SCHEDULE 14A
(RULE 14A - 101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (a)14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

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[ ] Preliminary Proxy Statement [ ] CONFIDENTAL, FOR THE USE OF THE COMMISSION ONLY (AS
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RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
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14a-11 (c) or Rule 14a-12.

PICO HOLDINGS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(NAME OF PERSON (S)PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):

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PICO HOLDINGS, INC.
875 PROSPECT STREET, SUITE 301
LA JOLLA, CALIFORNIA 92037

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of PICO Holdings, Inc., a California
corporation (the "Company"), will be held at 3264 Goni Road, Suite 153, Carson
City, Nevada 89706the Museum of Contemporary Art,
Coast Room, 700 Prospect Street, La Jolla, California 92037 on Thursday, October 11, 2001July
18, 2002 at 9:00 a.m. (PDT) for the following purposes:

1. To elect twothree directors, for which positions the Board of Directors
has nominated RobertJohn R. BroadbentHart, Ronald Langley and Carlos C. CampbellJohn D. Weil to serve
for three years until the annual meeting of shareholders in the year
20042005 and until their respective successors have been duly elected and
qualified.

2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors.

3. To transact such other business as may be properly brought before the
meeting and any adjournment thereof.

Shareholders of record at the close of business on AugustMay 20, 20012002 will be entitled
to notice of and to vote at the Annual Meeting and any adjournment thereof.

By Order of the Board of Directors

/s/ RonRonald Langley

Ronald Langley
Chairman of the Board

Dated: August 22, 2001May 28, 2002

TO ASSURE YOUR REPRESENTATION AT THE MEETING, WHETHER OR NOT YOU PLAN TO ATTEND,
PLEASE VOTE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE AS PROMPTLY AS POSSIBLE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR
RIGHT TO REVOKE SUCH PROXY BY APPROPRIATE WRITTEN NOTICE OR BY VOTING IN PERSON
AT THE MEETING. PLEASE NOTE THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE
MEETING A LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR
BENEFICIAL OWNERSHIP OF THE SHARES AND YOU MUST OBTAIN FROM THE RECORD HOLDER A
PROXY ISSUED IN YOUR NAME.

PICO HOLDINGS, INC.
875 PROSPECT STREET, SUITE 301
LA JOLLA, CALIFORNIA 92037

PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 11, 2001JULY 18, 2002

The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of PICO Holdings, Inc., a California corporation (the "Company"), to
be voted at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting") to be held at 3264 Goni Road, Suite 153, Carson City, Nevada 89706,the Museum of Contemporary Art, Coast Room, 700 Prospect
Street, La Jolla, California at 9:00 a.m. (PDT) on Thursday, October 11, 2001July 18, 2002 and
at any postponement or adjournment thereof. The proxy may be revoked by
appropriate written notice at any time before it is exercised or by voting in
person at the meeting.

GENERAL INFORMATION

A copy of the Company's Annual Report to Shareholders for 20002001 accompanies this
Proxy Statement. The Annual Report and these proxy solicitation materials are
being mailed on or about August 22, 2001May 28, 2002 to all shareholders entitled to vote at
the meeting.

As of AugustMay 20, 2001,2002, the record date for the determination of shareholders
entitled to vote at the Annual Meeting, 12,390,09612,368,616 shares of Common Stock of the
Company were issued and outstanding, excluding 4,394,1274,415,607 treasury shares. Each
share of Common Stock entitles the holder to one vote on all matters brought
before the Annual Meeting, except for the 4,394,1274,415,607 shares held by the Company
and subsidiaries of the Company which may not be voted.

In voting for the election of directors, shareholders have cumulative voting
rights. Accordingly, each shareholder may cumulate such voting power as such
shareholder possesses and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares held by the
shareholder, or distribute such shareholder's votes on the same principle among
two or more candidates, as such shareholder sees fit. However, no shareholder is
entitled to cumulate votes (in other words, cast for any candidate a number of
votes greater than the number of shares of stock held by such shareholder)
unless at least one shareholder has given notice, at the Annual Meeting prior to
the voting, of the shareholder's intention to cumulate votes. If any shareholder
has given such notice, all shareholders may cumulate their votes for nominated
candidates.

The proxy, if returned properly executed and not subsequently revoked by written
notice delivered to the Secretary of the Company or by the shareholder voting in
person at the Annual Meeting, will be voted in accordance with the choice made
by the shareholder thereon. If a choice is not made with respect to any issue,
the proxy will be voted for the items described in this Proxy Statement. If
cumulative voting is permitted in the election of directors at the Annual
Meeting, the proxy holders shall have discretion as to the manner in which votes
represented by the proxy are to be cumulated, unless the proxy indicates the
manner in which such votes shall be cumulated.

Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
inspectorsinspector of election appointed for the meeting who will also determine whether
or not a quorum is present. The inspectorsinspector of election will treat abstentions,
and any shares as to which a broker or nominee has indicated that it does not
have discretionary authority to vote on a particular matter, as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum at the meeting, but will not be considered as present with respect to
that matter.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of AugustApril 1, 2001,2002, with respect to
the beneficial ownership of the Company's Common Stock entitled to vote by each
person known by the Company to be the beneficial owner of more than 5% of Common
Stock, and by each director, each Named Officer (as defined below) and all
executive officers and directors as a group. Except as otherwise indicated, each
person has sole investment and voting power, subject to community property laws.
Unless otherwise indicated, the business address for each person is 875 Prospect
Street, Suite 301, La Jolla, CA 92037.

NUMBER OF SHARES PERCENTAGE
AND NATURE OF OWNERSHIP OF
NAME AND ADDRESS OF BENEFICIAL OWNER AND NATURE OF OWNERSHIP OF
------------------------------------ BENEFICIAL OWNERSHIP(1) VOTING SHARES
------------------------------------ ------------------------------------------- -------------

Ronald Langley(2)(4) 4,031,209 32.5%4,032,785 32.6%

John R. Hart(3)(4) 4,031,595 32.5%4,033,586 32.6%

Robert R. Broadbent(5)(6) 10,949 *

Carlos C. Campbell(5) 1,500 *

S. Walter Foulkrod, III, Esq.(5) 4,403 *

Richard D. Ruppert, MD (5)(6)MD(5)(7) 8,798 *

John D. Weil(5) (7) 4,107,991 33.1%(8) 4,179,791 33.7%

Richard H. Sharpe(8) 118,389 *

Gary W. Burchfield(9) 61,434Sharpe(9) 118,314 *

Maxim C. W. Webb(10) 60,99858,013 *

James F. Mosier(11) 61,33161,410 *

PICO Equity Investors, L.P.(12) 3,333,333 26.9%

Dimensional Fund Advisors Inc.(13) 687,805 5.55%704,805 5.6%
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401

Artisan Partners Limited Partnership, Artisan Investment Corporation,
Andrew Ziegler, and Carlene Murphy Ziegler (14) 1,385,700 11.18%Ziegler(14) 1,477,473 11.9%
1000 N. Water Street, Suite 1770, Milwaukee, WI 53202

Executive Officers and Directors as a Group (11(10 persons) 5,831,930 47.1%5,842,883 47.2%

*Less than one percent (1%percent(1%)

- ------------------------------

(1) Sole voting and investment power unless otherwise indicated.

