IMPORTANT NOTICE TO POLICYHOLDERS, SUBSCRIBERS, CREDITORS, AND OTHER INTERESTED PERSONS

RE:     NOTICE OF HEARINGS ON THE APPLICATION FOR LIQUIDATION OF RECIPROCAL OF AMERICA AND THE RECIPROCAL GROUP AND RELATED MATTERS

This notice will provide you with important information regarding the Application for Liquidation of Reciprocal of America (“ROA”) and The Reciprocal Group (“TRG”), (collectively, ROA and TRG are referred to as the “Companies”) and scheduled hearings before the Commission of the Commonwealth of Virginia.

On January 29, 2003, in a case styled Commonwealth of Virginia, ex rel. State Corporation Commission v. Reciprocal of America, The Reciprocal Group, and Jody M. Wagner, Treasurer of Virginia, Court File No. CH03-135, the Circuit Court of the City of Richmond, issued its Final Order Appointing Receiver for Rehabilitation or Liquidation (the “Receivership Order”), appointing the Commission of the Commonwealth of Virginia, as Receiver, Alfred W. Gross, the Commissioner of the Commission’s Bureau of Insurance, as Deputy Receiver, and Melvin J. Dillon as Special Deputy Receiver of the Companies, in accordance with Title 38.2, Chapters 12 and 15 of the Virginia Code.

On April 30, 2003, the Deputy Receiver filed an Application for Orders Setting Hearing on Liquidation of Reciprocal of America and The Reciprocal Group, Establishing Response Dates, Ordering Liquidation, Approving Claims Bar Dates, and Related Matters (the “Application”) with the Commission in a case styled Commonwealth of Virginia, ex rel. State Corporation Commission v. Reciprocal of America and The Reciprocal Group.

FIRST HEARING BEFORE THE COMMISSION

The Commission has scheduled the first hearing (the “Liquidation Hearing”) on the Application for 10:00AM on June 19, 2003, at the State Corporation Commission, Tyler Building, 2^nd Floor, 1300 East Main Street, Richmond, Virginia. At the “Liquidation Hearing” the Commission has been asked to: 1) determine whether further efforts to rehabilitate the Companies would be useless;  2) grant the Deputy Receiver’s request for a finding of insolvency; 3) enter an Order of Liquidation for the Companies; 4) grant the Deputy Receiver authority to cancel the contracts of insurance and insurance policies of ROA; and 5) grant the Deputy Receiver authority to continue medical and disability payments (collectively, “Disability Payments”) under workers’ compensation policies as described in the Application.

Any party opposed to a finding of insolvency, Order of Liquidation, continuation of the Disability Payments, or to the cancellation of the contracts of insurance and insurance policies of ROA, shall present such opposition at the Liquidation Hearing and must provide to the Commission, the Deputy Receiver, and counsel for the Deputy Receiver, no later than 10 days before the Liquidation Hearing, notice of such opposition, with a full statement as to the basis therefore, and a list of anticipated witnesses, the substance of the anticipated testimony, and a list of exhibits to be offered in support of the opposition.

The statement of the basis for the opposition shall contain at least (i) a precise statement of the interest of the respondent; (ii) a statement of the specific relief sought, to the extent then known; and (iii) the factual and legal basis for the relief sought.  The statement of opposition will be deemed filed with the Commission only upon receipt of the original and fifteen (15) copies thereof by the Clerk of the Commission at the following address: State Corporation Commission, 1300 East Main Street, P.O. Box 1197, Richmond, Virginia 23218; and delivery of one complete copy of any such filing to each of the Deputy Receiver, Alfred W. Gross, at 4200 Innslake Drive, Glen Allen, Virginia 23060, and counsel for the Deputy Receiver, Patrick H. Cantilo, at the same address, on or before the date required for filing with the Commission.

SECOND HEARING BEFORE THE COMMISSION

The Commission has scheduled the second hearing (the “Other Matters Hearing”) on the Application for 10:00AM on September 17, 2003, at the State Corporation Commission, Tyler Building, 2^nd Floor, 1300 East Main Street, Richmond, Virginia. At the “Other Matters Hearing” the Commission has been asked to consider all other matters raised in the Deputy Receiver’s Application, and any related matters raised by the Deputy Receiver in any supplemental or amended application, as well as any opposition to any relief sought by the Deputy Receiver (other than the finding of insolvency, Order of Liquidation, continuing of Disability Payments, and cancellation of the contracts of insurance and insurance policies of ROA) which may be presented by any interested party.

Any person who expects to appear at the Other Matters Hearing for the purpose of opposing any relief sought by the Deputy Receiver (other than the finding of insolvency, Order of Liquidation, continuation of Disability Payments under workers’ compensation policies, and cancellation of the contracts of insurance and insurance policies of ROA) is required, no later than 30 days before the Other Matters Hearing, to file with the Commission, and provide a copy to each of the Deputy Receiver and counsel for the Deputy Receiver, a Notice of Participation as Respondent, which shall contain: (i) a precise statement of the interest of the respondent; (ii) a statement of the specific relief sought, to the extent then known; and (iii) the factual and legal basis for the relief sought.

All persons who timely file a Notice of Participation as Respondent, and who still desire to participate in the Other Matters Hearing, are required to file with the Commission and deliver a copy to each of the Deputy Receiver and counsel for the Deputy Receiver, no later than 20 days before such hearing, the prepared testimony and exhibits of each witness expecting to present direct testimony in opposition to any relief sought herein by the Deputy Receiver (other than the finding of insolvency, Order of Liquidation, continuation of Disability Payments, and cancellation of the contracts of insurance and insurance policies of ROA).