| ý | QUARTERLY REPORT PURSUANT TO      SECTION 13 OR      15(d) OF THE      SECURITIES EXCHANGE ACT OF1934 |
|--------|-------------------------------------------------------------------------------------------------------|

|   | For      the quarterly period ended March 31,2009 |
|--------|---------------------------------------------------|

|   | OR |
|--------|----|

| ¨ | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

| California(State      or other Jurisdiction of Incorporation or Organization)                                                                                            |   | 94-2723335(IRS      Employer Identification No.) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|
|   875      Prospect Street, Suite 301La      Jolla, California  92037(Address      of principal executive offices, excluding zip code) (Zip    code) |

|  Large      accelerated      filer                                                                ý     | Accelerated      filer                                 ¨ |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Non-accelerated      filer                                                                       ¨          | Smaller      reporting      company                ¨                                                                           |

----

|                                          |                                                                                                               |
|-----------------------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                                          | Page      No.                                                                                                      |
|                                          |                                                                                                               |
| Part      I:  Financial Information |                                                                                                               |
|                                          |                                                                                                               |
| Item      1:                                  | Condensed Consolidated Financial      Statements (Unaudited)                                                       |   |
|                                          |                                                                                                               |   |
|                                          | Condensed Consolidated Balance      Sheets as of March 31, 2009 and December 31,      2008                    | 2 |
|                                          |                                                                                                               |   |
|                                          | Condensed Consolidated Statements      of Operations for the Three Months Ended March 31, 2009 and      2008  | 3 |
|                                          |                                                                                                               |   |
|                                          | Condensed Consolidated Statements      of Cash Flows for the Three Months Ended March 31, 2009 and      2008       | 4 |
|                                          |                                                                                                               |   |
|                                          | Notes to Condensed      Consolidated Financial Statements                                                          | 5 |
|                                          |                                                                                                               |   |
| Item      2:                                  | Management’s Discussion and      Analysis of Financial Condition and the Results of      Operations          | 11  |
|                                          |                                                                                                               |   |
| Item      3:                                  | Quantitative and Qualitative      Disclosure About Market Risk                                                     |   |
|                                          |                                                                                                               |   |
| Item      4:                                  | Controls and      Procedures                                                                                       | 16  |
|                                          |                                                                                                               |   |
| Part      II:  Other Information    |                                                                                                               |
|                                          |                                                                                                               |
| Item      1:                                  | Legal      Proceedings                                                                                             | 17  |
|                                          |                                                                                                               |   |
| Item      1A:                                 | Risk      Factors                                                                                                  |   |
|                                          |                                                                                                               |   |
| Item      2:                                  | Unregistered Sales of      Equity Securities and Use of Proceeds                                                   | 17  |
|                                          |                                                                                                               |   |
| Item      3:                                  | Defaults Upon Senior      Securities                                                                               | 17  |
|                                          |                                                                                                               |   |
| Item      4:                                  | Submission of Matters to      a Vote of Security Holders                                                           | 17  |
|                                          |                                                                                                               |   |
| Item      5:                                  | Other      Information                                                                                             | 17  |
|                                          |                                                                                                               |   |
| Item      6:                                  | Exhibits                                                                                                           | 18  |

----

CONDENSED 

|                                                                                              |   | March      31, 2009 |        |   | December      31, 2008 |   |
|---------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|------------------------|--------|
| ASSETS                                                                                            |   |                |        |   |                   |   |
| Investments                                                                                       |   | $                   | 129,969,338 |   |                   | $      | 149,417,023 |   |
| Cash      and cash equivalents                                                                    |   |                | 99,231,738  |   |                   |   | 96,316,018 |   |
| Notes      and other receivables, net                                                             |   |                | 17,877,777  |   |                   |   | 24,352,367 |   |
| Reinsurance      receivables                                                                      |   |                | 15,958,618  |   |                   |   | 16,373,132 |   |
| Real      estate and water assets, net                                                            |   |                | 262,281,970 |   |                   |   | 271,714,300 |   |
| Property      and equipment, net                                                                  |   |                | 1,457,234   |   |                   |   | 1,512,370 |   |
| Deferred      income taxes                                                                        |   |                | 35,136,330  |   |                   |   | 25,274,232 |   |
| Federal,      foreign and state income taxes                                                      |   |                |        |   |                   |   | 4,519,920 |   |
| Other      assets                                                                                 |   |                | 3,851,966   |   |                   |   | 3,154,434 |   |
| Total      assets                                                                                 |   | $                   | 565,764,971 |   |                   | $      | 592,633,796 |   |
|                                                                                              |   |                |        |   |                   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                         |   |                |        |   |                   |   |   |   |
| Unpaid      losses and loss adjustment expenses                                                   |   | $                   | 27,121,161  |   |                   | $      | 27,773,320 |   |
| Deferred      compensation                                                                        |   |                | 22,448,296  |   |                   |   | 27,744,528 |   |
| Bank      and other borrowings                                                                    |   |                | 38,813,027  |   |                   |   | 42,381,718 |   |
| Federal,      foreign and state income taxes                                                      |   |                | 2,434,006   |   |                   |   |   |   |
| Other      liabilities                                                                            |   |                | 18,538,085  |   |                   |   | 16,988,040 |   |
| Total      liabilities                                                                            |   |                | 109,354,575 |   |                   |   | 114,887,606 |   |
|                                                                                              |   |                |        |   |                   |   |   |   |
| Commitments      and Contingencies (Note 4)                                                       |   |                |        |   |                   |   |   |   |
|                                                                                              |   |                |        |   |                   |   |   |   |
| Common      stock, $.001 par value; authorized 100,000,000    shares,                             |   |                |        |   |                   |   |   |   |
| 23,265,187      issued and 18,840,392 outstanding at March 31, 2009 and      at December 31, 2008 |   |                | 23,265      |   |                   |   | 23,265 |   |
| Additional      paid-in capital                                                                   |   |                | 440,543,447 |   |                   |   | 439,381,715 |   |
| Retained      earnings                                                                            |   |                | 99,531,074  |   |                   |   | 118,036,716 |   |
| Accumulated      other comprehensive income                                                       |   |                | (4,361,154  | )      |                   |   | (1,423,863 | ) |
| Treasury      stock, at cost (common shares: 4,424,795 in 2009 and      2008)                     |   |                | (78,271,643 | )      |                   |   | (78,271,643 | ) |
| Total      PICO Holdings, Inc. shareholders’ equity                                         |   |                | 457,464,989 |   |                   |   | 477,746,190 |   |
| Noncontrolling      interest in subsidiaries                                                      |   |                | (1,054,593  | )      |                   |   |   |   |
| Total      shareholders' equity                                                                   |   |                | 456,410,396 |   |                   |   | 477,746,190 |   |
| Total      liabilities and shareholders' equity                                                   |   | $                   | 565,764,971 |   |                   | $      | 592,633,796 |   |

