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

Filed by the Registrant / X /[X]

Filed by a Party other than the Registrant / /[ ]

Check the appropriate box:

/ /[ ] Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
/ X /[X] Definitive Proxy Statement
/ /[ ] Definitive Additional Materials
/ /[ ] Soliciting Material Pursuant to Section 240.14a-11(c)Rule 14a-11(c) or Section 240.14a-12Rule 14a-12.

PICO HOLDINGS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

Payment of Filing Fee (Check the appropriate box):
/ X /[X] No fee required.
/ /[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: ___________________________________________________________________.......

(2) Aggregate number of securities to which transaction applies: ___________________________________________________________________..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ___________________________________________________________________............

(4) Proposed maximum aggregate value of transaction: __________________......................

(5) Total fee paid: ___________________________________________________

/ /.......................................................

[ ] Fee paid previously with preliminary materials.

/ /[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: ___________________________________________...............................................

(2) Form, Schedule or Registration Statement No.: _____________________.........................

(3) Filing Party: _____________________________________________________.........................................................

(4) Date Filed: _______________________________________________________...........................................................

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2

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 The Empress Hotel, 7766 Fay
Avenue,the Museum of Contemporary Art, in
the Coast Room, 700 Prospect Street, La Jolla, California 92037 on Thursday, June 5, 1997Monday, July
19, 1999 at 10:9:00 a.m. (Pacific Daylight Time)(PDT) for the following purposes:

1. To elect three directors, for which positions the Board of Directors has
nominated S. Walter Foulkrod, III, Esq., RichardJohn R. Hart, Ronald Langley, and John D. Ruppert, MD, and
Dr. Gary H. Weiss,Weil, to serve for
three years until the annual meeting of shareholders in the year 20002002 and
until their respective successors have been duly elected and qualified;
and

2. 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 May 7, 1997June 4, 1999 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/ Ronald Langley

Ronald Langley
Chairman of the Board

Dated: May 8, 1997June 11, 1999

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. 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.

IF YOU
PLAN TO ATTEND THE MEETING, PLEASE SO INDICATE IN THE SPACE PROVIDED ON THE
PROXY.
3

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

PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 5, 1997JULY 19, 1999

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 The Empress Hotel, 7766 Fay Avenue,the Museum of Contemporary Art, Coast Room, 700 Prospect
Street, La Jolla, California 92037, at 10:9:00 a.m. (Pacific Daylight Time)(PDT) on Thursday, June 5,
1997Monday, July 19, 1999
and at any postponement or adjournment thereof. The date of this Proxy Statement
is May 8, 1997,June 11, 1999, the approximate date upon which it was first mailed to
shareholders. 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 19961998 accompanies this
Proxy Statement. The Annual Report and these proxy solicitation materials were
mailed on or about May 8, 1997June 11, 1999 to all shareholders entitled to vote at the
meeting.

As of May 7, 1997,June 4, 1999, the record date for the determination of shareholders
entitled to vote at the Annual Meeting, 32,486,71813,328,770 shares of Common Stock of the
Company were issued and outstanding. Each share of Common Stock entitles the
holder to one vote on all matters brought before the Annual Meeting, except for
4,572,0154,380,779 shares held by 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 candidates
in nomination.

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 the election
of directors and authority to vote for directors is not withheld, the proxy will
be voted for the election of directors as described under "Election of
Directors." 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
election inspectors appointed for the meeting and will determine whether or not
a quorum is present. The election inspectors 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.

On November 20, 1996, Citation Holdings, Inc., an Ohio Corporation, merged with
and into Physicians Insurance Company of Ohio ("Physicians") pursuant to an
Agreement and Plan of Reorganization dated as of May 1, 1996 and as
subsequently amended (the "Merger"). According to the terms of the Merger, each
share of Class A Common Stock of Physicians was

1
4
converted into the right to receive 5.0099 shares of the Company's Common
Stock. As a result, the former shareholders of Physicians own approximately 80%
of the outstanding Common Stock of the Company immediately after the Merger and
Physicians became a wholly owned subsidiary of the Company. On the effective
date of the Merger the corporate name of Citation Insurance Group was changed
to PICO Holdings, Inc., and the symbol for the Company's Common Stock was
changed from "CITN" to "PICO".

