences; (4) unpaid
               losses, unpaid loss adjustment expenses and unearned
               premium reserves are presented gross of reinsurance with
               a corresponding asset recorded; and (5) fixed maturity
               portfolios that qualify as available for sale are carried
               at fair value and changes in fair value are reflected
               directly in unassigned surplus, net of related deferred
               taxes.

               The consolidated capital and surplus, shareholders'
               equity and income of the Insurance Companies on a
               statutory and GAAP basis were as follows:
<TABLE>
<CAPTION>
              <S>                     <C>          <C>
                                            December 31,
                                         1999         1998
             Capital and surplus -
              Statutory basis         $30,211,579  $24,886,388
             Shareholders' equity -
              GAAP basis              $47,647,953  $42,143,091
</TABLE>
<TABLE>
<CAPTION>
            <S>                 <C>        <C>          <C>
                                       Years ended December 31,
                                   1999       1998         1997
            Net income (loss):
            Statutory basis     $  204,073 ($  762,471) $3,719,782
            GAAP basis          $1,265,286  $5,157,732  $4,316,713
</TABLE>

               Distribution by the Insurance Companies of the excess of
               GAAP shareholders' equity over statutory capital and
               surplus to the Company is prohibited by law.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note K - Contingencies:

               The Company and its subsidiaries are parties to various
               legal actions and administrative proceedings and subject
               to various claims arising in the ordinary course of
               business.  The Company believes that the disposition of
               these matters will not have a material adverse effect on
               the financial position, the results of operations or cash
               flows of the Company.

Note L - Pensions:

       (a)     The Company has a non-contributory defined benefit plan
               (the "Plan").  Eligible salaried and hourly employees of
               the Company participate in the Plan after twelve months
               of continuous employment with the Company when age 21 has
               been attained.  Retirement benefits are based on each
               participant's average compensation and years of service.
               Vesting of benefits  begins after five years of service
               commencing from the minimum age of 21 or date of hire, if
               later.

               The Company's contributions are designed to fund the
               Plan's normal costs on a current basis and to  fund the
               unfunded prior service costs, including accrued benefits
               arising from qualifying employee service occurring prior
               to the establishment of the Plan, over 40 years.

               On January 15, 1992, the Company suspended the accrual of
               benefits arising from participant service.  The Company
               continues to fund the Plan for benefits earned through
               January 31, 1992.

               The Plan maintained a significant amount of assets in
               group annuity contracts with Mutual Benefit Life
               Insurance Company ("Mutual"), which was placed in
               rehabilitation by the NJ DOBI on July 16, 1991.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note L - Pensions (Continued):

               In October 1994, MBLLAC approved and subsequently paid a
               "hardship withdrawal" of $2,666,204 (net of an
               administrative charge of $470,507) to the Plan.

               The Plan also received $91,938, $183,876 and $183,876 in
               distributions from MBLLAC and Mutual in 1999, 1998 and
               1997, respectively, under provisions of the Plan of
               Rehabilitation.

               On June 1, 1999, $3,424,869 was received from MBLLAC and
               an additional $14,670 was received on August 27, 1999.
               The restructured contract has how been paid in full and
               the Plan no longer has any assets with MBLLAC.

       (b)     Pension expense for 1999, 1998 and 1997 included the
               following components:
<TABLE>
<CAPTION>
            <S>                 <C>          <C>        <C>
                                    1999       1998        1997

            Interest cost       $  784,400   $813,900   $837,900
            Expected return on
             plan assets        (1,032,700)  (946,800)  (862,000)
             Recognized loss       342,100    312,500    277,900
             Net periodic
             benefit cost
             benefit obligation $   93,800   $179,600   $253,800
</TABLE>

               Measurement of the Company's benefit obligation and
               pension expense as of December 31 of each year used the
               following assumptions:
<TABLE>
<CAPTION>
       <S>                         <C>     <C>     <C>
                                   1999    1998    1997

       Discount rate               7.75%   6.75%   7.25%
       Expected return on plan
         assets                   10.00%  10.00%  10.00%
       Rate of compensation
         increase                   N/A     N/A     N/A

</TABLE>
                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note L - Pensions (Continued):