Theaccompanying notes are an integral part of the condensed consolidated financialstatements

----

CONDENSED 

|                                                                                               |   | Three      Months Ended March 31, 2009 |        |   | Three      Months Ended March 31, 2008 |   |
|----------------------------------------------------------------------------------------------------|--------|----------------------------------------|-------------|--------|----------------------------------------|--------|
| Revenues:                                                                                          |   |                                   |        |   |                                   |   |
| Net      investment income                                                                         |   | $                                      | 926,572     |   |                                   | $      | 3,027,626 |   |
| Net      realized gain (loss) on and impairment ofinvestments                                      |   |                                   | (12,101,421 | )      |                                   |   | 471,854 |   |
| Sale      of real estate and water assets                                                          |   |                                   | 310,414     |   |                                   |   | 494,408 |   |
| Rents,      royalties and lease income                                                             |   |                                   | 256,377     |   |                                   |   | 159,556 |   |
| Other                                                                                              |   |                                   | 282,806     |   |                                   |   | 323,621 |   |
| Total      revenues (charges)                                                                      |   |                                   | (10,325,252 | )      |                                   |   | 4,477,065 |   |
| Costs      and Expenses:                                                                           |   |                                   |        |   |                                   |   |   |   |
| Operating      and other costs                                                                     |   |                                   | 7,336,208   |   |                                   |   | 2,016,264 |   |
| Impairment      loss                                                                               |   |                                   | 12,378,000  |   |                                   |   |   |   |
| Cost      of real estate and water assets sold                                                     |   |                                   | 80,533      |   |                                   |   | 149,845 |   |
| Interest      expense                                                                              |   |                                   | 490,404     |   |                                   |   |   |   |
| Depreciation      and amortization                                                                 |   |                                   | 334,567     |   |                                   |   | 296,413 |   |
| Total      costs and expenses                                                                      |   |                                   | 20,619,712  |   |                                   |   | 2,462,522 |   |
| Income      (loss) before income taxes                                                             |   |                                   | (30,944,964 | )      |                                   |   | 2,014,543 |   |
| Provision      for income taxes                                                                    |   |                                   | (11,134,729 | )      |                                   |   | 3,966,995 |   |
| Net      loss                                                                                      |   |                                   | (19,810,235 | )      |                                   |   | (1,952,452 | ) |
| Add:      Net loss attributable to the noncontrollinginterests                                     |   |                                   | 1,304,593   |   |                                   |   | 305,777 |   |
| Net      loss attributable to PICO Holdings, Inc.                                                  |   | $                                      | (18,505,642 | )      |                                   | $      | (1,646,675 | ) |
|                                                                                               |   |                                   |        |   |                                   |   |   |   |
| Net      loss attributable to PICO Holdings, Inc. per common share – basic and      diluted: |   |                                   |        |   |                                   |   |   |   |
| Net      loss per common share                                                                     |   | $                                      | (0.98       | )      |                                   | $      | (0.09 | ) |
| Weighted      average shares outstanding                                                           |   |                                   | 18,840,392  |   |                                   |   | 18,833,737 |   |

Theaccompanying notes are an integral part of the condensed consolidated financialstatements.