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of May 7, 1997,December 31, 1998, 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, former chief executive officers, and directors as a
group. Except as otherwise indicated, each person has sole investment and voting
power, subject to community property laws.

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

Guinness Peat Group plc (2) 6,067,006 21.73
21-26 Garlick Hill, 2nd Floor
London EC4V 2AU
England

Global Equity Corporation (3) Ronald Langley(2)(4) 4,258,415 13.23
30A Hazelton Avenue, 4th Floor
Toronto, Ontario
Canada M5R 2E2621,725 6.0%

John R. Hart (5) 1,908,848 6.83

Ronald Langley (5) 1,908,848 6.83Hart(3)(4) 616,170 5.9%

Robert R. Broadbent 20,03911,949 *

Dr. Marshall J. BurakCarlos C. Campbell -0- *

S. Walter Foulkrod, III, Esq. 12,5242,904 *

Richard D. Ruppert, MD (6) 33,490(5) 6,974 *

John D. Weil (7) 2,376,987 8.51

Dr. Gary H. Weiss (8) 8,863(6) 529,518 5.1%

David A. Williams 78,693 *

Richard H. Sharpe (9) 216,225(7) 67,527 *

Gary W. Burchfield (10) 151,338(8) 47,043 *

James F. Mosier (9) 47,303 *

A. Judson Hill (10) 149,435100,000 *

Donald HendersonSheila C. Ferguson (11) 80,0003,986 *

Robert M. EricksonMaxim C. W. Webb (12) 15,00029,409 *

Executive Officers and Directors as a Group 6,786,597 24.31
(11(14 2,163,201 20.8%
persons)

* Less*Less than one percent (1%)

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

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

5
(2) Guinness Peat Group plc ("GPG") has an option to purchase $1,175,000Of these shares, 555,863 represent beneficial ownership of newly issuedcurrently
exercisable options. 551 shares ofare held in the Company's stock. The purchase price would be
the average of the closing bid prices for the Company's stock on Nasdaq
for the 20 trading days immediately preceding the date when GPG gives
notice of purchase. This option will expire if GPG's ownership of shares
of the Company's stock becomes less than 7.5%. The Company has a first
right to purchase any stock which GPG desires to sell, except for sales
to Ronald Langley and John R. Hart (see note 5 below). This does not
include shares beneficially owned by Dr. Weiss, who is a director of
GPG. The numbers in the above table do not include shares issuable
pursuant to the options described in this footnote.

(3) Global Equity Corporation ("GEC") has an option to purchase $825,000 of
newly issued shares of the Company's stock. The purchase price would be
the average of the closing bid prices for the Company's stock on Nasdaq
for the 20 trading days immediately preceding the date when GEC gives
notice of purchase. This option will expire if GEC's ownership of the
Company's stock becomes less than 7.5%. The Company has a first right to
purchase any stock, which GEC desires to sell. 38.2% of GEC's
outstanding shares are owned by a subsidiary of the Company and
accordingly, pursuant to California law, GEC cannot vote any of its
shares of the Company's stock. The numbers in the above table do not
include shares issuable pursuant to the options described in this
footnote.

(4) Physicians owns 38.2% of the issued and outstanding shares of GEC. Since
September 5, 1995,401(k) Plan.
Mr. Langley has been Chairman and a Director of GEC.GEC since September 5,
1995. He has been Chairman, and a Director of the Company since November
20, 1996.

(3) Of these shares, 613,170 represent beneficial ownership of currently
exercisable options. Mr. Hart has been President and CEO and a Director
of GEC since September 5, 1995. (5)He has been President and CEO and a
Director of the Company since November 20, 1996.