(2) Of these shares, 460,635 represent beneficial ownership of stock options
exercisable within the next 60 days. 4,8456,421 shares are held in the Company's
401(k) Plan. Mr. Langley owns a membership interest in PICO Equity
Investors Management, LLC which has voting control of 3,333,333 shares of
the Company.

(3) Of these shares, 479,738 represent beneficial ownership of stock options
exercisable within the next 60 days. 6,4018,392 shares are held in the Company's
401(k) Plan. Mr. Hart owns a membership interest in PICO Equity Investors
Management, LLC,

2
5 which has voting control of 3,333,333 shares of the
Company. The number of shares shown above does not include 19,940 shares of
the Company held in a deferred compensation plan Rabbi Trust for Mr. Hart.

(4) Mr. Langley and Mr. Hart each had 1993 call option agreements with Guinness
Peat Group plc; in August 1998 the Company assumed Guinness Peat Group's
obligations with respect to these 412,846 options. Mr. Langley exercised
57,307 of his call options in December 1998 and has 149,116 call options
remaining. Mr. Hart has not exercised any call options and has 206,423 call
options remaining.

(5) Each nonemployee director of the Company received a grant of 1,500 stock
options pursuant to the PICO Holdings, Inc. 2000 Nonstatutory Stock Option
Plan, which was approved by the Company's shareholders on October 19, 2000.
These options are vested and exercisable.

(6) The number of shares shown above does not include 770 shares of the Company
held in a deferred compensation plan Rabbi Trust for Mr. Broadbent.

(7) Dr. Ruppert shares voting and investment power with his wife.

(7)(8) Of these shares, 773,158844,958 are owned by a partnership which Mr. Weil
controls. Mr. Weil owns a membership interest in PICO Equity Investors
Management, LLC which has voting control of 3,333,333 shares of the
Company. (8)The number of shares shown above does not include 770 shares of
the Company held in a deferred compensation plan Rabbi Trust for Mr. Weil.

(9) Of these shares, 110,219 represent beneficial ownership of stock options
exercisable within the next 60 days. In addition, 3,6613,586 shares are held in the Company's
401(k) Plan.

(9) Of these shares, 56,111 represent beneficial ownership of stock options
exercisable within the next 60 days. In addition, 1,128 shares are held in
the Company's 401(k) Plan. Mr. Burchfield left the Company's employment on
June 15, 2001.

(10) Mr. Webb was elected Chief Financial Officer and Treasurer of the Company
on May 14, 2001. He previously served as an executive officer of the
Company as Vice President, Investments. Of these shares, 59,12356,138 represent
beneficial ownership of stock options exercisable within the next 60 days.
In addition,
1,494 shares are held in the Company's 401(k) Plan.

(11) Of these shares, 56,111 represent beneficial ownership of stock exercisable
within the next 60 days. In addition, 2,371 shares are held in the Company's 401(k)
Plan.

(12) Pursuant to a rights offering conducted by the Company in March 2000, an
investment partnership named PICO Equity Investors, L.P. acquired on March
28, 2000, 3,333,333 newly issued shares which were not subscribed for in
the rights offering. PICO Equity Investors, L.P. is managed by PICO Equity
Investors Management, LLC. PICO Equity Investors Management, LLC is owned
by Mr. Langley, Mr. Hart and Mr. Weil. PICO Equity Investors Management,
LLC will exercise all voting and investment decisions with respect to these
3,333,333 shares for up to ten years. The interest of PICO Investors
Management, LLC in any profits and losses earned on this investment will be
proportional to the capital contributions made to PICO Equity Investors,
L.P. by the partners, i.e., 1,000/50,001,000. There are no other fees or
other management compensation of any kind payable to Mr. Langley, Mr. Hart,
and Mr. Weil.

(13) The Company received a Form 13-G filing from Dimensional Fund Advisors Inc.
in 20012002 for calendar year 2000.2001.

(14) The Company received a Form 13-G filing from Artisan Partners Limited
Partnership, Artisan Investment Corporation, Andrew A. Ziegler, and Carlene
Murphy Ziegler as of April 30,in 2002 for calendar year 2001.

1. ELECTION OF DIRECTORS

NOMINEES AND CONTINUING DIRECTORS

The Board of Directors is divided into three classes, with the terms of office
of each class ending in successive years. Pursuant to Section 3.2 of the
Company's By-laws, the total number of directors has been established as seven.
TwoThree directors of the Company are to be elected for terms ending at the Annual
Meeting of Shareholders in the year 20042005 or until their respective successors
have been duly elected and qualified.

Unless otherwise instructed, the proxy holders named on the enclosed form of
proxy intend to distribute the votes represented by proxies in such proportions
as they deem desirable to elect the two nominees named below or their
substitutes. Although it is not contemplated that any nominee will decline or be
unable to serve, if either occurs prior to the Annual Meeting, a substitute

nominee will be selected by the Board of Directors. See "Stock Ownership of
Certain Beneficial Owners and Management" for the number of shares of Common
Stock beneficially owned by these nominees.

The Nominating Committee has recommended that Ronald Langley, John R. Hart and
John D. Weil be nominated for election as Directors at the Company's Annual
Meeting of Shareholders on July 18, 2002 for terms ending in 2005. The following
table sets forth information regarding the nominees for election as directors
and the other directors whose terms of office as directors will continue after
the Annual Meeting, including their ages, a brief description of their business
experience, certain directorships held by each of them and the year in which
each became a director of the Company.

If a quorum is present and voting, the nominees for election as directors
receiving the highest numbers of votes shall be elected. Abstentions and broker
non-votes have no effect on the vote. THE COMPANY'S BOARD RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE NOMINEES FOR ELECTION LISTED BELOW.