----

CONDENSED 

|                                                                          |   | Three      Months Ended March 31, 2009 |        |   | Three      Months Ended March 31, 2008 |   |
|-------------------------------------------------------------------------------|--------|----------------------------------------|-------------|--------|----------------------------------------|--------|
| OPERATING      ACTIVITIES:                                                    |   |                                   |        |   |                                   |   |
| Net      cash provided by (used in) operating activities                      |   | $                                      | 3,231,029   |   |                                   | $      | (7,942,903 | ) |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| INVESTING      ACTIVITIES:                                                    |   |                                   |        |   |                                   |   |   |   |
| Purchases      of investments                                                 |   |                                   | (858,546    | )      |                                   |   | (7,523,491 | ) |
| Proceeds      from sale of investments                                        |   |                                   | 1,223,269   |   |                                   |   | 5,257,263 |   |
| Proceeds      from maturity of investments                                    |   |                                   |        |   |                                   |   | 38,097,968 |   |
| Real      estate and water asset capital expenditure                          |   |                                   | (164,357    | )      |                                   |   | (16,439,639 | ) |
| Net      cash provided by investing activities                                |   |                                   | 200,366     |   |                                   |   | 19,392,101 |   |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| FINANCING      ACTIVITIES:                                                    |   |                                   |        |   |                                   |   |   |   |
| Excess      tax benefits from stock based payment arrangements                |   |                                   |        |   |                                   |   | 332,774 |   |
| Repayment      of borrowings                                                  |   |                                   | (2,610,000  | )      |                                   |   |   |   |
| Proceeds      from borrowings                                                 |   |                                   | 488,118     |   |                                   |   | 6,341,988 |   |
| Net      cash provided by (used in) financing activities                      |   |                                   | (2,121,882  | )      |                                   |   | 6,674,762 |   |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| Effect      of exchange rate changes on cash                                  |   |                                   | 1,606,207   |   |                                   |   | (3,749,975 | ) |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| INCREASE      IN CASH AND CASH EQUIVALENTS                                    |   |                                   | 2,915,720   |   |                                   |   | 14,373,985 |   |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| CASH      AND CASH EQUIVALENTS, BEGINNING OF PERIOD                           |   |                                   | 96,316,018  |   |                                   |   | 70,791,025 |   |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| CASH      AND CASH EQUIVALENTS, END OF PERIOD                                 |   | $                                      | 99,231,738  |   |                                   | $      | 85,165,010 |   |
|                                                                          |   |                                   |        |   |                                   |   |   |   |
| SUPPLEMENTAL      CASH FLOW INFORMATION:                                      |   |                                   |        |   |                                   |   |   |   |
| Cash      paid for interest (net of amounts capitalized)                      |   | $                                      | 377,952     |   |                                   |   |   |   |
| Net      cash paid (refund) for Federal, state and foreign income      taxes, |   | $                                      | (14,753,856 | )      |                                   | $      | 14,400 |   |
| Non-cash      investing and financing activities:                             |   |                                   |        |   |                                   |   |   |   |
| Construction      in progress incurred but not paid                           |   | $                                      | 11,198      |   |                                   | $      | 11,921,811 |   |

Theaccompanying notes are an integral part of the condensed consolidated financialstatements.    

----

NOTES 

|                                                             |                |
|------------------------------------------------------------------|---------------------|
| Outstanding      at January 1, 2009 (all RSA)                    | 4,200               |
| Granted      (all RSU – expected to vest on March 3, 2012) |        300,000 |
| Outstanding      at March 31, 2009                               | 304,200             |

The fair value of each award was estimated on the date of grantusing a Black-Scholes option pricing model that uses various assumptions andestimates to calculate a fair value as described below.

| Expected      volatility      |  29%      — 31%   |
|-------------------------------|------------------------------|
| Expected      term            |  7      years           |
| Risk-free      rate           |  4.3%      — 4.7% |
| Expected      dividend yield  |  0%                     |
| Expected      forfeiture rate |  0%                     |

|                                | SAR           |   | Weighted      AverageExercise      Price |   | Weighted      AverageContractual      Term (In years) |
|-------------------------------------|---------------|--------|------------------------------------------|--------|-------------------------------------------------------|
| Outstanding      at January 1, 2009 | 1,995,018     |   | $                                        | 36.89  |                                                  | 7 |
| Granted                             |        - |   |                                     |   |                                                  |   |
| Exercised                           |        - |   |                                     |   |                                                  |   |
| Outstanding      at March 31, 2009  | 1,995,018     |   | $                                        | 36.89  |                                                  |   |
| Exercisable      at March 31, 2009  | 1,719,190     |   | $                                        | 35.83  |                                                  |                                                                    7 |

----

|                                                                            |   | SAR    |    |   | Weighted      Average GrantDate      Fair Value |   |
|---------------------------------------------------------------------------------|--------|--------|---------|--------|-------------------------------------------------|--------|
| Unvested      at January 1, 2009                                                |   |   | 275,828 |   |                                            | $      | 18.31 |   |
| Granted                                                                         |   |   | -       |   |                                            |   |   |   |
| Vested                                                                          |   |   | -       |   |                                            |   |   |   |
| Unvested      at March 31, 2009 (expected to vest over the next two      years) |   |   | 275,828 |   |                                            | $      | 18.31 |   |