       (c)     A reconciliation of the changes in the Plan's benefit
               obligations and fair value of assets during 1999 and 1998
               and a statement of the funded status of the Plan as of
               December 31 of each year is as follows:
<TABLE>
<CAPTION>
          <C>                         <C>           <C>

                                          1999       1998
       Change in benefit obligation:
         Benefit obligation at
          January 1                    $11,968,900   $11,605,700
         Service cost                        -             -
         Interest Cost                     784,400       813,900
         Actuarial (gain)/loss            (886,400)      568,000
         Benefits paid                  (1,022,000)   (1,018,700)
         Benefit obligation at
          December 31                  $10,844,900   $11,968,900
      Change in plan assets:
        Fair value of plan assets at
          January                      $10,618,700   $ 9,340,000
        Actual return on plan assets     1,325,700     1,165,300
        Employer contribution              239,900     1,254,500
        Benefits paid                   (1,022,000)   (1,018,700)
        Other                             (101,000)     (122,400)
        Fair value of plan assets at
          December 31                   $11,061,300   $10,618,700
        Funded Status at December 31    $   216,400  ($ 1,350,200)
        Unrecognized loss                 3,268,000     4,688,500
        Net amount recognized at
          December 31                   $ 3,484,400   $ 3,338,300
</TABLE>
               Following are the amounts recognized in the statement of
               financial position as of December 31 of each year:
<TABLE>
<CAPTION>
             <S>                               <C>              <S>

             Prepaid benefit cost              $  216,400       -
             Accrued benefit liability            -         ($1,350,200)
             Accumulated other comprehensive
              income                            3,268,000     4,688,500
             Net amount recognized             $3,484,400    $3,338,300
</TABLE>
                                           (Continued)


                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note L - Pensions (Continued):

               The adjustment required to recognize the minimum
               liability is reflected as a component of accumulated
               comprehensive income  (loss) as of December 31, 1999 and
               1998, respectively.

       (d)     The Company maintains a defined contribution plan for
               substantially all employees.   Employer contributions of
               a discretionary amount are made by the Company and its
               subsidiaries.  Employer contributions in the amount of
               $124,458, $116,329 and $115,995 were made by the Company
               in 1999, 1998 and 1997, respectively, for its employees
               and charged to expense.

       (e)     In 1997, the Company established a non-qualified deferred
               compensation plan for certain employees.  Employer
               contributions of a discretionary amount are made by the
               Company.

Note M - Post-retirement Benefits:

       (a)     The Company currently provides certain life and health
               benefits to retired employees who had twenty-five or more
               years of service, subject to certain eligibility
               restrictions.  These benefits consist of the payment of
               medical, life and dental premiums for the retired
               employees.  The Company's funding policy is to pay for
               the premiums currently; any future increases in the cost
               of these benefits will be borne by the retirees and not
               the Company.

       (b)     Net periodic post-retirement benefit cost for 1999, 1998
               and 1997 included the following components:
<TABLE>
<CAPTION>
            <S>                     <C>         <C>       <C>
                                      1999       1998      1997

            Service cost            $ 2,700     $ 2,500   $ 2,300
            Interest cost            30,100      36,000    40,200
            Amortization of
             transition obligation   28,000      28,000    28,000
            Amortization of net
             loss                    22,600      21,800    22,400
            Net postretirement
             expense                $83,400     $88,300   $92,900

                                    (Continued)
</TABLE>
                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note M - Post-retirement Benefits (Continued):

               Measurement of the Company's benefit obligation and post-
               retirement benefit expense as of December 31 of each year
               used the following assumptions:
<TABLE>
<CAPTION>
                <S>                <C>        <C>      <C>

                                   1999       1998     1997

                Discount Rate      7.75%      6.75%    7.25%
                Expected return
                 on assets          N/A        N/A      N/A
                Average rate of
                 increase in
                 compensation       N/A        N/A      N/A
</TABLE>

               (c)    A reconciliation of the changes in the benefit
                      obligations and fair value of assets during 1999
                      and 1998 and a statement of the funded status as of
                      December 31 of each year is as follows:
<TABLE>
<CAPTION>
        <S>                              <C>         <C>

                                             1999        1998
      Change in Accumulated Postretirement
       Benefit Obligation
        Benefit Obligation at January 1    $502,600    $552,900
        Service Cost                          2,700       2,500
        Interest Cost                        30,100      36,000
        Employee Contributions               45,700      12,400
        Benefit Paid                       (157,900)   (125,100)
        Actuarial (gain) loss               (47,900)     23,900
        Benefit Obligation at December 31  $375,300    $502,600

