Technology-Driven Advances Help Improve
Internal Processes and External Service

In 2001, Princeton Insurance made great strides in its effort to convert from its two-tiered internal policy management software to a newly designed system. Advanced Insurance Management System is specially tailored to adapt to the changing nature of policy rating and processing. This is a web-based system that will allow for expanded functionality for agents, brokers and employees in the field. Intelligent routines have been created that will allow for more complete policy processing with less human interaction.

Technology advances also allowed Princeton Insurance to expand its use of the internet to publish interactive reports and newsletters. Electronic publishing allows for more immediate communication and improved efficiency, as important information can be disseminated quicker, and is expected to expand even farther in the coming year. Last year, Princeton Insurance launched Agent Connection, an electronic newsletter for contract agents representing us in the marketplace. Also, we laid the groundwork to convert our risk management newsletter, Risk Review, into an all-electronic newsletter accessible from the company's Web site. This conversion is expected to be completed by third quarter 2002.

TABLE OF CONTENTS

Cover Page

Letter to Policyholders

A Year of Market Turmoil

Princeton's Legacy Continues

2001 Financial Statements

{yir_finrvwadd}