----

----

|                                                                              |   | Three      Months Ended March 31, 2009 |        |   | Three      Months Ended March 31, 2008 |   |
|-----------------------------------------------------------------------------------|--------|----------------------------------------|-------------|--------|----------------------------------------|--------|
| Net      loss                                                                     |   | $                                      | (19,810,235 | )      |                                   | $      | (1,952,452 | ) |
| Other      comprehensive income (loss), net of tax:                               |   |                                   |        |   |                                   |   |   |   |
| Net      change in unrealized depreciation on available for sale      investments |   |                                   | (3,404,987  | )      |                                   |   | (2,632,106 | ) |
| Net      change in foreign currency translation                                   |   |                                   | 467,696     |   |                                   |   | 2,211,593 |   |
| Total      other comprehensive loss, net of tax                                   |   |                                   | (2,937,291  | )      |                                   |   | (420,513 | ) |
| Comprehensive      loss                                                           |   | $                                      | (22,747,526 | )      |                                   | $      | (2,372,965 | ) |
| Comprehensive      loss attributable to the noncontrolling interest               |   |                                   | 1,304,593   |   |                                   |   | 305,777 |   |
| Comprehensive      loss attributable to PICO Holdings, Inc.                       |   | $                                      | (21,442,933 | )      |                                   | $      | (2,067,188 | ) |

|                                                                                       | March      31, 2009 |        | December      31, 2008 |   |
|--------------------------------------------------------------------------------------------|---------------------|-------------|------------------------|--------|
|                                                                                       |                |        |                   |   |
|     Net      unrealized appreciation on available for sale investments | $                   | 8,161,989   |                   | $      | 11,566,976 |   |
|     Foreign      currency translation                                  |                | (12,523,143 | )                      |   | (12,990,839 | ) |
|     Accumulated      other comprehensive loss                          | $                   | (4,361,154  | )                      | $      | (1,423,863 | ) |

----

|  Assets                           |   | Quoted      Prices In Active Markets for Identical Assets(Level      1) |        |   | Significant      Other Observable Inputs (Level 2) |   |    | Significant      Unobservable Inputs(Level      3) |   |   | Balance      at March 31, 2009 |   |
|----------------------------------------|--------|-------------------------------------------------------------------------|-------------|--------|----------------------------------------------------|--------|---------|----------------------------------------------------|--------|--------|--------------------------------|--------|
| Available      for sale securities (A) |   | $                                                                       | 124,987,837 |   |                                               | $      | 481,365 |                                               |   | $      | 3,117,565                      |   |   | $ | 128,586,767 |   |
| Liabilities                            |   |                                                                    |        |   |                                               |   |    |                                               |   |   |                           |   |   |   |   |   |
| Deferred      compensation (B)         |   | $                                                                       | 22,448,296  |   |                                               |   |    |                                               |   |   |                           |   |   | $ | 22,448,296 |   |

| (A)      Where there are quoted market prices that are readily available in an      active market, securities are classified as Level 1 of the valuation      hierarchy.  Level 1 marketable equity securities are valued      using quoted market prices multiplied by the number of shares owned and      debt securities are valued using a market quote in an active      market.  Level 2 available for sale securities include      securities where the markets are not active, that is where there are few      transactions, or the prices are not current or the prices vary      considerably over time. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (B)      Deferred compensation plans are compensation plans directed by the Company      and structured as a rabbi trust for certain executives and non-employee      directors.  The investment assets of the rabbi trust are valued      using quoted market prices multiplied by the number of shares held in each      trust account including the shares of PICO Holdings common stock held in      the trusts. The related deferred compensation liability represents the      fair value of the investmentassets.                                                                                                      |

| Asset Description                                                                  |   | Fair      Value Beginningof      Period |      | Unrealized      Gains Included inIncome | Accumulated      Other ComprehensiveIncome | Purchases,      Sales, andIssuances |   | Transfers      In |   |    | Fair Value      at End ofPeriod |   |
|------------------------------------------------------------------------------------|--------|-----------------------------------------|-----------|----------------------------------------------|--------------------------------------------|-------------------------------------|--------|-------------------|--------|---------|--------------------------------------|--------|
|         Available      for sale securities |   | $                                       | 2,998,055 |                                         |                                       |                                |   |              | $      | 119,510 |                                 |   | $ | 3,117,565 |   |

| Asset      Description                                                                                |   | March      31,2009 |      | Quoted      Prices In Active Markets for Identical Assets (Level 1) |   | Significant      Other Observable Inputs (Level 2) |   | Significant      Unobservable Inputs (Level 3) |   | Total      Losses |   |
|-------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|---------------------------------------------------------------------|--------|----------------------------------------------------|--------|------------------------------------------------|--------|-------------------|--------|
|         Intangible      asset (applications for water rights) |   | $                  | 3,953,033 |                                                                |   |                                               | $      | 3,953,033                                      |   |              |   | $ | 12,378,000 |   |