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5

(4) Mr. Langley and Mr. Hart formerly had stock options, granted in 1995, to
purchase shares of GEC; these shares were converted on December 17, 1998
into economically equivalent stock options to purchase shares of the
Company. Mr. Langley and Mr. Hart each hold currently exercisable optionshad 1993 call option agreements
with GPG; in August 1998, the Company assumed GPG's obligations with
respect to purchase up to 876,733 shares of the Company's shares under the
Physicians Insurance Company of Ohio 1995 Non-Qualified Stock Option
Plan. In additionthese 412,846 options. Mr. Langley exercised 57,307 of his
call options in December 1998 and has 149,116 call options remaining. Mr.
Hart each hold currently
exercisablehas not exercised any call options to purchase up to 1,032,115 shares of the Company's
stock presently owned by GPG.

(6)and has 206,423 call options
remaining.

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

(6) Of these shares, 495,558 are owned by a partnership which Mr. Weil
controls.

(7) Of these shares, 2,261,68960,119 represent beneficial ownership of currently
exercisable options. In addition, 2,897 shares are owned by a limited partnership
which Mr. Weil controls; 10,091held in the Company's
401(k) Plan.

(8) Of these shares, 42,083 represent beneficial ownership of currently
exercisable options. In addition, 805 shares are owned by a corporation Mr.
Weil controls; and Mr. Weil has voting control over 105,207 shares held in trusts for family members.

(8) Does not includethe Company's
401(k) Plan.

(9) Of these shares, held by GPG. Dr. Weiss is a Director42,083 represent beneficial ownership of GPG.

(9) Includes currently
exercisable options. In addition, 2,371 shares are held in the Company's
401(k) Plan.

(10) Mr. Hill has beneficial ownership of 100,000 options to purchase up to 200,396buy shares of the
Company's stock under the Physicians Insurance CompanyCompany. Mr. Hill's options vest monthly over three years in equal
increments beginning November 3, 1998.

(11) Of these shares, 3,702 represent beneficial ownership of Ohio
1995 Non-Qualified Stock Option Plan.

(10) Includes currently
exercisable options to purchase up to 140,277options. In addition, 284 shares ofare held in the Company's
stock under the Physicians Insurance Company401(k) Plan.

(12) Of these shares, 29,177 represent beneficial ownership of Ohio
1995 Non-Qualified Stock Option Plan.

(11) Includes currently
exercisable options to purchase up to 75,000options. In addition, 232 shares ofare held in the Company's
stock under the 1991 Employee Stock Option Plan of
Citation Insurance Group.

(12) Includes currently exercisable options to purchase up to 15,000 shares
of the Company's stock under the Employee Stock Option Plan of Citation
Insurance Group.401(k) Plan.

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. Three directors of the Company are to
be elected for terms ending at the Annual Meeting of Shareholders in the year
20002002 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 a maximum of the three nominees named below or
their 3
6
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 Sharesshares
of Common Stock beneficially owned by these nominees.

As a result of the resignation in March 1997April 1998 of a director whose term would have
expired at the Annual Meeting of Shareholders in 1998,2000, there currently exists
one vacancy on the Company's Board of Directors. The Board of Directors has not
nominated an individual for election at the 19971999 Annual Meeting of Shareholders
to fill this vacancy. A majority of the directors may nevertheless elect to fill
this vacancy at any time in the future without shareholder approval.
Notwithstanding the vacancy, proxies may not be voted for a greater number of
persons than the number of nominees named.

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.

DIRECTOR NAME BUSINESS EXPERIENCE AGE SINCE
- - ----------------- ------------------- --- -----

DIRECTORS WITH TERMS ENDING IN 2000:

DIRECTORS STANDING FOR ELECTION FOR TERMS ENDING IN 2000:
S. Walter Foulkrod, III, Esq. Attorney; owner of S. Walter Foulkrod, III 55& 57 1996
&
Associates, Attorneys at Law, Harrisburg, PA,
since 1994; President and Chairman of Foulkrod,
Reynolds & Havas, PC, from 1984 to 1994;
Director of Physicians since 1988.

Richard D. Ruppert, MD Physician; President of Medical College of Ohio 6668 1996
Fromfrom 1978 to 1993; President of American
Society of Internal Medicine from 1992 to 1993;
Director of Physicians since 1988.

