To Protect Our Policyholders

Princeton Insurance adhered squarely to its policies of responsible pricing and strict underwriting begun in 1996. In fact, it was that dedication to protecting the interests of policyholders by not engaging in the competition-driven low pricing tactics of other companies that helped us emerge from 2001 shaken but still financially solid.

Recognizing the signs of financial vulnerability in certain lines, we began to cast off business in property-casualty areas outside of medical malpractice that had contributed significantly to our overall loss for the year.

These actions were part of a larger overall goal: to focus on our core strengths— New Jersey medical malpractice and select professional liability niches, and workers compensation coverage for small businesses— and take steps to ensure we will meet our policyholders financial obligations now and in the future.

In addition, we continued to monitor escalating claim costs and an increasingly difficult regulatory environment in Pennsylvania with an eye toward limiting our exposure in that territory.

TABLE OF CONTENTS

Cover Page

Letter to Policyholders

A Year of Market Turmoil

Princeton's Legacy Continues

2001 Financial Statements

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