----

|                                                               |   |
|--------------------------------------------------------------------|--------|
|   5.     Segment      Reporting |

|                                             |   | At      March 31, 2009 |        |   | At      December 31, 2008 |   |
|--------------------------------------------------|--------|------------------------|-------------|--------|---------------------------|--------|
| Total      Assets:                               |   |                   |        |   |                      |   |
| Water      Resource and Water Storage Operations |   | $                      | 213,378,233 |   |                      | $      | 225,870,410 |   |
| Real      Estate Operations                      |   |                   | 97,560,379  |   |                      |   | 97,592,062 |   |
| Corporate                                        |   |                   | 112,549,534 |   |                      |   | 111,984,967 |   |
| Insurance      Operations in Run Off             |   |                   | 142,276,825 |   |                      |   | 157,186,357 |   |
|                                             |   | $                      | 565,764,971 |   |                      | $      | 592,633,796 |   |

|                                                               |   | Three      Months Ended March 31, |        |
|--------------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                               |   | 2009                              |        |   | 2008 |   |
| Revenues:                                                          |   |                              |        |   |   |   |
| Water      Resource and Water Storage Operations                   |   | $                                 | 207,669     |   |   | $ | 819,285 |   |
| Real      Estate Operations                                        |   |                              | 661,661     |   |   |   | 1,594,419 |   |
| Corporate                                                          |   |                              | (4,961,958  | ) |   |   | 390,228 |   |
| Insurance      Operations in Run Off                               |   |                              | (6,232,624  | ) |   |   | 1,673,133 |   |
| Total      revenues (charges)                                      |   | $                                 | (10,325,252 | ) |   | $ | 4,477,065 |   |
|                                                               |   |                              |        |   |   |   |   |   |
| Income      (Loss) Before Taxes and Noncontrolling Interest:       |   |                              |        |   |   |   |   |   |
| Water      Resource and Water Storage Operations                   |   | $                                 | (13,917,285 | ) |   | $ | (960,038 | ) |
| Real      Estate Operations                                        |   |                              | (929,191    | ) |   |   | 422,124 |   |
| Corporate                                                          |   |                              | (9,205,809  | ) |   |   | 1,343,201 |   |
| Insurance      Operations in Run Off                               |   |                              | (6,892,679  | ) |   |   | 1,209,256 |   |
| Income      (loss) before income taxes and noncontrolling interest |   | $                                 | (30,944,964 | ) |   | $ | 2,014,543 |   |

|   7.           Subsequent Event |
|--------------------------------------------------------------------|

----

Management’s Discussion and Analysis of Financial Condition andResults of Operations

| · | Water Resource and Water Storage      Operations;       |
|--------|---------------------------------------------------------|
| · | Real Estate Operations;                                 |
| · | Insurance Operations in “Run Off”;      and |
| · | Corporate                                               |

| · | Vidler      Water Company, Inc. (“Vidler”), a business that we started more than 11      years ago, which acquires and develops water resources and water storage      operations in the southwestern United States, with assets in Nevada,      Arizona, Idaho, California, and Colorado;                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Nevada      Land & Resource Company, LLC (“Nevada Land”), an operation that we      built since we acquired the company more than 11 years ago, which owns      approximately 440,000 acres of former railroad land in Nevada, and certain      mineral rights and water rights related to theproperty; |
| · | UCP,      LLC (“UCP”), a business we started in 2008, which acquires and develops      partially-developed and finished residential housing lots in selected      markets in California;                                                                                                                    |
| · | Physicians      Insurance Company of Ohio (“Physicians”), which is “running off” its      medical professional liability insurance loss reserves;  and                                                                                                                                          |
| · | Citation      Insurance Company (“Citation”), which is “running off” its property &      casualty insurance and workers’ compensation loss  reserves.                                                                                                                                 |

|                                                                |   | Three      Months Ended March 31, |        |
|---------------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                                |   | 2009                              |        |   | 2008 |   |
| Revenues:                                                           |   |                              |        |   |   |   |
| Water      Resource and Water Storage Operations                    |   | $                                 | 208,000     |   |   | $ | 819,000 |   |
| Real      Estate Operations                                         |   |                              | 662,000     |   |   |   | 1,594,000 |   |
| Insurance      Operations in “Run Off”                  |   |                              | (6,233,000  | ) |   |   | 1,673,000 |   |
| Corporate                                                           |   |                              | (4,962,000  | ) |   |   | 391,000 |   |
| Total      revenues                                                 |   | $                                 | (10,325,000 | ) |   | $ | 4,477,000 |   |
|                                                                |   |                              |        |   |   |   |   |   |
| Income      (loss) before income taxes and noncontrolling interest: |   |                              |        |   |   |   |   |   |
| Water      Resource and Water Storage Operations                    |   | $                                 | (13,917,000 | ) |   | $ | (960,000 | ) |
| Real      Estate Operations                                         |   |                              | (929,000    | ) |   |   | 422,000 |   |
| Insurance      Operations in “Run Off”                  |   |                              | (6,893,000  | ) |   |   | 1,209,000 |   |
| Corporate                                                           |   |                              | (9,206,000  | ) |   |   | 1,344,000 |   |
| Income      (loss) before income taxes and noncontrolling interests |   | $                                 | (30,945,000 | ) |   | $ | 2,015,000 |   |

Water Resourceand Water Storage Operations – Tule Desert Groundwater Basin and Impairment ofWater Assets