      Change in Plan Assets
        Fair Value of Plan Assets at
         January 1                         $   -       $  -
        Company Contributions               112,200     112,700
        Employee Contributions               45,700      12,400
        Benefits Paid                      (157,900)   (125,100)
        Fair Value of Plan Assets at
         December 31                       $  -        $  -

      Funded Status of the Plan
        Benefit obligation less than plan
         assets                           ($375,300)  ($502,600)
        Unamortized transition obligation   361,000     389,000
        Unamortized net loss                187,100     257,600
        Net prepaid asset                  $172,800    $144,000
</TABLE>

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note M - Post-retirement Benefits (Continued):

               The following are the amounts recognized in the statement
               of financial position as of December 31 of each year:
<TABLE>
<CAPTION>
         <S>                                     <C>        <C>
                                                 1999        1998

         Prepaid benefit cost                    $172,800   $144,000
         Accumulated other comprehensive income     -          -
         Net amount recognized                   $172,800   $144,000
</TABLE>


       (d)     It is the policy of the Company that any future increase
               in life and health care benefits will be borne by the
               retirees and not the Company; as a result, there will be
               no increase in either the accumulated post-retirement
               benefit obligation or the service and interest cost
               components of net periodic post-retirement benefit cost
               related to a 1% increase in the health care trend rate.

Note N - Selected Quarterly Financial Data (Unaudited):

       (a)  Year ended December 31, 1999:
<TABLE>
<CAPTION>
       <S>         <C>            <C>           <C>          <C>

                       1st            2nd          3rd           4th
                     Quarter        Quarter      Quarter       Quarter*
       Revenues    $14,314,773    $14,417,053   $14,627,084  $17,708,809

       Losses and
         expenses  $13,106,674    $13,173,443   $15,465,552  $19,219,904

       Net income
         (loss)    $   985,621    $ 1,011,433   $   129,745  $  (849,866)

           Net income (loss) per common share:

       Basic       $       .47    $       .48   $       .06  $      (.40)
       Diluted     $       .46    $       .48   $       .06  $      (.40)
</TABLE>

               * Includes North East and subsidiaries

                                           (Continued)


                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note N - Selected Quarterly Financial Data (Unaudited) (Continued):

       (a)  Year ended December 31, 1998:
<TABLE>
<CAPTION>
       <S>         <C>            <C>           <C>          <C>

                       1st            2nd          3rd           4th
                     Quarter        Quarter      Quarter       Quarter
       Revenues    $14,122,238    $14,196,905   $14,481,138  $14,879,605

       Losses and
         expenses  $12,689,535    $12,629,606   $13,140,836  $13,500,503

       Net income  $ 1,024,531    $ 1,134,939   $ 1,015,460  $ 1,080,861

           Net income per common share:

       Basic       $       .49    $       .54   $       .48  $       .51
       Diluted     $       .48    $       .54   $       .48  $       .51
</TABLE>

Note O - Comprehensive Income:

               Comprehensive income consisted of the following:
<TABLE>
<CAPTION>
  <S>                                  <C>          <C>          <C>

                                           1999         1998        1997
  Net income                           $1,276,933   $4,255,791   $3,482,702
  Other comprehensive income
    Unrealized gains (losses) on
     securities:
     Unrealized gains (losses) during
      period (net of taxes of
      ($1,482,838), $358,732 and
      $307,981                         (3,010,842)     687,195      327,721
     Less: Reclassification
      adjustment for gains included
      in net income(net of taxes of
      $12,254, $9,705 and $0)             (23,786)     (18,840)      -
    Net unrealized gains (losses)      (3,034,628)     668,355      327,721

    Minimum pension liability
     adjustment (net of $0 taxes
     in all years)                      1,420,500     (159,400)     161,800
  Other comprehensive income (loss)    (1,614,128)     508,955      489,521
  Comprehensive income (loss)         ($  337,195)  $4,764,746   $3,972,223
</TABLE>
                                                   (Continued)

                                     MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                   __________

Note P - Stock Option Plans:

               The Motor Club of America 1987, 1992 and 1999 Stock
               Option Plans ("1987 Option Plan", "1992 Option Plan" and
               "1999 Option Plan", respectively) provide for the
               issuance of options to purchase 100,000 common shares,
               respectively, by key executives at the  market price at
               date of grant.