DIRECTOR NAME BUSINESS EXPERIENCE AGES SINCE
------------- ------------------- ---- -----

NOMINEES STANDING FOR TERMS ENDING IN 2004:

Robert R. Broadbent Retail consultant since 1989; Chairman of Higbee Company from 1984 to 79 1996
1989; President, CEO, Director and Vice Chairman of the Higbee Company
from 1979 to 1984; President and Chief Executive Officer of Liberty
House - Mainland from 1976 to 1978; Chairman and CEO of Gimbel's from
1973 to 1976; Director of Physicians from 1993 to 1995.

Carlos C. Campbell President of C.C. Campbell & Company, Reston, Virginia, since 1985; 63 1998
Director of Resource America, Inc.; Director of Laidlaw Global Corp;
Chairman of Geolink Advisors, LLC.

DIRECTORS WITH TERMS ENDING IN 2002:2005:

John R. Hart President and CEO and Director of the Company since 1996; President of 4142 1996
Quaker Holdings Limited, an investment company, since 1991; Principal
with Detwiler, Ryan & Company, Inc., an investment bank, from 1982 to
1991; Director of Physicians since 1993; President and CEO of Physicians
since 1995; President and CEO and Director of Global Equity Corporation
since 1995; Director of HyperFeed Technologies, Inc.

Ronald Langley Chairman and Director of the Company since 1996; Director of Physicians 5657 1996
since 1993; Chairman of Physicians since 1995: Chairman and Director of
Global Equity Corporation since 1995; Director of HyperFeed
Technologies, Inc.; Director of MC Shipping Inc.Jungfraubahn Holding AG; Director of
Australian Oil & Gas Corporation Limited.

John D. Weil President, Clayton Management Company, an investment company; Director 6061 1996
of Todd Shipyards Corporation, Oglebay Norton Company, Southern
Investors Service Company, Inc., Allied Health
Products, Inc., and Baldwin & Lyons, Inc.

DIRECTORS WITH TERMS ENDING IN 2003:

S. Walter Foulkrod, III, Esq. Attorney; owner of one third of the issued and outstanding capital 5960 1996
stock of Foulkrod Ellis Professional Corporation, Attorneys at Law,
Harrisburg, PA; sole owner of S. Walter Foulkrod, III & Associates,
Attorneys at Law, Harrisburg, PA from 1994 through 2000; President and
Chairman of Foulkrod, Reynolds & Havas, PC, from 1984 to 1994;
Director of Physicians Insurance Company of Ohio ("Physicians") since
1988.

Richard D. Ruppert, MD Physician; President of Medical College of Ohio from 1978 to 1993; 7071 1996
President of American Society of Internal Medicine from 1992 to 1993;
Director of Physicians since 1988.

DIRECTORS WITH TERMS ENDING IN 2004:

Robert R. Broadbent Retail consultant since 1989; Chairman of Higbee Company from 1984 to 80 1996
1989; President, CEO, Director and Vice Chairman of the Higbee Company
from 1979 to 1984; President and Chief Executive Officer of Liberty
House - Mainland from 1976 to 1978; Chairman and CEO of Gimbel's from
1973 to 1976; Director of Physicians since 1988.from 1993 to 1995.

Carlos C. Campbell Chairman of Geolink Advisors, LLC; Director of Resource America, Inc.; 64 1998
Director of Laidlaw Global Corp.

4
7

2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Company's Board of Directors is seeking shareholder ratification of its
selection of Deloitte & Touche LLP to serve as the Company's auditors for the
fiscal year ending December 31, 2001.2002. Deloitte & Touche LLP has previously
served as the auditors of the Company since July 1997. It is anticipated that
representatives of Deloitte & Touche LLP will attend the Annual Meeting, will
have the opportunity to make any statements they may desire, and will be
available to respond to appropriate questions from PICO shareholders. Approval
of this proposal requires the affirmative vote of the holders of a majority of
the shares represented and voting at the Annual Meeting. THE COMPANY'S BOARD
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company has an Executive Committee, an Audit
Committee, a Compensation Committee, and a Nominating Committee.

The Executive Committee currently consists of Messrs. Langley (Chairman), Hart,
and Weil. The Executive Committee may exercise substantially all the powers
vested in the Board of Directors except for certain actions as prescribed by
California law.

The Audit Committee consists of Messrs. Ruppert (Chairman), Campbell and
Foulkrod, none of whom has been or is an officer or employee of the Company. In
2000,2001, this Committee met sixseven times. The functions of the Audit Committee
include reviewing the accounting principles and practices employed by the
Company and its subsidiaries; meeting with the Company's independent auditors to
review their reports on their audits of the Company's financial statements,
their comments on the internal accounting controls of the Company and the action
taken by management with regard to such comments; reviewing auditor
independence; issuing an Audit Committee report to shareholders; and
recommending annually to the Board of Directors the appointment of the Company's
independent auditors. The Audit Committee has the authority, in its discretion,
to order interim and unscheduled audits and to perform such other duties as may
be assigned to it from time to time by the Board of Directors.

The Compensation Committee consists of Messrs. Weil (Chairman), Campbell, and
Ruppert, none of whom was or is an officer or employee of the Company. The
Compensation Committee met one time in 2000.2001. The functions of the Compensation
Committee include reviewing and approving the overall executive compensation
program for officers of the Company and its subsidiaries, considering and
reviewing compensation levels for services as a member of the Board of
Directors, approving individual executive officer compensation packages and
recommending to the Board of Directors modifications of the compensation package
for the Chief Executive Officer. The Compensation Committee's goals are to
attract and retain qualified directors and key executives critical to the
long-term success of the Company, to reward executives for the long-term success
of the Company and the enhancement of shareholder value, and to integrate
executive compensation with both annual and long-term financial results of the
Company.

The Nominating Committee met one time in 2000.2001. Its members consist of Messrs.
Langley (Chairman), Broadbent, and Campbell. The Committee will consider
nominees recommended by shareholders; such recommendations must be submitted in
writing to the Committee.

DIRECTORS' ATTENDANCE

In 2000,2001, there were four meetings of the Board of Directors of the Company. All
of the directors attended 75% or more of the aggregate of their respective Board
of Directors and Committee meetings.

DIRECTORS' COMPENSATION

Directors who are not officers or employees of the Company or its subsidiaries
receive an annual retainer, plus $1,000 for each Board and Committee meeting
attended in person and $500.00 for each telephonic Board and Committee meeting
attended. There is a limit of $4,000 per day in Board and Committee fees to any
one director. In line with a recent study by William M. Mercer, Incorporated,
the annual retainer for each nonemployee member of the Board of Directors was
increased from $15,000$20,000 to $20,000$30,000 effective JulyOctober 1, 2000;2001; see Report of the
Compensation Committee.