Noncontrolling Interest inSubsidiaries

Noncontrolling 

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|                                                       |   | Three      Months Ended March 31, |        |
|------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                       |   | 2009                              |        |   | 2008 |   |
| Revenues:                                                  |   |                              |        |   |   |   |
| Sale      of real estate and water assets                  |   | $                                 | 23,000      |   |   | $ | 129,000 |   |
| Net      investment income                                 |   |                              | 20,000      |   |   |   | 566,000 |   |
| Other                                                      |   |                              | 165,000     |   |   |   | 124,000 |   |
| Segment      total revenues                                |   | $                                 | 208,000     |   |   | $ | 819,000 |   |
|                                                       |   |                              |        |   |   |   |   |   |
| Expenses:                                                  |   |                              |        |   |   |   |   |   |
| Cost      of real estate and water assets sold             |   | $                                 | (6,000      | ) |   | $ | (22,000 | ) |
| Impairment      of water assets                            |   |                              | (12,378,000 | ) |   |   |   |   |
| Depreciation      and amortization                         |   |                              | (267,000    | ) |   |   | (277,000 | ) |
| Overhead                                                   |   |                              | (819,000    | ) |   |   | (858,000 | ) |
| Project      expenses                                      |   |                              | (655,000    | ) |   |   | (622,000 | ) |
| Segment      total expenses                                |   | $                                 | (14,125,000 | ) |   | $ | (1,779,000 | ) |
| Loss      before income taxes and noncontrolling interests |   | $                                 | (13,917,000 | ) |   | $ | (960,000 | ) |

Tule Desert Groundwater Basin

| · | the      operation and maintenance of the Vidler Arizona Recharge      Facility;                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | the      development of water rights in the Tule Desert groundwater basin      (part of the Lincoln County agreement);                            |
| · | the      utilization of water rights at Fish Springs Ranch as a future municipal      water supply for the north valleys of the Reno, Nevada area;      and |
| · | the      operating and financing costs of our farm properties in Idaho and      maintenance of the associated waterrights.                                  |

|                                                                   |   | Three      Months Ended March 31, |       |
|------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                   |   | 2009                              |       |   | 2008 |   |
| Revenues:                                                              |   |                              |       |   |   |   |
| Sale      of real estate and water assets                              |   | $                                 | 219,000    |   |   | $ | 365,000 |   |
| Net      investment income                                             |   |                              | 264,000    |   |   |   | 923,000 |   |
| Other                                                                  |   |                              | 179,000    |   |   |   | 306,000 |   |
| Segment      total revenues                                            |   | $                                 | 662,000    |   |   | $ | 1,594,000 |   |
|                                                                   |   |                              |       |   |   |   |   |   |
| Expenses:                                                              |   |                              |       |   |   |   |   |   |
| Cost      of real estate and water assets sold                         |   | $                                 | (75,000    | ) |   | $ | (128,000 | ) |
| Operating      expenses                                                |   |                              | (1,516,000 | ) |   |   | (1,044,000 | ) |
| Segment      total expenses                                            |   | $                                 | (1,591,000 | ) |   | $ | (1,172,000 | ) |
| Income      (loss) before income taxes and noncontrolling    interests |   | $                                 | (929,000   | ) |   | $ | 422,000 |   |

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|                                                                               |   | Three      Months Ended March 31, |       |
|------------------------------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                                               |   | 2009                              |       |   | 2008 |   |
| Revenues:                                                                          |   |                              |       |   |   |   |
| Net      investment income                                                         |   | $                                 | 372,000    |   |   | $ | 619,000 |   |
| Net      realized gain (loss) on and impairment of      investments |   |                              | (6,647,000 | ) |   |   | 1,014,000 |   |
| Other                                                                              |   |                              | 42,000     |   |   |   | 40,000 |   |
| Segment      total revenues                                                        |   | $                                 | (6,233,000 | ) |   | $ | 1,673,000 |   |
|                                                                               |   |                              |       |   |   |   |   |   |
| Expenses:                                                                          |   |                              |       |   |   |   |   |   |
| Segment      total expenses                                                        |   | $                                 | (660,000   | ) |   | $ | (464,000 | ) |
|                                                                               |   |                              |       |   |   |   |   |   |
| Income      (loss) before income taxes and noncontrolling interests                |   | $                                 | (6,893,000 | ) |   | $ | 1,209,000 |   |

| PHYSICIANS      INSURANCE COMPANY OF OHIO -- LOSS AND LOSS ADJUSTMENT EXPENSE      RESERVES |   |
|---------------------------------------------------------------------------------------------|--------|
|                                                                                        |   | March      31, 2009 |   |   | December      31, 2008 |   |
| Direct      Reserves                                                                        |   | $ | 3,773,000 |   |   | $ | 3,834,000 |   |
|                                                                                        |   |   |   |   |   |   |   |   |
| Net      medical professional liability insurance reserves                                  |   | $ | 3,773,000 |   |   | $ | 3,834,000 |   |