               Options under all Option Plans are exercisable for a five
               year period in twenty-five percent increments each year,
               commencing one year from the date of grant. As of
               December 31, 1999: (1) 5,125 shares under the 1987 Option
               Plan are available for grant; 57,000 shares were
               exercisable and 37,875 shares had been exercised as of
               that date; (2) 1,950 shares under the 1992 Option Plan
               are available for grant; 62,500 shares were exercisable
               and 35,550 shares had been exercised as of that date; and
               (3) 100,000 shares under the 1999 Option Plan are
               available for grant.

               Transactions during 1997, 1998 and 1999 relating to the
               1987 Option Plan are as follows:
<TABLE>
<CAPTION>
             <C>                     <C>        <C>         <C>

                                                              Weighted
                                                 Exercise      Average
                                     Number of   Price per    Aggregate
                                      Shares       Share        Amount

            Options outstanding at
             December 31, 1996         34,500     $ 2.625     $ 90,562
            Options exercised in 1997 (11,375)    $ 2.625      (29,859)
            Options lapsed in 1997     (1,125)    $ 2.625       (2,953)
            Options granted in 1997    62,000     $12.75       790,500
            Options outstanding at
             December 31, 1997         84,000     $10.098      848,250
            Options exercised in 1998 (22,000)    $ 2.625      (57,750)
            Options lapsed in 1998     (5,000)    $12.75       (63,750)
            Options outstanding at
             December 31, 1998 and
              1999                     57,000     $12.75      $726,750
</TABLE>

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note P - Stock Option Plans (Continued):

               Transactions during 1997, 1998 and 1999 relating to
               the 1992 Option Plan are as follows:
<TABLE>
<CAPTION>
           <C>                      <C>        <C>         <C>

                                                             Weighted
                                                 Exercise     Average
                                     Number of   Price per   Aggregate
                                       Shares      Share       Amount

          Options outstanding at
           December 31, 1996          51,000     $ 6.00      $306,000
          Options exercised in 1997  (35,550)    $ 6.00      (213,300)
          Options lapsed in 1997     (15,450)    $ 6.00       (92,700)
          Options granted in 1997      3,000     $12.75        38,250
          Options outstanding at
           December 31, 1997           3,000     $12.75        38,250
          Options granted in 1998     28,500     $11.75       334,875
          Options outstanding at
           December 31, 1998 and      31,500     $11.845     $373,125
          Options granted in 1999     31,000     $12.875      399,125
          Options outstanding at
           December 31, 1999          62,500     $12.36      $772,250
</TABLE>

               There were no transactions during 1999 relating to the
               1999 Option Plan.

               The Company has adopted the provision of SFAS No. 123
               ("Accounting for Stock-Based Compensation"), which calls
               for companies to measure employee stock compensation
               expense based on the fair value method of accounting.
               However, as allowed by SFAS No. 123, the Company has
               elected the continued use of APB Opinion No. 25
               ("Accounting for Stock Issued to Employees"), with pro
               forma disclosures of net income and earnings per share
               determined as if the fair value method had been applied
               in measuring compensation cost.

               These calculations only take into consideration options
               issued since January 1, 1995.  In 1999, 1998 and 1997,
               had the fair value method been applied, net income would
               have been reduced by $70,900, $21,100 and $10,200, $.03,
               $.01 and less than $.01 basic net earnings per share,
               respectively.
                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note P - Stock Option Plans (Continued):

               The average fair value of options granted during 1999,
               1998 and 1997 was $6.34, $5.79 and $6.52, respectively.
               The fair value was estimated using the Black-Scholes
               option pricing model based on the following assumptions
               for 1999, 1998 and 1997: risk-free interest rate of
               6.55%, 4.66% and 5.65%; volatility of 50.5%, 52.3% and
               54.5%; and expected life of 4.5, 4.75 and 4.5 years. The
               Company does not pay a dividend on its common stock.  The
               following table summarizes options outstanding and
               exercisable at December 31, 1999:
<TABLE>
<CAPTION>
           <C>           <C>       <C>         <C>          <C>         <C>

                Options Outstanding                   Options Exercisable
                                                                      Average
            Exercise              Average      Exercise               Exercise
             Price     Options   Life(a)        Price    Options        Price

           $11.75        28,500    3.75        $11.75       7,125       $11.75
           $12.75        60,000    2.25        $12.75      30,000        12.75
          $12.875       31,000    4.50        $12.875          0          -
            Total       119,500    3.19        $12.54      37,125       $12.56
</TABLE>

               (a)    Average contractual life remaining years.