5
8

EXECUTIVE COMPENSATION AND OTHER MATTERS

The following table sets forth information concerning the compensation for the
fiscal year 2000ended December 31, 2001 of the (i) Chief Executive Officer of the
Company and (ii) the fivefour other most highly compensated executive officers of
the Company as of December 31, 20002001 whose salary and bonus exceeded $100,000.
(Messrs. Langley, Hart, Sharpe, Burchfield, Webb, and Mosier are sometimes hereinafter
referred to as "Named Officers"). Amounts under the caption "Bonus" are amounts
earned for performance during the year including amounts paid after the end of
the year.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ----------------
SECURITIES
UNDERLYING
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES)(9) COMPENSATION
- --------------------------- ---- ------ ----- ------------------- ------------

Chief Executive Officer:
- -----------------------

John R. Hart(1)(2) 2001 $800,000 -0- -0- $21,493(7)
President and Chief 2000 $800,000 -0- 456,586 $20,093(8)
President and Chief456,586(8) $20,093(7)
Executive Officer 1999 $800,000 -0- -0- $21,839(8)$21,839(7)

Executive Officer 1998Officers

Ronald Langley(2)(3) 2001 $800,000 -0- -0- $22,000(8)

Executive Officers
- ------------------

Ronald Langley(2) (3)$21,493(7)
Chairman of the 2000 $800,000 -0- 427,932 $20,093(8)
Chairman427,932(8) $20,093(7)
Board of theDirectors 1999 $800,000 -0- -0- $21,839(8)
Board of Directors 1998 $800,000 -0- -0- $22,000(8)$21,839(7)

Richard H. Sharpe(4) 2001 $250,000 -0- -0- $20,118(7)
Chief Operating Officer 2000 $202,199 -0- 75,149 $20,093(8)
Chief Operating Officer75,149(8) $21,814(7)
1999 $192,570 -0- -0- $21,839(8)
1998 $199,029$21,839(7)

Maxim C. W. Webb(5) 2001 $162,500 -0- -0- $22,000(8)

Gary W. Burchfield(5)20,000(9) $18,088(7)
Chief Financial Officer 2000 $148,800 -0- 21,042 $18,465(8)
And Treasurer 1999 $141,750 -0- -0- $19,118(8)
1998 $164,640 -0- -0- $20,930(8)

Maxim C. W. Webb(6) 2000 $137,500 -0- 40,472 $15,462(8)
Chief Financial Officer40,472(8) $15,462(7)
and Treasurer 1999 $ 80,000 -0- -0- $11,261(8)
And Treasurer 1998 $ 90,000$11,261(7)

James F. Mosier(6)
General Counsel 2001 $145,000 -0- -0- $13,171(8)

James F. Mosier(7) -0-
General Counsel$16,522(7)
and Secretary 2000 $138,500 -0- 21,042 $17,189(8)
And Secretary21,042(8) $17,269(7)
1999 $131,985 -0- -0- $17,801(8)
1998 $126,917 -0- $18,512(8)$17,879(7)

- ----------------------

(1) Mr. Hart became President and CEO of the Company on November 20, 1996.
Prior to that time he wasHe became President and CEO of Physicians Insurance Company of Ohio sinceon
July 15, 1995.

(2) On December 31, 1997, Mr. Langley and Mr. Hart each signed employment
agreements with the Company. Each employment agreement providesprovided for
annual compensation of $800,000.$800,000; see Report of the Compensation
Committee.

(3) Mr. Langley became Chairman of the Board of Directors of Physicians
Insurance Company of Ohio on July 15, 1995. He became Chairman of the
Board of Directors of the Company on November 20, 1996.

(4) Mr. Sharpe became Chief Operating Officer of Physicians Insurance
Company of Ohio on June 3, 1994. He became Chief Operating Officer of
the Company on November 20, 1996.

6
9

(5) Mr. Burchfield became Chief Financial Officer and Treasurer of
Physicians Insurance Company of Ohio on November 3, 1995. He became
Chief Financial Officer and Treasurer of the Company on November 20,
1996. Mr. Burchfield left the Company's employment on June 15, 2001.

(6) Mr. Webb became Chief Financial Officer and Treasurer on May 14, 2001.
Prior to that he was Vice President, Investments of the Company.

(7)6

(6) Mr. Mosier became General Counsel and Secretary of Physicians Insurance
Company of Ohio in 1984. He became General Counsel and Secretary of the
Company on November 20, 1996.

(8)(7) Represents amounts contributed by the Company to the PICO Holdings,
Inc. Employees 401(k) Retirement Plan and Trust. This retirement plan
conforms to the requirements of the Employee Retirement Income Security
Act.

(9)(8) This represents stock options granted in 2000 pursuant to the PICO
Holdings, Inc. 2000 Nonstatutory Stock Option Plan.

(9) This represents a grant of nonstatutory stock options in 2001 in an
individual nonstatutory stock option agreement.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
NUMBER OF PERCENTAGE OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISEPRICE PER EXPIRATION ----------------------------------------------
NAME GRANTED 2000 PRICE2001 SHARE DATE 5% 10%
---- ---------- ------------- -------- ---------- --------- ------------------ ---- ----- ---- ---------------------

John R. Hart(1) 456,586 42% $15.00 4/7/2020 6,705,009 27,517,191

Ronald Langley(1) 427,932 39% $15.00 4/7/2020 6,284,222 25,790,293

Richard H. Sharpe(1) 75,149 6.9% $15.00 4/7/2020 1,103,570 4,529,025

Gary W. Burchfield(1) 21,042 1.9% $15.00 4/7/2020 309,004 1,268,144

Maxim C. W. Webb(1) 40,472 3.7%20,000 12.9% $15.00 4/7/2020 594,335 2,439,137

James F. Mosier(1) 21,042 1.9% $15.00 4/7/2020 309,004 1,268,1448/6/2021 $459,904 $1,626,756

- --------------------------------

(1) The above options were granted pursuant to the PICO Holdings, Inc. 2000
Nonstatutory Stock Option Plan as approved by the Company's
shareholders. One thirdon August 6, 2001 under an individual
nonstatutory stock option agreement. One-third of these stock options
were exercisablevested on April 7, 2000, an additional one third of these stock options became
exercisableAugust 6, 2001, one-third will vest on April 7, 2001August 6, 2002 and the
remaining one third of these stock
optionsone-third will become exercisablevest on April 7, 2002.August 6, 2003.