| CITATION      INSURANCE COMPANY -- LOSS AND LOSS ADJUSTMENT EXPENSE    RESERVES |   |
|---------------------------------------------------------------------------------|--------|
|                                                                            |   | March      31, 2009 |   |   | December      31, 2008 |   |
| Property      & Casualty Insurance                                          |   |   |   |   |   |   |
| Direct      Reserves                                                            |   | $ | 724,000 |   |   | $ | 741,000 |   |
| Ceded      Reserves                                                             |   |   | (96,000 | ) |   |   | (96,000 | ) |
| Net      property and casualty insurance reserves                          |   | $ | 628,000 |   |   | $ | 645,000 |   |
|                                                                            |   |   |   |   |   |   |   |   |
| Workers’      Compensation                                                |   |   |   |   |   |   |   |   |
| Direct      Reserves                                                            |   | $ | 22,624,000 |   |   | $ | 23,198,000 |   |
| Ceded      Reserves                                                             |   |   | (15,371,000 | ) |   |   | (15,781,000 | ) |
| Net      workers’ compensation insurance reserves                         |   | $ | 7,253,000 |   |   | $ | 7,417,000 |   |
| Total      net reserves                                                         |   | $ | 7,881,000 |   |   | $ | 8,062,000 |   |

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|                                                                |   | Three      Months Ended March 31, |          |
|---------------------------------------------------------------------|--------|-----------------------------------|---------------|
|                                                                |   | 2009                              |          |   | 2008 |   |
| Revenues:                                                           |   |                              |          |   |   |   |
| Net      realized loss on and impairment of investments   |   | $                                 | (5,455,000    | )  |   | $ | (542,000 | )  |
| Net      investment income                                          |   |                              | 271,000       |   |   |   | 920,000 |   |
| Other                                                               |   |                              | 222,000       |   |   |   | 13,000 |   |
| Segment      total revenues                                         |   | $                                 | (4,962,000    | ) |   | $ | 391,000 |   |
|                                                                |   |                              |          |   |   |   |   |   |
| Expenses:                                                           |   |                              |          |   |   |   |   |   |
| Stock      appreciation rights expense                              |   | $                                 | (997,000      | ) |   | $ | (997,000 | ) |
| Restricted      stock units expense                                 |   |                              | (165,000      | ) |   |   |   |   |
| Foreign      exchange gain (loss)                              |   |                              | (3,027,000    | ) |   |   | 3,772,000 |   |
| Other                                                               |   |                              | (      55,000 | ) |   |   | (1,822,000 | ) |
| Segment      total recovery (expenses)                              |   | $                                 | (4,244,000    | ) |   | $ | 953,000 |   |
| Income      (loss) before income taxes and noncontrolling interests |   | $                                 | (9,206,000    | ) |   | $ | 1,344,000 |   |

| · | A      $199,000 charge for other-than-temporary impairment in 19 common stocks      held in deferred compensation accounts. The stocks have been trading      continuously below cost for at least nine months.  Based on the      extent and duration of the unrealized losses, it was determined that the      declines in market value are other-than-temporary. Consequently, we      recorded a charge to reduce our basis in the stocks to their market value      at March 31, 2009; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | A      $5.1 million charge for other-than-temporary impairment of bonds from      three issuers held in deferred compensation  accounts.                                                                                                                                                                                                                                                                                                                                                                  |

| · | A      $175,000 charge for other-than-temporary impairment in 3 common stocks      held in deferred compensation accounts, which reduced our basis in the      stocks to their fair value at March 31, 2008; and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | A      $340,000 charge for other-than-temporary impairment of one bond held in      deferred compensation accounts, which reduced the basis in the bond to      fair value at March 31, 2008.                    |

| ·   | included      SAR expense of $997,000 (see “SAR Expense”      below); |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | included      Restricted Stock Unit (“RSU”) expense of $165,000 (see “RSU Expense”      below); |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | included      $3 million foreign exchange expense, consisting of two different      foreign exchange effects (see “Foreign Exchange      Expense/Gain” below); and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | were      reduced by a $3.2 million decrease in deferred compensation      expense. |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | included      SAR expense of $997,000; |
|--------------------|----------------------------------------|

| ·   | were      reduced by a $3.8 million exchange rate benefit on an inter-company loan      (see “Foreign Exchange      Expense/Gain” below); and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | were      reduced by a $1.4 million decrease in deferred compensation      expense. |
|--------------------|-------------------------------------------------------------------------------------|

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LIQUIDITY 

| · | the      Water Resource and Water Storage Operations segment contains cash of $10.6      million; |
|--------|---------------------------------------------------------------------------------------------------|
| · | the      Real Estate Operations segment holds cash of $23  million;                               |

| · | the      Insurance in Run Off segment has cash of $3.7 million, fixed-income      securities with a market value of $13.7 million, and equities with a      market value of $95.9 million; and                                                                                                                                                                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | the      Corporate segment contains cash of $57.3 million and a fixed-income      security with a market value of $1.9 million.  In addition, cash      of $4.6 million, fixed-income securities with a market value of $10.2      million, and equity securities with a market value of $6.5 million are      held in deferred compensation Rabbi Trusts within the Corporate segment,      which will be used to pay the deferred compensation      liabilities. |

| · | As      Vidler’s water assets are monetized, Vidler should generate free cash flow      as receipts from the sale of real estate and water assets will have      overtaken maintenance capital expenditure, development      costs, financing costs, and operating  expenses; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Nevada      Land is actively selling real estate which has reached its highest and      best use. Nevada Land’s principal sources of cash flow are the proceeds of      cash real estate sales and collections of principal and interest on sales      contracts where Nevada Land has provided vendor financing. These receipts      and other revenues exceed Nevada Land’s operating and development costs,      so Nevada Land is generating positive cash flow.  We are      redeploying part of the cash flow from Nevada Land to build the business      of UCP, by acquiring finished and partially-developed residential lots in      selected California markets; and |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Investment      income more than covers the operating expenses of the “run off” insurance      companies, Physicians and Citation. The funds to pay claims come from the      maturity of fixed-income securities, the realization of fixed-income      investments and stocks held in their investment portfolios, and recoveries      from reinsurance companies.   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ISSUER                                                |   | FAIR      VALUEMARCH      31, 2009 |       |   | PERCENTAGE |   |
|-------------------------------------------------------|--------|------------------------------------|------------|--------|------------|--------|
|                                                  |   |                               |       |   |       |   |
| Government-sponsored      enterprises                 |   | $                                  | 7,837,000  |   |       |   | 57 | % |
| Other      investment grade corporate                 |   |                               | 2,122,000  |   |       |   | 15 | % |
| Non-investment      grade corporate                   |   |                               | 398,000    |   |       |   | 3 | % |
| State      of California general obligation municipal |   |                               | 2,125,000  |   |       |   | 16 | % |
| U.S.      Treasury                                    |   |                               | 1,210,000  |   |       |   | 9 | % |
|                                                  |   | $                                  | 13,692,000 |   |       |   | 100 | % |

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Quantitative and Qualitative Disclosure about MarketRisk

Item 4:  Controls and Procedures 

Item 1:  Legal Proceedings

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Factors

Item 4:  Submission of Matters to a Vote of SecurityHolders

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Exhibits

| Exhibit      Number |       | Description                                                                                                                                                                                             |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3                   | (i)        | Amended      and Restated Articles of Incorporation of PICO. (1)                                                                                                                                        |
| 3                   | (ii)  | Amended      and Restated By-laws of PICO. (2)                                                                                                                                                          |
| 10.1                | †    | Trust      for PICO Holdings, Inc. Executive Deferred Compensation, dated December      31, 2007, between PICO Holdings, Inc. and Huntington National Bank, N.A.,      as trustee.(3)                   |
| 10.2                | †    | Trust      for PICO Holdings, Inc. Non-Employee Director Deferred Compensation, dated      September 25, 2001, between PICO Holdings, Inc. and Huntington National      Bank, N.A., as trustee.(3)      |
|  10.3          | †    |  Employment      Agreement, dated March 3, 2009, by and between the Company and Richard      H.  Sharpe. (4)                                                                                  |
| 10.4                | †    | Employment      Agreement, dated as of March 3, 2009, by and between the Company and Maxim      C.W. Webb.(4)                                                                                           |
|                |       |                                                                                                                                                                                                    |   |
| 10.5                | †    | Employment      Agreement, dated as of March 3, 2009, by and between the Company and      Damian C. Georgino.(4)                                                                                        |
| 10.6                | †    | Form      of Restricted Stock Units Agreement.(4)                                                                                                                                                       |
| 10.7                | †    | Form      of Notice of Grant of Restricted Stock Units. (4)                                                                                                                                             |
| 10.8                | †    | Amendment      to PICO Holdings, Inc. 2005 Long-Term Incentive Plan 2009 Restricted Stock      Unit Award Agreement, dated as of April 2, 2009, by and between the      Company and W. Raymond Webb.(5) |
| 23.1                |       | Consent      of Daniel B. Stephens and Associates, Inc                                                                                                                                                  |
| 23.2                |       | Consent      of Peter A. Mock, Ph. D., R. G., P. H.                                                                                                                                                     |
| 31.1                |       | Certification      of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted      pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.                                          |
| 31.2                |       | Certification      of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted      pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.                                          |
| 32.1                |       | Certification      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (Section 906      of the Sarbanes-Oxley Act of 2002).                                                                  |
| 32.2                |       | Certification      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906      of the Sarbanes-Oxley Act of 2002).                                                                  |

|   | (1)     | Incorporated      by reference to the Quarterly Report on Form 10-Q filed with the      Securities and Exchange Commission on November 7, 2007. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2)     | Incorporated      by reference to the Current Report on Form 8-K filed with the Securities      and Exchange Commission on February 29, 2008.   |
|   | (3)     | Incorporated      by reference to the Quarterly Report on Form 10-Q filed with the      Securities and Exchange Commission on May 9, 2008.      |
|   | (4)     | Incorporated      by reference to the Current Report on Form 8-K filed with the Securities      and Exchange Commission on March 9, 2009.       |
|   | (5)     | Incorporated      by reference to the Current Report on Form 8-K filed with the Securities      and Exchange Commission on April 7, 2009.       |
|   | † | Indicates      compensatory plan, contract or arrangement in which directors or executive      officers may participate.                        |

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