Note Q - Lease Obligations:

               Effective January 1, 1996, the Company entered into a
               lease ("Paramus Lease") at 95 Route 17 South, Paramus,
               New Jersey.  The Paramus Lease expires on December 31,
               2005.  The Company has an option to terminate the Paramus
               Lease after six years, and an option to extend the
               Paramus Lease for an additional five years after the
               initial lease term expires. The Company will pay a base
               annual rental of $371,745 through  December 31, 2000 and
               $416,805 thereafter until the Paramus Lease expires.
               Additional charges for electricity and escalation of
               certain operating costs apply.  Rent expense paid by the
               Company on the Paramus Lease was $410,000 in 1999, 1998
               and 1997.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                            ________

Note Q - Lease Obligations (Continued):

               North East leases office space at 482 Payne Road,
               Scarborough, Maine.  The lease expires on December 31,
               2000.  The minimum lease payment for 2000 is $144,823.

Note R - Earnings per Share ("EPS"):

               In 1997, the Company adopted SFAS No. 128 ("Earnings Per
               Share") specifying the computation, presentation and
               disclosure requirements for EPS. The new standard defines
               "basic" and "diluted" earnings per share.  Basic earnings
               per share are based on weighted average basic shares
               outstanding.  Diluted earnings per share are based on
               weighted average diluted shares outstanding, which is
               calculated by adding shares contingently issuable under
               stock options and shares contingently issuable under the
               Debentures (if dilutive) to the average basic shares
               outstanding.  The calculations of average basic and
               diluted common shares outstanding and net income per
               common share are as follows:
<TABLE>
<CAPTION>
     <S>                        <C>          <C>         <C>

                                    1999        1998         1997

     Net income (numerator)      $1,276,933   $4,255,791  $3,482,702
     Weighted average basic
      common shares outstanding
      (denominator)               2,117,912    2,108,722   2,074,473
      Shares contingently
       issuable under Stock
       Option plans                   3,785       12,644      27,922
      Average diluted common
       shares outstanding
       (denominator)              2,121,697    2,121,366   2,102,395

      Net income per common share:
      Basic                           $ .60        $2.02       $1.68
      Diluted                         $ .60        $2.01       $1.66
</TABLE>
                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                            ________

Note S - Reportable Segments:

               In 1998, the Company adopted SFAS No. 131 ("Disclosures
               about Segments of an Enterprise and Related
               Information").  Under this Statement, the Company does
               not have any reportable segments but is required to
               disclose certain enterprise-wide information.

               The Company writes property and casualty insurance in the
               States of New Jersey and Maine only through independent
               producers, none of which generate more than 10% of the
               Company's insurance premiums.  Products include private
               passenger automobile, homeowners and ancillary coverages
               ("Personal Property"), and small commercial lines
               insurance, including commercial auto.  Insurance premiums
               generated by these products during 1999, 1998 and 1997
               were as follows:
<TABLE>
<CAPTION>
<S>                 <C>             <C>             <C>

Product              1999            1998            1997

Private Passenger
 Automobile       $40,989,903     $39,872,261     $39,213,154
Commercial Lines    9,237,955       7,703,054       4,912,797
Personal Property   5,579,472       5,600,348       6,751,939
   Total          $55,807,330     $53,175,663     $50,877,890
</TABLE>

Note T - Subsequent Event (Unaudited):

               On March 1, 2000 the Company completed its acquisition of
               Mountain Valley Indemnity Company ("Mountain Valley"),
               formerly known as White Mountains Insurance Company, from
               Unitrin Inc. for $7.5 million in cash.

               Mountain Valley, formed in 1995, presently writes small
               and medium sized commercial lines business in New York
               and all of New England except Connecticut.  Statutory
               surplus at December 31, 1999 was $7.3 million.