(2) The amounts reflected in this table represent certain assumed rates of
appreciation only. Actual realized values, if any, on option exercises
will be dependent on the actual appreciation of the Company's shares
over the term of the options. There can be no assurances that the
Potential Realizable Values in this table will be achieved.

OPTION EXERCISES AND FISCAL 20002001 YEAR-END VALUE

The following table provides information concerning stock options held as of
December 31, 20002001 by the Named Officers. No options were exercised in 20002001 by
such individuals.

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AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY-OPTIONS
AT 12/31/01(1) AT 12/31/00(1) 12/31/00(1)01(1)(2)
------------------------------------------- ---------------------------------- -----------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------

Ronald Langley(1) 317,991 285,288460,635 142,644 -0- -0-

John R. Hart(1) 327,542 304,391479,738 152,195 -0- -0-

Richard H. Sharpe(1) 85,168 50,100 -0- -0-

Gary W. Burchfield(1) 49,097 14,028110,219 25,049 -0- -0-

Maxim C. W. Webb(1) 38,965 26,98256,138 26,824 -0- -0-

James F. Mosier(1) 49,097 14,02856,111 7,014 -0- -0-

- --------------------------------

(1) This applies to stock options granted by the Company in the PICO
Holdings, Inc. 2000 Nonstatutory Stock Option Plan, stock options
granted by the Company in individual nonstatutory stock option
agreements, stock options granted pursuant to the Physicians Insurance
Company of Ohio 1995 Non-Qualified Stock Option Plan which waswere assumed
by the Company in 1996, and stock options granted by Global Equity
Corporation which were assumed by the Company in 1998.

(2) Based on the closing price of the Company's Common Stock on December
31, 20002001 on the Nasdaq National Market of $12.438$12.50 per share.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL
ARRANGEMENTS

Mr. Langley and Mr. Hart each entered into employment agreements effective
December 31, 1997 with the Company. Total compensation to Mr. Langley and Mr.
Hart under these employment agreements iswas $800,000 each on an annual basis. Mr.
Langley and Mr. Hart entered into new employment agreements effective January 1,
2002 with the Company for an additional four years; see Report of the
Compensation Committee.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to a rights offering conducted by the Company in March 2000, an
investment partnership named PICO Equity Investors, L.P. acquired on March 28,
2000, 3,333,333 newly issued shares which were not subscribed for in the rights
offering. PICO Equity Investors, L.P. is managed by PICO Equity Investors
Management, LLC. PICO Equity Investors Management, LLC is owned by Mr. Langley,
Mr. Hart and Mr. Weil. PICO Equity Investors Management, LLC will exercise all
voting and investment decisions with respect to these 3,333,333 shares for up to
ten years. The interest of PICO Investors Management, LLC in any profits and
losses earned on this investment will be proportional to the capital
contributions made to PICO Equity Investors, L.P. by the partners, i.e.,
1,000/50,001,000. There are no other fees or other management compensation of
any kind payable to Mr. Langley, Mr. Hart, and Mr. Weil.

REPORT OF THE COMPENSATION COMMITTEE

This report of the Compensation Committee, and the Stock Price Performance Graph
set forth below, shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended (the "Securities Act") or under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under the Securities Act or the Exchange
Act.

COMMITTEE MEMBERS

The three-member Compensation Committee of the Board of Directors is a standing
committee composed entirely of outside Directors. Mr. Weil is the chairman and
Mr. Campbell and Dr. Ruppert are the other members.

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COMMITTEE FUNCTIONS

The Compensation Committee is responsible for assuring that all of the executive
compensation programs of the Company are developed, implemented, and
administered in a way that supports the Company's fundamental philosophy that a
significant portion of executive compensation should be effectively linked to
Company performance.

The Compensation Committee meets on a regularly scheduled basis. It reviews and
approves the overall executive compensation program which includes both base pay
and incentive compensation. It considers and approves individual executive
officer compensation packages based on recommendations of the Company's Chief
Executive Officer. It recommends, for the approval of the full Board, any
modification to the compensation package of the Company's Chief Executive
Officer.

The Compensation Committee also reviews the level of compensation paid to
nonemployee members of the Company's Board of Directors and makes
recommendations to the Board of Directors to modify the level of nonemployee
directorsdirectors' compensation when appropriate.

EXECUTIVE COMPENSATION PHILOSOPHY

The Board of Directors of the Company's predecessor retained an independent
compensation expert, William M. Mercer, Incorporated ("Mercer"). In 1996, Mercer
conducted an analysis of marketplace executive compensation levels. The scope of
Mercer's study covered the Company's Chairman and President and Chief Executive
Officer. The objectives of Mercer's study were as follows:

- - Analyze the scope, responsibilities and skill requirements of the jobs
performed by Messrs. Langley and Hart and compare and contrast to
comparable benchmark executive positions found in the marketplace.

- - Develop an appropriate methodology for selecting comparable benchmark jobs,
industry categories and a peer group of companies comparable to the Company
in terms of business focus, industry classification and size; and
competition for senior executives with the skills, expertise and talent
demonstrated by the Company's top two executives.

- - For the appropriate benchmark jobs, industry category and peer company
group, collect information on marketplace compensation levels and practices
from compensation surveys and peer company proxy statements. The companies
included in the peer company group are not necessarily those included in
the Nasdaq Insurance Stock Index used to determine the most relevant
marketplace compensation levels and to compare actual Company compensation
levels.

- - Develop alternate approaches for structuring the total compensation package
for the Company's top two executives, in terms of compensation elements to
be used, the mix of total pay and how short and long term incentive
compensation might be structured to accurately reflect performance.

Mercer's study recommended to the Compensation Committee a compensation strategy
with the following objectives:

- - To provide a total compensation package that:

- is competitive with market rates for executives with similar skill,
talent and job requirements.

- is closely linked to the Company's strategy and the role of covered
executives in building shareholder value through growing the book value
and, ultimately, the market value of the Company.

- - To retain critical executive talent by:

- providing a reasonable and competitive level of current income (cash
flow).

- providing for loss of future incentive opportunity if an executive
terminates employment before unrealized investment gains are realized.

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12

- - To link executive rewards to shareholder interests by:

- tying incentive awards to growth in book value which ultimately
translates into increased market price per share (as investments are
liquidated for gains, and the Company grows earnings).

- granting additional stock options in the future.

