FPIC Insurance Group Unveils Q4 and Year 2003 Numbers

February 26, 2004

Florida-based FPIC Insurance Group, Inc. reported net income of $4.9 million, or $0.49 per diluted share, for the fourth quarter 2003, compared to net income of $5.0 million, or $0.53 per diluted share, for the fourth quarter 2002. Operating earnings increased 43 percent to $4.9 million, or $0.49 per diluted share, for the fourth quarter 2003, up from operating earnings of $3.4 million, or $0.36 per diluted share, for the fourth quarter 2002.

For the year ended Dec. 31, 2003, net income was $16.6 million, or $1.71 per diluted share, up from a net loss of ($14.7) million, or ($1.56) per diluted share, for the year ended Dec. 31, 2002. During 2002, the company adopted Financial Accounting Standard No. 142 “Goodwill and Other Intangible Assets,” which resulted in a one-time, non-cash charge of $29.6 million, net of income taxes. Income before the cumulative effect of accounting change was $14.9 million, or $1.58 per diluted share, for the year ended Dec. 31, 2002. For the year ended Dec. 31, 2003, operating earnings increased 28 percent to $15.3 million, or $1.58 per diluted share, up from operating earnings of $12.0 million, or $1.27 per diluted share, for the year ended Dec. 31, 2002.

“We ended 2003 with strong earnings momentum,” stated John Byers, president and CEO, “with operating earnings increasing quarter over quarter and year over year at each of our business segments.

“Our insurance operations continue to focus on our core markets, writing good business at appropriate prices. We are aggressively handling claims and conservatively booking reserves. We are confident in the level of our reserves, as the in-depth, year-end reviews performed by both our internal and independent actuaries demonstrate our reserves’ adequacy. Furthermore, our non-insurance operations continue to contribute positive earnings and cash flow and remain an excellent complement to our insurance operations.”

2003 Financial Highlights
— Net income of $1.71 per diluted share and operating earnings of $1.58 per diluted share for the year ended Dec. 31, 2003;

— Income before cumulative effect of accounting change increased 11 percent year over year;

— Operating earnings up 43 percent quarter over quarter and 28 percent year over year;

— Eighth consecutive quarter of positive consolidated operating earnings;

— Lower revenues for the quarter and year due to higher ceded reinsurance premiums, lower net investment income and lower realized investment gains;

— Improved underwriting results with a GAAP combined ratio of 99% for the year 2003;

— Growth in cash and invested assets to $623 million in 2003;

— Increases in assets, reserves, shareholders’ equity and statutory surplus during 2003;

— Operating cash flow of $90 million for the year 2003;

— 9 percent return on average equity based on net income for the year 2003.

2003 Operational Highlights
— Overall policyholder retention levels remained high;

— Third year of significant pricing improvements;

— Continued focus on core markets and products;

— Continuation of selective underwriting and strong claims management;

— Overall claims results remained within expectations;

— Integration of insurance operations;

— Participation in three private offerings of trust preferred securities and senior notes;

— Full repayment and early retirement of commercial bank debt;

— Commutation of all Gerling Global reinsurance exposure;

— Successful negotiation of 2004 reinsurance program at a lower overall cost;

— Active participation in Florida 2003 tort reform legislation.

Byers, commenting on 2003 accomplishments, said, “We achieved our financial and business goals during 2003. Financially, we materially improved our operating earnings and grew the statutory surplus of our insurers. In addition, we enhanced our capitalization by replacing restrictive, short-term commercial bank debt with long-term trust preferred securities and senior notes that offer us more operating flexibility and improved liquidity. Operationally, we successfully integrated our insurance operations, which affords us efficiencies that will improve our bottom line. We believe these accomplishments, along with our solid financial results, echo our commitment to the long-term interests of our shareholders and our policyholders.

“Looking ahead to 2004, our hard work and achievements throughout 2003 have further established FPIC as a consistently stable and profitable organization. We are positioned financially and operationally to capitalize on opportunities in 2004.”

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