                                           (Continued)

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                           __________

Note T - Subsequent Event (Unaudited)(Continued):

               Under the terms of the purchase, Mountain Valley will
               run-off its present 100% intercompany quota share
               reinsurance agreement; thus at closing there are no net
               loss and loss expense reserves for claims occurring prior
               to closing, including those which develop subsequently.

               Mountain Valley will be assuming the unearned premium at
               closing (subject to certain adjustments).

               In connection with the acquisition of Mountain Valley,
               the Ownership Group extended unsecured debt financing in
               the amount of $11.5 million to finance the transaction
               and to provide additional working capital to the Company.
               This debt will mature in two years and pay interest
               quarterly at a rate of 10.605%.  The Company will be
               pursuing longer-term financing options to replace this
               debt during that period.  At the Company's election, if
               acceptable financing is not identified by Motor Club
               during the two-year period, the debt can be extended for
               up to five years utilizing successive one-year renewals,
               in exchange for an increased interest rate on the debt.

Note U - Related Party Transactions:

               The Ownership Group owns 42% of the outstanding common
               stock of the Company at December 31, 1999.  The Company
               paid directors fees' of $180,000 during 1999, 1998 and
               1997 to the Ownership Group.

               As noted, the Ownership Group's participation in the
               Debentures could potentially increase their share
               ownership of the Company from its present 42.0% to 53.8%.
               During 1999, the Ownership Group received $214,780 in
               interest payments on the Debentures.

<TABLE>
<CAPTION>
                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                              SCHEDULE I.  SUMMARY OF INVESTMENTS-
                            OTHER THAN INVESTMENTS IN RELATED PARTIES
                                      at December 31, 1999


 <S>                       <C>           <C>          <C>
     Column A               Column B      Column C     Column D
                                                       Amount at
                                                      which shown
                                                        in the
                             Cost(a)       Market    balance sheet

Type of investment

Fixed maturity securities
 available-for-sale:
United States Government
 and government agencies
 and authorities           $30,710,190   $30,328,040  $30,328,040
Industrial and
 miscellaneous              46,544,011    44,532,565   44,532,565
Public utilities             3,600,563     3,381,717    3,381,717

Total fixed maturities      80,854,764                 78,242,322
Equity securities:
 Common stock                   43,346        57,053       57,053
Mortgage loans on real
 estate                        153,616                    153,616

Short-term investments,
 available-for-sale          8,528,858     8,528,858    8,528,858

Total investments          $89,580,584                $86,981,849
</TABLE>

Note: (a)      Represents original cost of investments reduced by
               repayment and as to fixed maturities, adjusted for
               amortization of premiums or accrual of discounts.


                                           (Continued)
<TABLE>
<CAPTION>

                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                          SCHEDULE II. CONDENSED FINANCIAL INFORMATION
                                 OF REGISTRANT (PARENT COMPANY)


                                         BALANCE SHEETS

  <S>                                 <S>          <S>
                                                December 31,
                                          1999             1998
Assets:

  Cash and cash equivalents           $    -          $ 1,238,530
  Investments in subsidiaries          46,551,073      40,707,745
  Insurance premiums receivable        18,896,067      19,587,908
  Deferred tax asset                    1,766,019          -
  Other assets                          3,513,832       1,991,162
         Total assets                 $70,726,991     $63,525,345

Liabilities and shareholders' equity:
  Indebtedness to subsidiaries        $28,276,495     $26,498,457
  Deferred tax liability                   -              957,440
  Convertible subordinated debentures  10,000,000          -
  Note payable                             -            3,000,000
  Other liabilities                     4,891,048       5,245,919
         Total liabilities             43,167,543      35,701,816
  Shareholders' equity                 27,559,448      27,823,529
         Total liabilities and
           shareholders' equity       $70,726,991     $63,525,345
</TABLE>

                                        Notes to Schedule

       The Notes to Consolidated Financial Statements of Motor Club
       of America and Subsidiaries are incorporated by reference to
       this schedule.

       The Statements of Shareholders' Equity are the same as those
       presented for Motor Club of America and Subsidiaries.


