The MIIX Group Notes Q3 Results

Patricia Costante, chairman and CEO of The MIIX Group, Inc., a New Jersey-based provider of medical professional liability insurance services, announced net operating income for the third quarter ended Sept. 30, 2003, of $4.4 million, or $.33 per share compared to net operating income for the third quarter ended Sept. 30, 2002 of $1.5 million, or $.11 per share.

For the nine months ended Sept. 30, 2003, the company had net operating income of $16.7 million or $1.25 per share compared with a net operating loss of $43.8 million or $3.27 per share during the first nine months of 2002. The company had net income for the third quarter ended Sept. 30, 2003 of $7.0 million, or $.52 per share, compared to net income of $.9 million, or $.07 per share in the third quarter of 2002. The company had net income for the nine months ended Sept. 30, 2003 of $21.7 million, or $1.62 per share, compared to a net loss of $50.6 million, or $3.78 per share in the nine months ended Sept. 30, 2002.

Net operating income is a non-GAAP financial measure calculated by subtracting realized investment gains of $2.6 million and $5.0 million from GAAP net income of $7.0 million and $21.7 million for the third quarter ended Sept. 30, 2003 and nine months ended Sept. 30, 2003, respectively.

Total Premiums Written: Total premiums written were $0.3 million in the third quarter of 2003, an increase of $2.6 million compared to the third quarter of 2002. This increase in total premiums written primarily reflects the company’s cessation of writing or renewing policies during the second quarter of 2002, which resulted in extensive cancellation activity in the third quarter of 2002. Activity in the third quarter of 2003 consisted primarily of tail coverage premiums.

Net Premiums Earned: Net premiums earned for the third quarter of 2003 decreased by $21.7 million from the comparable 2002 period. The decrease in direct premiums earned reflects the company’s cessation of writing or renewing policies during 2002. The reduction in ceded premiums earned resulted from reduced direct earned premiums during the period.

Net Investment Income: Net investment income decreased $5.9 million for the third quarter of 2003 compared to 2002. The decrease in net investment income reflects the impact of declining market yields coupled with a decline in the invested asset base, as well as an increase in average short-duration investments held during the third quarter of 2003.

Realized Investment Gains: Net realized gains on investments were $2.6 million in the third quarter of 2003, compared to a realized loss of $0.6 million in the third quarter of 2002. The realized gains primarily resulted from ongoing investment portfolio repositioning while realized losses included $1.7 million of investment write-downs in the quarter, primarily as a result of continued poor performance in collateralized bond and loan obligations.

Other Revenue / Expenses: Other revenue/expense increased $0.9 million for the third quarter of 2003 compared to 2002. The net other revenue and expenses of $1.7 million for the third quarter of 2003 consisted primarily of net management fees associated with administering the operations of MIIX Advantage Insurance Company of New Jersey of $0.9 million and renewal rights revenues of $0.7 million.

Loss and Loss Adjustment Expenses: Loss and loss adjustment expenses were $(3.9) million for the third quarter of 2003, compared to $21.2 million in the third quarter of 2002. The net decrease consisted of the net effect of a reduction in gross losses and allocated loss adjustment expenses incurred of $60.4 million, a reduction in ceded losses incurred of $12.8 million and an increase in ULAE incurred of $22.5 million. The net decrease largely resulted from the reduction in net earned premiums in third quarter 2003 compared to 2002.

Underwriting Expenses: Underwriting expenses decreased by $1.7 million in the third quarter of 2003 compared to the third quarter of 2002. The net decrease in the quarter was composed of reductions in most underwriting and administration cost categories as the result of extensive cost reduction measures taken since entering run-off in 2002.