The Compensation Committee believes that to accomplish these goals, the
executive compensation program should be based on three distinct components:
base pay, annual incentives, and long-term incentives. The Company obtains
industry and peer group surveys, and consults with independent experts, to
evaluate the Company's executive compensation programs in comparison with those
offered by its comparable competitors.

In March 2000, the Compensation Committee asked Mercer to examine the present
level of stock options granted to the Company's management, to recommend an
appropriate level of stock options to be granted in the future to the Company's
management, and to review the level of compensation paid to the Company's
nonemployee directors. The Compensation Committee believed such a review by
Mercer was necessary in order to assist the Company in retaining and attracting
qualified directors and executives, and to link executive and director rewards
to the long term interests of the Company's shareholders. Mercer's study
recommended that additional stock options be granted to management to enhance
the Company's ability to retain and attract key executives. Mercer's study also
recommended that, to enable the Company to remain competitive and to continue to
be able to retain and attract qualified members of the Board of Directors and to
align directors long term interests with those of shareholders, nonemployee
directors compensation should be increased and should contain an element of
stock options granted annually. The nonemployee directors options granted
annually will vest immediately as a further incentive to nonemployee directors
and to further link nonemployee director's compensation with the Company's
performance.increased. In line with the recent study by
Mercer, with respect to annual cash remuneration paid to nonemployee directors,
the boardBoard approved the Compensation Committee's recommendation that the
Company's annual retainer fee be increased to $20,000$30,000 per nonemployee director.director
effective October 1, 2001. In addition,

each nonemployee director was granted 1,500 stock options in 2000 under the PICO
Holdings, Inc. 2000 Nonstatutory Stock Option Plan.

The Compensation Committee has considered amendments tothe provisions of Section 162(m) of
the Internal Revenue Code denying deductionsand related income tax regulations which restrict the
deductibility of certain compensation paid to the Company's Chief Executive
Officer and each of the four most highly compensated officers holding office at
the end of any year, to the extent such compensation paid to any of these
officers exceeds $1,000,000 in any year and fails to qualify for annual compensation to certain executives in excessan exemption
from the restriction. In view of $1 million, subject to certain exceptions. Thethe Company's compensation structure, has been such that it does not believe thatthe
Committee believes it is likelyunlikely that the $1
million capthis will affectimpact the Company in the near
future. The Internal Revenue
Service has issued proposed regulations which, among other things, provide for a
transition period of three years for plans previously approved by shareholders.
The Company is studying the proposed regulations, but has not yet determined
what steps may be required or desirable with respectCompensation Committee will continue to its existing plans.monitor this.

EXECUTIVE COMPENSATION PROGRAM

The features of the executive compensation program as recommended by Mercer and
approved by the Compensation Committee are:

BASE COMPENSATION. A fixed rate, to be reviewed annually. Future adjustments
will take into account movement in executive compensation levels, changes in job
responsibilities, and the size of the Company.

INCENTIVE AWARDS. Based on growth of book value per share in a fiscal year.
Awards are earned when a pre-determined threshold is surpassed. If book value
per share of the Company exceeds this threshold, the incentive award is equal to
5% of the increase in book value per share multiplied by the number of shares
outstanding at the beginning of the fiscal year. The threshold for 20002001 was
approximately 15%8.5%.

In addition, the Board of Directors of Physicians granted options under the
Physicians Insurance Company of Ohio 1995 Non-Qualified Stock Option Plan. The
options granted under said option plan were designed to reinforce the
relationship between the Company's future performance and the executive's
potential future financial rewards. These options were assumed by PICO Holdings,
Inc. on November 20, 1996. In line with this philosophy of providing incentives
to executive officers, the Company agreed to convert the Global Equity options
of said officers on an economically equivalent basis, to options to purchase
shares of the Company effective with the close of the PICO/Global Equity
Combination. On April 7, 2000, PICO granted, subject to approval by the
Company's shareholders obtained on October 19, 2000, non-qualified common stock
options to employees and nonemployee directors of the Company.

GOALS OF COMPENSATION COMMITTEE

The Compensation Committee attempts to align executive compensation with the
value achieved by the executives for the Company's shareholders. The Company's
compensation program for executives emphasizes a combination of base salary,
discretionary bonuses, and stock options designed to attract, retain, and
motivate executives who will maximize shareholder value. The Compensation
Committee considers individual and Company performance, as well as compensation
paid by comparable companies.

Executives also participate in other employee benefit programs, including health
insurance, group life insurance, and the Company's 401(k) Plan.

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13

DISCUSSION OF 20002001 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER

No bonus was paid with respect to the Company's performance in 2000.for 2001. In 1997,
the Compensation Committee recommended to the Board of Directors, and the Board
of Directors accepted the recommendation, that it was appropriate for the CEO
and the Chairman to be compensated as employees, rather than as consultants.
Accordingly, effective December 31, 1997, the CEO and Chairman entered into
employment agreements with the Company.

As stated above, the Compensation Committee believes the interest of Company
shareholders is best served by aligning the CEO's short-term compensation, over
and above a competitive fixed annual rate of pay, with an increase in the
Company's book value per share which will ultimately be reflected in higher
market values per share. Specifically, a threshold was set at 80% of the S&P
500's annualized total return for the five previous calendar years. For 2000,2001,
this threshold was approximately 15%8.5%. Since the Company's book value per share
decreased in 2000, and
did not exceed the threshold, no bonus was payable for 2000.2001.

In light of Mercer's March 2000 study, the compensation committee recommended
that the Company adopt a stock option plan for the reasons stated above. The
Board of Directors approved this recommendation and approved the PICO Holdings,
Inc. 2000 Nonstatutory Stock Option Plan, which the Company's shareholders
approved on October 19, 2000. Pursuant to the PICO Holdings, Inc. 2000
Nonstatutory Stock Option Plan, the Company's CEO was granted 456,586 stock
options in 2000.

The Committee believes that the compensation provided by this combination of
fixed annual compensation, and short-term and long termlong-term incentives provides a
mechanism to fairly compensate the CEO while providing the CEO with a strong
incentive to maximize shareholder value.

June 15, 2001Mr. Langley and Mr. Hart each entered into new employment agreements effective
January 1, 2002 with the Company for an additional four years. These employment
agreements are substantially similar to the 1997 employment agreements. Total
compensation to Mr. Langley and Mr. Hart under these employment agreements is
$800,000 each on an annual basis, subject to adjustment in January of each year.
The $800,000 base salary in each employment agreement is subject to annual
adjustment in January of each year in the same percentage applicable to the
Company's other staff members in an amount deemed adequate to provide for
inflation, cost of living, and merit increases based on the Consumer Price Index
and major compensation studies. These employment agreements include a change in
control clause providing that if there is a change of control before January 1,
2004, the Company is required to immediately pay each employee a total lump sum
of $2.4 million and an amount equal to three times the highest annual bonus paid
to the employee in the last three years. The new employment agreements contain
the same bonus, i.e., short-term incentive provision as the 1997 employment
agreements.

