According to A.M. Best, personal automobile insurance is the largest line of property and casualty insurance in the United States, accounting for approximately 34.3% or $157.5 billion of the total $458.9 billion of annual industry premiums in 2003. Personal automobile insurance provides coverage to drivers for liability to others for both bodily injury and property damage and for physical damage to an insured’s own vehicle from collision and other perils. Personal automobile insurance is comprised of preferred, standard and nonstandard risks. Nonstandard insurance is intended for drivers who, due to their driving record, age or vehicle type, represent a higher than normal risk. As a result, customers who purchase nonstandard automobile insurance generally pay higher premiums for similar coverage than drivers qualifying for standard or preferred policies.

Each state requires personal automobile drivers to be insured to the particular state’s minimum limits as a prerequisite to being licensed and driving lawfully. Minimum limits refer to minimal levels of bodily injury and property damage liability insurance coverage. For example, Ohio requires personal automobile drivers to carry a minimum of $12,500 of bodily injury coverage per person, $25,000 of bodily injury coverage per accident and $7,500 of property damage liability coverage.

Despite regulations mandating that drivers have a minimum level of liability insurance, there are a number of drivers that do not carry any personal automobile insurance. A report dated December 2000 and based on data from 1995-1997 by the Insurance Research Council entitled “Uninsured Motorists” estimates that in the United States approximately 13% of drivers do not carry automobile liability insurance. Based on Federal Highway Administration statistics from 2001, this percentage implies that there are approximately 25 million uninsured motorists in the United States. The percentage of uninsured motorists varies significantly by state.

In addition to insurance premiums, the Company also charges fees, including policy origination fees, cancellation fees, billing fees and reinstatement fees. The Company does not charge any financing fees, and, therefore, its customers’ payments are not subject to changes in interest rates.

The Company had approximately 200,000 insurance policies in-force as of September 30, 2004. The average annual premium on these policies was $1,344 (or $1,460 if policy service fees are included).

The Company believes that its customers generally purchase automobile insurance to comply with state laws requiring drivers to be insured. As of June 30, 2004, over 90% of the Company’s in-force policies were issued to customers who have failed to maintain continuous insurance coverage. In addition, approximately one-half of the Company’s customers had driving records reflecting no moving violations within the previous three-year period.

The Company sells minimum limits personal automobile insurance directly to the public through company-owned call centers. The Company does not accept any business from independent agents. The Company’s telephone system tracks all incoming calls to ensure that calls are directed to agents who are licensed in the state of residence of the potential customer.

The Company currently has three call centers that handle its sales operations. These call centers are located in Columbus, Ohio in the Company’s corporate headquarters, Monroe County, Ohio and Williamsburg County, South Carolina. As of June 30, 2004, the Company had over 200 licensed sales representatives located at these three sites.

The Company is currently selling insurance in ten states.

Net premiums earned for the nine months ended September 30, 2004 amounted to $196.4 million, an increase of $52.0 million or 36.0% compared to premiums earned during the nine months ended September 30, 2003.

Net investment income increased to $4.0 million in the nine months ended September 30, 2004 from $2.3 million in the nine months ended September 30, 2003.

Net realized gains on investments for the nine months ended September 30, 2004 were less than $0.1 million compared to net realized losses of less than $0.1 million for the nine months ended September 30, 2003.

Net income was $21.9 million for the nine months ended September 30, 2004, an increase of $7.0 million compared to net income of $14.9 million for the nine months ended September 30, 2003.