Dr. Gary H. Weis Barrister and Solicitor; Executive Director of 43 1996
Guinness Peat Group plc, an international
investment company, since 1992; Director of
Turnbull & Partners, Ltd., an investment bank,
From 1990 to 1992; Director of Physicians
since 1993.

DIRECTORS WHOSEWITH TERMS EXPIREENDING IN 1998:2001:

Robert R. Broadbent Retail consultant since 1989; Chairman of 77 1996
Higbee 75 1996 Company from 1984 to 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.

Dr. Marshall J. Burak ProfessorCarlos C. Campbell President of FinanceC.C. Campbell & Company, Reston, 61 1998
Virginia, since 1985; Director of Resource
America, Inc., Fidelity Mortgage Funding, Inc.,
and DeanPassport Health.

David A. Williams CEO of the College 60 1995Beutel Goodman & Co. Ltd. From 1991 to 56 1998
1995; President, Roxborough Holdings Limited,
Toronto, Ontario since 1995; Director of Business of San Jose State University since
1981.

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DIRECTORS WHOSE TERMS EXPIRE IN 1999:

Global
Equity Corporation, Enhanced Marketing
Services, Equisure Financial Network, FRI
Corporation, Krystal Bond Corporation, Octagon
Industries Ltd., Phoenix Duff and Phelps Corp.,
Pinetree Capital Corporation, Micropulse Inc.,
Radiant Energy Corporation, and Signature
Brands Ltd.

NOMINEES STANDING FOR ELECTION FOR TERMS ENDING IN 2002:

John R. Hart Self-employed investor; President of Quaker 37 1996
Holdings Limited, an 39 1996
investment company, since 1991; PartnerPrincipal 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 Resource America, Inc.PC Quote, Inc; President and Nooney Realty
Trust, Inc.CEO and
Director of the Company since 1996.

Ronald Langley Self-employed investor since 1992; Director 52 1996 and officer of Pacific Southwest 54 1996
Corporation, a strategic investment company,
from 1989 to 1992; Director of Physicians since
1993; Chairman of Physicians since 1995;1995:
Chairman and Director of Global Equity
Corporation since 1995; Chairman of Summit
Global Management, Inc. since 1994; Director of
PC Quote, Inc.Inc; Chairman and Director of the
Company since 1996.

John D. Weil President, Clayton Management Company, a 5658 1996
strategic investment company; Director of Todd
Shipyards Corporation; Cliffs Drilling Company,
CleveTrust Realty Investors,Corporation, Oglebay Norton Company, and
Southern Investors Service Company, Inc.,
Allied Health Products, Inc., and Baldwin &
Lyons, Inc.

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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.

Since the Merger, theThe Audit Committee has consistedconsists of Messrs. BurakRuppert (Chairman), Foulkrod, and
Ruppert,Williams, none of whom has been or is an officer or employee of the Company. In
1996,1998, this Committee met one time.six 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; 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 (the "Compensation Committee") has since November 20,
1996, consistedconsists of Messrs.
Weil (Chairman), Foulkrod, and Ruppert, none of whom was or is an officer or
employee of the Company. In 1996, theThe Compensation Committee did not meet. In 1996, prior to November 20, 1996 the Company's
Compensation Committee consisted of Louis J. Mariani, Sr. (Chairman), J. Philip
DiNapoli, James R. Bancroft, and E. Alexander Glover. However the Compensation
Committee of Physicians, consisting of Mr. Weil (Chairman), Mr. Foulkrod, and
Dr. Ruppert, met three times in 1996.1998. 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 approving individual executive

5
8 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 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 did not meetmet one time in 1996.1998. Its members consist of Messrs.
Langley (Chairman), Ruppert, and Hart. The Committee will consider nominees
recommended by shareholders; such recommendations maymust be submitted in writing
to the Committee.