                                           (Continued)
<TABLE>
<CAPTION>
                                 MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                              SCHEDULE II.  CONDENSED FINANCIAL INFORMATION
                                     OF REGISTRANT (PARENT COMPANY)

                                        STATEMENTS OF OPERATIONS
  <S>                          <C>          <C>          <C>

                                  For the years ended December 31,
                                   1999        1998         1997
Revenues:

  Membership servicing fees    $  118,924   $  133,531   $  152,791
  Commission income                   -            -          1,595
  Interest on mortgage loans       16,974       35,251        4,973
  Other income (1)                168,222      204,640      216,161
       Total revenues             304,120      373,422      375,520

Expenses:

  Merger expenses                 800,000          -            -
  Interest expense                448,117       60,389        8,890
  General and administrative
   expenses (1)                   298,514     (248,636)    (512,054)
       Total expenses           1,546,631     (188,247)    (503,164)

Income before
   Federal income taxes        (1,242,511)     561,669      878,684
Benefit (provision) for
   Federal income taxes:
     current                       21,865    1,371,151      (37,573)
     deferred                   1,232,293   (1,270,494)  (1,110,192)
Total Federal income tax        1,254,158      100,657   (1,147,765)

Income (loss) before item
   shown below                     11,647      662,326     (269,081)
Equity in net income
 of subsidiaries                1,265,286    3,593,465    3,751,783
       Net income              $1,276,933   $4,255,791   $3,482,702

</TABLE>
(1)    Amount is net of $285,762 (1999), $296,810 (1998) and  $535,816
       (1996) of management fees charged to subsidiaries.


                                               (Continued)
<TABLE>
<CAPTION>

                                 MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                              SCHEDULE II.  CONDENSED FINANCIAL INFORMATION
                                     OF REGISTRANT (PARENT COMPANY)
                                               __________

                                        STATEMENTS OF CASH FLOWS
<S>                                    <C>                <C>             <C>
                                          For the years ended December 31,
                                     1999               1998             1997

Net income                             $1,276,933         $4,255,79   $3,482,702
Adjustments to reconcile net
  income to net cash provided by
  operating activities:
  Depreciation expense                    499,503            426,703     371,756
  Deferred tax benefit                 (2,723,459)         1,614,802   1,418,173

Changes in:
  Premiums receivable                     691,841        (12,221,216)    172,024
  Investments in subsidiaries           1,837,836        (11,149,624) (2,947,331)
  Other assets                             (7,716)           125,831     229,053
  Other liabilities                     1,065,629            451,011    (305,577)
  Indebtedness to related parties       1,778,038         11,857,053    (922,446
Net cash provided by (utilized in)
  operating activities                  4,418,605         (4,639,649)  1,498,354

Investing activities:
  Proceeds from:
    Disposal of short-term
      investments                         -               28,900,000  47,287,674
    Payments received on mortgage
      loan principal                      207,422            161,517       4,490
    Purchase of:
     Fixed maturities                     -                  -            -
    Short-term investments                -              (25,750,000)(48,692,219)
    Acquisition of North East         (12,482,796)           -            -
    Fixed assets                         (454,875)          (491,088)   (168,878)
  Mortgage loans from Finance Company     -                  -          (527,045)
Net cash provide by (utilized in)
  investing activities                (12,730,249)         2,820,429  (2,095,978)
Financing activities:
Convertible subordinated debentures    10,000,000            -            -
Note payable                           (3,000,000)         3,000,000      -
Common stock issued                        73,114             57,750     243,159
Net cash provided by
  financing activities                  7,073,114          3,057,750     243,159
Increase (decrease) in cash and
  cash equivalents                     (1,238,530)         1,238,530    (354,465)
Cash and cash equivalents at
  beginning of year                     1,238,530            -           354,465
Cash and cash equivalent at end of
  year                                $   -              $ 1,238,530  $  354,465
</TABLE>
Supplemental Disclosures of Cash Flow Information

(1)    Total interest paid was $448,782 (1999), $60,389(1998) and
       $8,890 (1997).

(2)    Total federal income taxes paid was $0 (1999), $212,738(1998)
       and $50,691 (1997).
                                            (Continued)

<TABLE>
<CAPTION>
                                     MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                                            SCHEDULE IV.  REINSURANCE
                              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
                                                   __________

   <S>                           <C>            <C>
        Column A                  Column B      Column C
                                                Ceded to
                                                  other
                                 Gross Amount   Companies

December 31, 1999:

  Total property and casualty
   insurance premiums earned     $64,151,936    $8,358,946

December 31, 1998:

  Total property and casualty
   insurance premiums earned     $59,951,837    $6,776,174


December 31, 1997:

  Total property and casualty
   insurance premiums earned     $58,029,094    $7,151,204
</TABLE>
<TABLE>
<CAPTION>
                               MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                                      SCHEDULE IV.  REINSURANCE
                          FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
   <S>                            <C>       <C>            <C>

        Column A                   Column D     Column E    Column F
                                                              % of
                                  Assumed from               Amount
                                    other                   Assumed
                                  Companies    Net Amount   to Net


December 31, 1999:

  Total property and casualty
   insurance premiums earned      $   14,340    $55,807,330    0.03%

December 31, 1998:

  Total property and casualty
   insurance premiums earned      $   -         $53,175,663    0.00%


December 31, 1997:

  Total property and casualty
   insurance premiums earned      $   -         $50,877,890    0.00%
</TABLE>

<TABLE>
<CAPTION>
                             MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                                SCHEDULE V. VALUATION AND QUALIFYING
                                          ACCOUNTS AND RESERVES
                           FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
                                                       __________
<S>               <C>          <C>           <C>        <C>        <C>
 Column A          Column B          Column C           Column D   Column E
                                      Additions
                   Balance at   Charged to  Charged to               Balance
                   Beginning     Cost and     Other                  at end
 Description       of Period     Expenses    Accounts   Deductions  of Period

Allowance for
doubtful
receivables:

December 31, 1999  $   68,091   $   -        $   -       $    -      $   68,091

December 31, 1998  $   68,091   $   -        $   -       $    -      $   68,091

December 31, 1997  $   41,340   $   26,751   $   -       $    -      $   68,091

Valuation allowance
for deferred taxes:

December 31, 1999  $   95,230   $  171,802   $    -      $    -      $  267,032

December 31, 1998  $1,916,202   $    -       $    -      $1,820,972  $   95,230

December 31, 1997  $    -       $1,916,202   $    -      $    -      $1,916,202

</TABLE>
<TABLE>
<CAPTION>
              MOTOR CLUB OF AMERICA AND SUBSIDIARIES
         SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING
            PROPERTY/CASUALTY INSURANCE OPERATIONS

        For the years ended December 31, 1999, 1998 and 1997
<S>                <C>            <C>            <C>           <C>         <C>


Column A           Column B        Column C       Column D     Column E     Column F
                                 Reserves for
                    Deferred     Unpaid Claims   Discount,
                     Policy       and Claim      if any,
                   Acquisition    Adjustment    Deducted in   Unearned       Earned
                      Costs         Expenses      Column C    Premiums      Premiums

Year ended
December 31, 1999   $10,560,763    $70,983,383         -       $38,698,028   $55,807,330

Year ended
December 31, 1998   $ 8,708,329    $58,335,143         -       $30,733,144   $53,175,663

Year ended
December 31, 1997   $ 5,858,650    $50,246,778         -       $19,285,757   $50,877,890

</TABLE>


                 Note:  (a)  Excludes non-insurance subsidiaries' investment
                             income and realized investment gains.
<TABLE>
<CAPTION>
                      MOTOR CLUB OF AMERICA AND SUBSIDIARIES
                  SCHEDULE VI. SUPPLEMENTAL INFORMATION CONCERNING
                      PROPERTY/CASUALTY INSURANCE OPERATIONS

                   For the years ended December 31, 1999, 1998 and 1997
<S>                 <C>              <C>           <C>          <C>            <C>           <C>
Column A            Column G              Column H               Column I      Column J      Column K
                                         Claims and Claim
                                         Adjustment Expenses     Amortization    Paid
                                         Incurred Related to     of deferred    Claims
                       Net             (1)         (2)             policy      and Claim
                   Investment         Current       Prior        acquisition   Adjustment     Premium
                  Income (a)           Year       Years             Costs        Expenses     Written

Year ended
December 31, 1999    $4,920,229     $37,271,781  $3,359,272     $14,305,501    $36,735,862  $54,508,215

Year ended
December 31, 1998    $4,102,255     $32,598,287  $3,881,304     $13,375,221    $29,548,773  $64,302,713

Year ended
December 31, 1997    $3,384,004     $29,368,738  $3,772,953     $15,162,320    $28,371,865  $51,680,146

</TABLE>