March 28, 2002 Compensation Committee

John D. Weil, Chairman
Carlos C. Campbell
Richard D. Ruppert, MD

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS

Messrs. Weil and Campbell, and Dr. Ruppert, serve as members of the Compensation
Committee. None of these individuals had anyare, or have been, employees of the
interlock relationships
requiring disclosure.Company.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors serves as the representative of
the Board for general oversight of the Company's financial accounting and
reporting process, internal controls, and audit process. Management has the
responsibility for preparing the Company's financial statements and the
independent auditors have the responsibility for the examination of those
statements.

We periodically meet privately with the Company's independent auditors, which
has unrestricted access to the Audit Committee. In addition, we meet
periodically with the Company's management to consider and review the adequacy
and objectivity of the Company's financial reporting. We discuss these matters
with the Company's independent auditors and with appropriate Company financial
personnel.

We also recommend to the Board of Directors the appointment of an independent
auditing firm and review periodically its performance and independence from
management.

In this context, the Audit Committee hereby reports as follows:

(1) The Committee has reviewed and discussed with management the audited
financial statements for the fiscal year ending December 31, 2000.2001.

(2) The Committee has discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No.
61 (Communications with Audit Committees).

11
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(3) The Committee received the written disclosures and the letter from the
Company's independent auditor required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). We
have discussed with the Company's independent auditors its independence
from management and the Company.

(4) Based on the review and discussions noted above with management and the
Company's independent auditors, the Committee recommended to the Board
of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000,2001, for filing with the Securities and
Exchange Commission. The Committee also recommended to the Board,
subject to ratification by the Company's shareholders, the
reappointment of the independent auditors and the Board approved such
recommendation.

(5) The Audit Committee acts pursuant to a written charter adopted by the
Board of Directors. A copy of that charter is attached to this proxy
statement as Appendix A.

(6) The Directors who serve on the Committee are all "independent" as
defined in the Nasdaq Stock Market listing standards.

The undersigned members of the Audit Committee have submitted this Report of the
Audit Committee:

Richard D. Ruppert, MD, Chairman
Carlos C. Campbell
S. Walter Foulkrod, III, Esq.

AUDIT FEES

Aggregate fees billed to the Company for the fiscal year ended December 31, 20002001
by the Company's principal accounting firm, Deloitte & Touche LLP, the member
firms of Deloitte Touche Tohmatsu, and their respective affiliates were as
follows:

Audit Fees $ 271,110
Other Fees $ 915,161 (a)300,580.00
Financial Information Systems Design and Implementation fees 0
-----------
Total $1,186,271Fees $ 0.00
All Other Fees(1) $ 301,500.00

(a)(1) This amount consists of fees paid for audits performedincludes $179,200 for statutory audit
compliance of $178,160fees and $122,300 for tax services of
$736,551.services.

The Audit Committee has considered the role of Deloitte & Touche in providing
tax, statutory compliance and other non-audit services to the Company and has
concluded that such services are compatible with Deloitte & Touche's
independence as the Company's auditors.

STOCK PRICE PERFORMANCE GRAPH

The graph below compares cumulative total return of the Company, the Nasdaq
Insurance Stocks Index, and the Nasdaq Stock Market (U.S. Companies) for the
period January 1, 19961997 through December 31, 2000.2001.

[GRAPH]

COMPARISON 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PICO HOLDINGS, INC., NASDAQ INSURANCE STOCK INDEX, AND RUSSELL 2000 INDEX

Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00

PICO Holdings 100.00 117.86 183.93 75.71 70.36 71.07
NASDAQ Insurance Stock Index 100.00 113.37 139.09 139.00 146.70 169.68
Russell 2000 Index 100.00 114.76 138.31 133.54 159.75 153.03
Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01

PICO Holdings 100.00 156.06 64.24 59.70 60.30 60.61
NASDAQ Insurance Stock Index 100.00 125.28 127.88 138.27 163.87 179.12
Russell 2000 Index 100.00 122.06 119.31 144.50 140.37 143.95

ASSUMES $100 INVESTED ON JAN. 1, 1996
FISCAL YEAR ENDING DEC. 31, 20002001

The graph assumes $100 was invested on January 1, 19961997 in the Company's Common
Stock, the Nasdaq Stock Market (U.S. Companies) Index, and the Nasdaq Insurance
Stocks Index, and that all dividends were reinvested. The performance of PICO
Holdings, Inc. stock on this graph represents the historical performance of
shares of Citation Insurance Group, which was renamed PICO Holdings, Inc. on
November 20, 1996. It does not represent the historical stock performance of
Physicians Insurance Company of Ohio.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by such persons.

Based on a review of the copies of these reports received by the Company and
written representations from certain reporting persons that they have complied
with the relevant filing requirements, the Company believes that all filing
requirements have been complied with on a timely basis for the fiscal year ended
December 31, 2000.2001.

INDEPENDENT AUDITORS

Deloitte & Touche LLP was the Company's independent auditing firm for fiscal
year 20002001 and has been appointed by the Board of Directors as the Company's
independent auditing firm for fiscal year 2001.2002. Representatives of Deloitte &
Touche LLP are expected to be present at the meeting, will have the opportunity
to make any statements they desire, and will be available to respond to
appropriate questions from shareholders.

SOLICITATION OF PROXIES

The Board of Directors is not aware of any matters other than those specifically
stated in the Notice of Annual Meeting which are to be presented for action at
the meeting. However, should any further matter requiring a vote of the
shareholders arise, it is the intention of the persons named in the proxy to
vote the proxy in accordance with their judgment.

13
16

The cost of this solicitation of proxies is being borne by the Company. In
addition to the solicitation of proxies by use of the mails, the Company may use
the services of one or more directors, officers or other regular employees of
the Company (who will receive no additional compensation for their services in
such solicitation) to solicit proxies personally and by telephone. Arrangements
will be made with brokerage firms and other custodians, nominees and fiduciaries
to forward solicitation material to the beneficial owners of the stock held of
record by such persons, and the Company will reimburse such firms or persons for
reasonable expenses actually incurred by them in so doing.

