In 2001, Princeton Insurance recorded the first overall loss in its 25-year history. Princeton was not alone in posting these disappointing results. Insurers across the medical liability market felt the effects of rising claims costs, and the industry combined ratio stood at an estimated 143.0 for the year, according to A.M. Best. The national medical professional liability market lost a major player in December when The St. Paul decided to withdraw from the market. On a regional basis, the demise of Pennsylvania-based PHICO and the significant year-end loss and subsequent discontinuance of business suffered by New Jersey-based MIIX Insurance Company profoundly affected doctors in our underwriting territories.

Higher premiums followed news of higher-than-anticipated claim costs; in some instances, especially in Pennsylvania, doctors were forced to make changes in their practice to counter those higher premiums.

TABLE OF CONTENTS

Cover Page

Letter to Policyholders

A Year of Market Turmoil

Princeton's Legacy Continues

2001 Financial Statements

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