DIRECTORS' ATTENDANCE

In 1996,1998, there were thirteensix 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

Beginning November 20, 1996, directorsDirectors who are not officers or employees of the Company or its subsidiaries
receive a retainer of $10,000$15,000 per year, $1,000 for each Board and Committee
meeting attended in person and up to $500.00 in the Committee
Chairman's discretion, for each telephonic Board and Committee
meeting attended. There is a limit of $3,000$4,000 per day in Board and Committee fees
to any one director.

Prior to November 20, 1996, beginning January 1, 1993, directors who were not
employees of the Company or its subsidiaries received a retainer of $10,000 per
year and $2,000 per day for one or more Board or Committee meetings attended,
subject to a maximum of $20,000 in total annual payments. During 1995,
directors who were not employees of the Company or its subsidiaries and were
also directors of the Company's insurance subsidiaries received $25,000 per
year as directors of those subsidiaries.

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9

EXECUTIVE COMPENSATION AND OTHER MATTERS

The following table sets forth information concerning the compensation for
the
years 1995 and 1996fiscal year 1998 of the (i) Chief Executive Officer of the Company (ii) the
prior Chief Executive Officers who served in 1996 prior to the Merger and (iii)
the executive officers of the Company as of December 31, 19961998 (Messrs. Langley,
Hart, Sharpe, Henderson, Erickson, Burchfield, 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

Long-Term
Annual Compensation Compensation
------------------- ------
SECURITIES
UNDERLYINGAwards
-----------
Securities
Underlying
NAME AND OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION
- - ------------------Options All Other
Year Salary Bonus (Shares) Compensation
---- -------------- ----- -------- ------------

Chief Executive Officer:
- - ------------------------
John R. Hart(1)(2) 1996 $300,000(3)1998 $800,000 -0- 876,733(4) -0- $22,000(7)
President and Chief 1995 $197,0001997 $800,000(3) -0- -0- -0-
Executive Officer Prior Chief Executive Officers:
- - -------------------------------
Donald Henderson(5) 1996 $250,000$300,000 $450,000 175,347(4) -0- -0- $10,500(6)
President and Chief 1995 $177,084 -0- 75,000 $10,240(6)
Executive Officer

Robert M. Erickson(7) 1996 $120,000 $20,000 -0- $ 8,200(6)
Acting Chief Executive 1995 $ 70,000 $ 5,000 15,000 $ 4,600(6)
Officer

Executive Officers(2):
- - ----------------------
Ronald Langley(8) 1996 $300,000(3)Langley(5) 1998 $800,000 -0- 876,733(4) -0- $22,000(7)
Chairman of the 1995 $197,0001997 $800,000(3) -0- -0- -0-
Board of Directors 1996 $300,000 $450,000 175,347(4) -0-

Richard H. Sharpe(9) 1996 $139,264 $28,000 300,594(4) $14,362(10)Sharpe(6) 1998 $199,029 -0- -0- $22,000(7)
Chief Operating Officer 19951997 $165,317 $ 18,340 -0- $18,734(7)
1996 $139,376 $ 28,000 60,119(4) $14,362(7)

Gary W. Burchfield(8) 1998 $164,640 -0- -0- $ 7,590(10)
1994 $132,027 $ 6,000 -0- $ 5,919(10)

Gary W. Burchfield(11) 1996 $102,170 $35,000 210,416(4) $10,506(10)$20,930(7)
Chief Financial Officer 19951997 $135,000 $ 92,08413,500 -0- $15,618(7)
And Treasurer 1996 $102,170 $ 35,000 42,083(4) $10,506(7)

James F. Mosier(9) 1998 $126,910 -0- -0- $18,512(7)
General Counsel 1997 $113,017 $ 9,338(10)12,570 -0- $12,796(7)
and Treasurer 1994 $ 75,328 $ 6,000 -0- $ 3,456(10)

James F. Mosier(12)Secretary 1996 $ 82,835 $27,000 210,416(4) $ 8,497(10)
General Counsel and 199527,000 42,083(4) $ 80,952 -0- -0- $ 8,807(10)
Corporate Secretary 1994 $ 71,531 $ 6,000 -0- $ 3,204(10)8,497(7)

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10- ----------------------

(1) Mr. Hart became President and CEO of Physicians on July 15, 1995. Prior
to that time he was not an officer of Physicians. He became President and CEO of the Company on November 20, 1996.
Prior to that time he was President and CEO of Physicians since July
15, 1995.