SHAREHOLDER NOMINATION OF DIRECTORS

Nominations other than those made by the directors of the Company must be in
writing and be delivered or mailed to the Secretary of the Company not less than
60 days prior to the Annual Meeting. Such nominations must include the
information regarding each nominee required by the Bylaws of the Company.
Nominations not made according to these procedures will be disregarded.

STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING

Proposals of stockholders intended to be presented at the next annual meeting of
the stockholders of the Company must be received by the Company at its offices
no later than March 9, 2002,2003, and satisfy the conditions established by the
Securities and Exchange Commission for stockholder proposals to be included in
the Company's proxy statement for that meeting.

TRANSACTION OF OTHER BUSINESS

At the date of this Proxy Statement, the only business that the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.

August 22, 2001May 28, 2002

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APPENDIX A

AUDIT COMMITTEE CHARTER
-----------------------

This charter shall be reviewed, updated and approved annually by the board of
directors.

Role and Independence
- ---------------------

The audit committee of the board of directors assists the board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and reporting practices of PICO Holdings, Inc. (the "Company") and
other such duties as directed by the board. The membership of the committee
shall consist of at least three directors who are generally knowledgeable in
financial and auditing matters, including at least one member with accounting or
related financial management expertise. Each member shall be free of any
relationship that, in the opinion of the board, would interfere with his or her
individual exercise of independent judgment, and shall meet the director
independence requirements for serving on audit committees as set forth in the
corporate governance standards of the NASDAQ. The committee is expected to
maintain free and open communication (including private executive sessions at
least annually) with the independent accountants and the management of the
Company. In discharging this oversight role, the committee is empowered to
investigate any matter brought to its attention, with full power to retain
outside counsel or other experts for this purpose.

The board of directors shall appoint one member of the audit committee as
chairperson. He or she shall be responsible for leadership of the committee,
including preparing the agenda, presiding over the meetings, making committee
assignments and reporting to the board of directors. The chairperson will also
maintain regular liaison with the CEO, CFO, and the lead independent audit
partner.

Responsibilities
- ----------------

The audit committee's primary responsibilities include:

- Recommending to the board the independent accountant to be
selected or retained to audit the financial statements of the
Company. In so doing, the committee will request from the auditor
a written affirmation that the auditor is in fact independent,
discuss with the auditor any relationships that may impact the
auditor's independence, and recommend to the board any actions
necessary to oversee the auditor's independence.

- Overseeing the independent auditor relationship by discussing with
the auditor the nature and rigor of the audit process, receiving
and reviewing audit reports, and providing the auditor full access
to the committee (and the board) to report on any and all
appropriate matters.

- Providing guidance and oversight to the internal control audit
activities of the Company including reviewing the organization,
plans and results of such activity.

- Reviewing the audited financial statements and discussing them
with management and the independent auditor. These discussions
shall include consideration of the quality of the Company's
accounting principles as applied in its financial reporting,
including review of estimates, reserves and accruals, review of
judgmental areas, review of audit adjustments whether or not
recorded and such other inquiries as may be appropriate. Based on
the review, the committee shall make its recommendation to the
board as to the inclusion of the company's audited financial
statements in the company's annual report on Form 10-K.

- Reviewing with management and the independent auditor the
quarterly financial information prior to the company's filing of
Form 10-Q. This review may be performed by the committee or its
chairperson.

- Discussing with management and the external auditors the quality
and adequacy of the Company's internal controls.

1
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- Discussing with management the status of pending litigation,
taxation matters and other areas of oversight to the legal and
compliance area as may be appropriate.

- Reporting audit committee activities to the full board and issuing
annually a report to be included in the proxy statement (including
appropriate oversight conclusions) for submission to the
shareholders.

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PROXY PROXY

PICO HOLDINGS, INC.
875 PROSPECT STREET, SUITE 301
LA JOLLA, CALIFORNIA 92037

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints John R. Hart and James F. Mosier,
or either of them acting alone, as proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent, and to vote as designated
below, all the shares of Common Stock of PICO Holdings, Inc. (the "Company")
held of record by the undersigned on AugustMay 20, 20012002 at the Annual Meeting of
Shareholders of the Company to be held at 3264 Goni Road, Suite 153, Carson City, Nevada 89706the Museum of Contemporary Art, Coast
Room, 700 Prospect Street, La Jolla, California 92037 on October 11, 2001July 18, 2002 at 9:00
a.m. (PDT), and at any adjournment thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS
LISTED ON THE REVERSE.

EVEN IF YOU ARE PLANNING TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK MAY BE REPRESENTED
AT THE MEETING. PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

(Continued and to be signed on the reverse side.)

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PICO HOLDINGS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.

PICO HOLDINGS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY

1. Election of TwoThree Directors to Serve for Three-Year For Withhold For All 3. In their discretion, the above named Proxies are
Three Year Terms until the Annual Meeting of Shareholders All All Except authorized to vote upon each other item of business
Shareholders in 2004. [ ] [ ] [ ] business2005. The Board of Directors as may properly come before the meeting Nominees: 01 - Robert R. Broadbent or any
recommends a vote FOR the listed nominees. adjournment thereof.

02 - Carlos C. Campbell
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
(To withhold authority toFOR WITHHOLD

01-John R. Hart [ ] [ ]

02-Ronald Langley [ ] [ ]

03-John D. Weil [ ] [ ]

2. The Board of Directors recommends a vote for an individual nominee, THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE,
strike a line throughFOR AGAINST ABSTAIN
FOR the nominee's name in the list above.) THIS PROXY WILL BE VOTED FOR THE PROPOSALS LISTED
ABOVE.

For Against Abstain
2.following proposal. [ ] [ ] [ ] ----------------------------------------------------
(Signatures)
To ratify the appointment of Deloitte &
Touche, LLP [ ] [ ] [ ]
as the Company's independent
auditors for fiscal -----------------------------------------------------
year 2001. (Signature)

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(Signature if held jointly)2002.
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(Signatures)

Dated:
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Please sign exactly as your Name (s)name(s) appears on your
stock certificate. If such stock is held by joint
tenants, both persons should sign. When signing as
Attorney,attorney, executor, administrator, trustee or
guardian, please note your title as such. If the
stock is registered in the name of a corporation,
please sign in the corporation's name by the
president or any other authorized officer. If the
stock is registered in the name of a partnership,
please sign in the partnership's name by an
authorized person.

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FOLD AND DETACH HERE

EVEN IF YOU ARE PLANNING TO ATTEND THE MEETING IN PERSON,
YOU ARE URGED TO SIGN AND MAIL THIS PROXY IN THE RETURN ENVELOPE
SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING.