FPIC INSURANCE GROUP INC - 10-Q Quarterly Report

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2004.

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transaction period from ____________to ___________.

Commission file number 1-11983

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

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

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

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

	www.fpic.com
	(Registrant's Internet Address)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x No o

As of October 29, 2004, there were 10,022,034 shares of the registrant's common stock outstanding.

FPIC Insurance Group, Inc.

Index to Quarterly Report on Form 10-Q

Part I	Financial Information	Page

Item 1.	Condensed Consolidated Financial Statements of FPIC Insurance Group, Inc. and Subsidiaries:
	Condensed Consolidated Statements of Financial Position	3
	Condensed Consolidated Statements of Income and Comprehensive Income	4
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to the Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32



Part II	Other Information	Page

Item 1.	Legal Proceedings	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Submission of Matters to a Vote of Security Holders	32

Item 5.	Other Information	33

Item 6.	Exhibits	33


Signature		33

FPIC Insurance Group, Inc.
Condensed Consolidated Statements of Financial Position
As of September 30, 2004 and December 31, 2003
(in thousands, except common share data)

	(unaudited)
	Sept 30, 2004		Dec 31, 2003
Assets
Cash and cash equivalents	$	102,838		85,064
Bonds and U.S. Government securities, available for sale		551,284		528,647
Equity securities, available for sale		10		9
Other invested assets (Includes related party amounts of $0 and $788 - Note 11)		3,583		4,774
Real estate, net		3,946		4,207
Total cash and investments		661,661		622,701

Premiums receivable, net (Includes related party amounts of $5,385 and $8,608 - Note 11)		106,766		101,262
Accrued investment income		6,806		6,153
Reinsurance recoverable on paid losses (Includes related party amounts of $3,234 and $2,738 - Note 11)		21,973		15,950
Due from reinsurers on unpaid losses and advance premiums (Includes related party amounts of $90,286 and $82,474 - Note 11)		308,761		275,766
Ceded unearned premiums (Includes related party amounts of $6,376 and $16,486 - Note 11)		50,146		71,435
Property and equipment, net		5,780		5,248
Deferred policy acquisition costs (Includes related party amounts of $2,969 and $3,500 - Note 11)		10,434		6,209
Deferred income taxes		35,150		34,819
Prepaid expenses		3,508		3,225
Goodwill		18,870		18,870
Intangible assets		616		782
Federal income tax receivable		503		2,179
Other assets (Includes related party amounts of $6,570 and $4,171 - Note 11)		24,048		18,157
Total assets	$	1,255,022		1,182,756

Liabilities and Shareholders' Equity
Losses and loss adjustment expenses (Includes related party amounts of $24,185 and $20,555 - Note 11)	$	606,331		574,529
Unearned premiums (Includes related party amounts of $45,923 and $47,240 - Note 11)		192,642		177,435
Reinsurance payable (Includes related party amounts of $10,533 and $11,761 - Note 11)		139,914		137,708
Paid in advance and unprocessed premiums		5,505		11,766
Long term debt		46,083		46,083
Deferred credit, related party (Note 11)		7,020		7,729
Deferred ceding commission		3,267		3,126
Accrued expenses and other liabilities (Includes related party amounts of $927 and $1,030 - Note 11)		44,951		37,723
Total liabilities		1,045,713		996,099

Commitments and contingencies (Note 7)

Common stock, $0.10 par value, 50,000,000 shares authorized; 10,022,034 and 9,770,843 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively		1,002		977
Additional paid-in capital		46,376		43,705
Accumulated other comprehensive income, net		3,237		4,276
Retained earnings		158,694		137,699
Total shareholders' equity		209,309		186,657
Total liabilities and shareholders' equity	$	1,255,022		1,182,756

See accompanying notes to the condensed consolidated financial statements.
	3

FPIC Insurance Group, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
For the Three and Nine Months Ended September 30, 2004 and 2003
(in thousands, except per common share data)



	(unaudited)
	Three Months Ended			Nine Months Ended
Revenues		Sept 30, 2004	Sept 30, 2003		Sept 30, 2004	Sept 30, 2003
Net premiums earned (Note 11)	$	38,873	40,895		105,552	101,674
Claims administration and management fees (Note 11)		13,810	10,760		38,598	28,523
Net investment income		5,039	4,680		15,224	13,902
Commission income		2,741	2,192		6,882	6,565