(2) Includes compensation received from Physicians prior to the Merger, as
well as compensation received from the Company.

(3) Mr. Langley and Mr. Hart were each compensated $150,000$533,328 by the Company
for consulting services in 19951997 in the areas of investment banking,
investment portfolio analysis, and analysis of operations. In addition, in September 1995
Mr. Langley and Mr. Hart entered into consulting agreements with a
subsidiary of Global Equity Corporation for annual compensation of
$150,000$266,672 each for consulting services in the areas of investment
banking, investment portfolio analysis, and analysis of operations. On
December 31, 1997, Mr. Langley and Mr. Hart each signed employment
agreements with the Company on terms substantially similar to the
consulting agreements.

(4) Options issued by Physicians prior to the November 1996 Merger under
the Physicians Insurance Company of Ohio 1995 Non-Qualified Stock
Option Plan and assumed by the Company upon the Merger. All options are
fully vested.

6
9

(5) Mr. Henderson became President and CEO of the Company in April 1995. He
resigned as an officer and director on October 1996. On October 1, 1996
Mr. Henderson entered into a written agreement with the Company whereby
he will receive monthly payments of $20,833.33 through June 30, 1997.

(6) Represents amounts contributed by the Company to the Salary Reduction
Profit Sharing Plan established by the Company. This retirement plan, a
401(k) plan, conforms to the requirements of the Employee Retirement
Income Security Act of 1974.

(7) Mr. Erickson became Acting CEO upon Mr. Henderson's resignation until
November 20, 1996. Mr. Erickson is Vice President, Controller, Treasurer,
and Assistant Secretary of Citation Insurance Company, one of the
Company's subsidiaries. He became an employee of the Company in June
1995.

(8) Mr. Langley became Chairman of the Board of Directors of Physicians on
July 15, 1995. Prior to that time he was not an officer of Physicians. He became Chairman of the Board of Directors of the
Company on November 20, 1996.

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

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

(11)(8) Mr. Burchfield became Chief Financial Officer and Treasurer of
Physicians on November 3, 1995. He became Chief Financial Officer and
Treasurer of the Company on November 20, 1996.

(12)(9) Mr. Mosier has beenbecame General Counsel and Secretary of Physicians sincein 1984.
He became General Counsel and Secretary of the Company on November 20,
1996.

8
11
OPTION GRANTS IN LAST FISCAL YEAR

The following table provides the specified information concerning grants of
optionsOptions to purchase 100,000 shares of the Company's Common Stock madewere granted
during the year ended December 31, 19961998 to the persons namedA. Judson Hill, Executive Vice
President, as shown in the Summary Compensation Table.

POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS IN 1996 FOR OPTION TERM(1)
- - ---------------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Exercise
Options Granted to Price Per Expiration
Name Grants(2) Employees Share(2) Date 0%($) 5%($) 10%($)
- - ---------------------------------------------------------------------------------------------------------------

John R. Hart(3) 876,733 34.4% $2.69 08/24/05 $1,038,929 $2,601,267 $4,758,907

Donald -- -- -- -- -- -- --
Henderson

Robert M. -- -- -- -- -- -- --
Erickson

Ronald 876,733 34.4% $2.69 08/24/05 $1,038,929 $2,601,267 $4,758,907
Langley(3)

Richard H. 300,594 11.8% $2.69 08/24/05 $ 356,204 $ 891,862 $1,631,624
Sharpe(4)

Gary W. 210,416 8.3% $2.69 08/24/05 $ 249,343 $ 624,304 $1,142,138
Burchfield(4)

James F. 210,416 8.3% $2.69 08/24/05 $ 249,343 $ 624,304 $1,142,138
Mosier(4)

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

(1) Potential gains are netStock Ownership of exercise price but before taxes associated
with exercise. These amounts represent certain assumed rates of
appreciation only,Certain Beneficial Owners in
accordance with the Securities and Exchange
Commission's rules. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Company's stock, overall market
conditions, and the optionholders' continued employment through the vesting
period. The amounts reflected in this table may not necessarily be
achieved. One share purchased at $3.875 on November 20, 1996, the day of
the option grant, would yield profits of $2.967 per share at 5%
appreciation over 8.75 years, or profits of $5.428 per share at 10%
appreciation over the same period.

