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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 June 30, 2003

or


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

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

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

www.fpic.com
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(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 |_|

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 |_|

As of August 4, 2003, there were 9,490,669 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 (Loss) and Comprehensive
               Income (Loss) 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 21 
Item 3 Quantitative and Qualitative Disclosures About Market Risk 33 
Item 4 Disclosure Controls and Procedures 33 

Part II 		Other Information Page

Item 1		 Legal Proceedings 33 
Item 2 Changes in Securities and Use of Proceeds 33 
Item 3 Defaults Upon Senior Securities 33 
Item 4 Submission of Matters to a Vote of Security Holders 33 
Item 5 Other Information 34 
Item 6 Exhibits and Reports on Form 8-K 34 

Signature		 36 

Certification of John R. Byers pursuant to Section 302 of the Sarbanes-Oxley Act
     and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934		 Exhibit 31.1

Certification of Kim D. Thorpe pursuant to Section 302 of the Sarbanes-Oxley Act
     and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934		 Exhibit 31.2

Certification of John R. Byers and Kim D. Thorpe pursuant to 18 U.S.C. Section 1350
     as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32




FPIC Insurance Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Position
 As of June 30, 2003 and December 31, 2002
(In Thousands, Except Share-related Data)


(unaudited)
June 30,
2003
Dec 31,
2002
Assets            
    Cash and cash equivalents     $ 80,250     86,589  
    Bonds and U.S. Government securities, available for sale       482,345     436,970  
    Equity securities, available for sale       7     6  
    Other invested assets (Note 8)       6,001     10,801  
    Real estate       4,141     4,354  
            Total cash and investments       572,744     538,720  
                 
    Premiums receivable, net (Note 8)       120,073     108,494  
    Accrued investment income       5,657     5,998  
    Reinsurance recoverable on paid losses (Note 8)       8,601     6,529  
    Due from reinsurers on unpaid losses and advance    
       premiums ((Includes amounts due from related    
       parties of $80,375 and $71,299) Note 8)       218,466     168,159  
    Ceded unearned premiums (Note 8)       86,054     78,889  
    Property and equipment, net       5,213     4,334  
    Deferred policy acquisition costs       3,851     4,452  
    Deferred income taxes       33,939     34,653  
    Prepaid expenses       3,104     1,744  
    Goodwill       18,870     18,870  
    Intangible assets       893     1,034  
    Federal income tax receivable       1,259     —  
    Other assets (Note 8)       13,996     54,555  
                 Total assets     $ 1,092,720     1,026,431  
Liabilities and Shareholders’ Equity    
    Losses and loss adjustment expenses     $ 495,306     440,166  
    Unearned premiums ((Includes amounts due to related    
       parties of $40,295 and $43,506) Note 8)       194,683     173,421  
    Reinsurance payable (Note 8)       118,769     96,470  
    Paid in advance and unprocessed premiums       8,038     14,060  
    Revolving credit facility       19,500     37,000  
    Trust preferred securities       20,000     —  
    Senior notes       10,000     —  
    Term loan       —     10,208  
    Deferred credit       8,239     8,749  
    Deferred ceding commission       3,445     4,669  
    Federal income tax payable       —     120  
    Accrued expenses and other liabilities (Note 8)       38,707     75,655  
            Total liabilities       916,687     860,518  
    Commitments and contingencies (Note 10)    
    Common stock, $.10 par value, 50,000,000 shares authorized;    
       9,448,882 and 9,390,795 shares issued and outstanding at    
       June 30, 2003 and December 31, 2002, respectively       945     939  
    Additional paid-in capital       38,738     38,322  
    Accumulated other comprehensive income       8,965     5,525  
    Retained earnings       127,385     121,127  
            Total shareholders’ equity       176,033     165,913  
                 Total liabilities and shareholders’ equity     $ 1,092,720     1,026,431  

See accompanying notes to the condensed consolidated financial statements.



3



FPIC Insurance Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(In Thousands, Except Share-related Data)


(unaudited)
Three months ended June 30, Six months ended June 30,  
2003
2002
2003
2002
Revenues                  
    Net premiums earned (Note 8)   $ 31,870     47,560     60,779     86,902  
    Claims administration and management fees (Note 8)     9,098     8,291     17,762     15,921  
    Net investment income     4,719     5,813     9,221     10,701  
    Commission income     2,789     1,162     4,373     2,036  
    Net realized investment gains (losses)     418     (324 )   656     144  
    Finance charges and other income (Note 8)     247     257     479     486  
        Total revenues     49,141     62,759     93,270     116,190  
Expenses  
    Net losses and loss adjustment expenses (Note 8)     29,666     41,358     56,300     75,183  
    Other underwriting expenses (Note 8)     2,167     6,687     5,032     13,386  
    Claims administration and management expenses     8,171     7,947     16,513     15,357  
    Interest expense (Note 8)     3,530     1,254     5,571     2,470  
    Other expenses (Note 8)     71     106     141     177  
        Total expenses     43,605     57,352     83,557     106,573  
    Income from operations before income taxes and cumulative
      effect of accounting change		     5,536     5,407     9,713     9,617  
        Less: Income taxes     2,038     2,798     3,455     4,143  
    Income before cumulative effect of accounting change     3,498     2,609     6,258     5,474  
        Less: Cumulative effect of accounting change  
            (net of an $18,784 income tax benefit) (Note 3)     —     —     —     29,578  
    Net income (loss)   $ 3,498     2,609     6,258     (24,104 )
Basic earnings (loss) per common share   $ 0.37     0.28     0.66     (2.57 )
Diluted earnings (loss) per common share   $ 0.37     0.27     0.66     (2.54 )
Basic weighted average common shares outstanding     9,425     9,390     9,417     9,382  
Diluted weighted average common shares outstanding     9,533     9,516     9,474     9,507  
Comprehensive Income (Loss)  
    Net income (loss)   $ 3,498     2,609     6,258     (24,104 )
    Other comprehensive income:  
      Unrealized holding gains on debt and equity securities     4,173     6,457     3,829     1,061  
      Unrealized holding (losses) gains on derivative  
        financial instruments     (239 )   (91 )   197     80  
      Settlement of derivative financial instruments     989     —     989     —  
      Income tax expense related to unrealized  
        gains and losses     (1,562 )   (2,397 )   (1,575 )   (375 )
           Other comprehensive income   $ 3,361     3,969     3,440     766  
    Comprehensive income (loss)   $ 6,859     6,578     9,698     (23,338 )

See accompanying notes to the condensed consolidated financial statements.



4



FPIC Insurance Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the Six Months Ended June 30, 2003 and Year Ended December 31, 2002
(In Thousands)


Common
Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Retained
Earnings
Total
Balances at December 31, 2001     $ 934    37,837    (26 )  135,829    174,574  
   Net loss    —    —    —    (14,702 )  (14,702 )
   Unrealized gain on debt and  
     equity securities, net    —    —    5,565    —    5,565  
   Unrealized loss on derivative  
     financial instruments, net    —    —    (270 )  —    (270 )
   Amortization of unrealized loss on  
     derivative financial instruments    —    —    256    —    256  
   Issuance of shares    5    485    —    —    490  
Balances at December 31, 2002    939    38,322    5,525    121,127    165,913  
   Net income    —    —    —    6,258    6,258  
   Unrealized gain on debt and  
     equity securities, net    —    —    2,369    —