(2) The exercise price of the options originally granted to Messrs.
Langley, Hart, Sharpe, Burchfield, and Mosier was equal to 100% of the fair
market value of Physicians stock on the date of grant, which was $13.50.
Pursuant to the Merger, each outstanding share of Physicians' stock was
exchanged for 5.0099 shares of the Company's stock and accordingly, the
number of shares subject to each option, which was assumed pursuant to the
Merger, was multiplied by 5.0099 and the exercise price was divided by
5.0099. For the purposes of this table, the fair market value of the
Company's Common Stock on the Merger is deemed to be the closing sales
price of the Company's Common Stock the day immediately preceding the
Merger which was $3.875.

(3) Physicians granted Mr. Langley and Mr. Hart options on August 24, 1995
under the Physicians Insurance Company of Ohio 1995 Non-Qualified Stock
Option Plan; these options were fully vested on August 24, 1995. The
Company assumed Physicians' obligations for these options under the terms
and conditions of the Merger.

9
12
(4) On August 24, 1995 Physicians granted Mr. Sharpe 300,594 options, and
Mr. Burchfield and Mr. Mosier 210,416 options each under the Physicians
Insurance Company of Ohio Non-Qualified Stock Option Plan. One-third of the
options granted to Messrs. Sharpe, Burchfield and Mosier vested on August
24, 1995, one-third vested on August 24, 1996, and the final one-third will
vest on August 24, 1997. The Company assumed these options under the terms
and conditions of the Merger.Management, footnote 10.

OPTION EXERCISES AND FISCAL 19961998 YEAR-END VALUE

The following table provides the specified information concerning options held as of December
31, 1996,1998 by the persons named in the Summary Compensation Table. No options were
exercised in 19961998 by such individuals.

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

NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY-OPTIONS
OPTIONS ATNumber of Securities Underlying Value of Unexercised
Unexercised In-the-Money-Options
Options at 12/31/96 AT98 At 12/31/96(1)
------------------------------- ------------------------98 (1)
------------------- ---------------

NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------

Ronald Langley(2) 406,747 -0- -0- -0-

John R. Hart 876,733Hart(2) 406,747 -0- $1,258,112 -0-

Donald Henderson 75,000 -0- $ 84,376 -0-

Robert M. Erickson 15,000 -0- $ 18,675 -0-

Ronald Langley 876,733 -0- $1,258,112 -0-

Richard H. Sharpe 200,396 100,198 $ 287,568 $143,78460,119 -0- -0- -0-

Gary W. Burchfield 140,277 70,139 $ 201,297 $100,64942,083 -0- -0- -0-

James F. Mosier 140,277 70,139 $ 201,297 $100,64942,083 -0- -0- -0-

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

(1) Based on the closing price of the Company's Common Stock on December 31,
19961998 on the Nasdaq'sNasdaq National Market of $4.125$13.25 per share.

(2) In addition to these options shown above, Mr. Langley and Mr. Hart have a
right to purchase shares of the Company under Call Option Agreements
assumed by the Company in August 1998; see Stock Ownership of Certain
Beneficial Owners and Management, footnote 4.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Louis J. Mariani, Sr., J. Philip DiNapoli, James R. Bancroft and E.
Alexander Glover served as the Compensation Committee during 1996 until the
November 1996 Merger. Upon the Merger,

Messrs. Weil and Foulkrod, and Dr. Ruppert, began serviceserve as members of the Compensation
Committee. Mr. Langley and Mr. Hart have been directors and executive officers
of GEC since September 5, 1995.

EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS

The Company's 1991 Stock Option Plan provides for accelerationARRANGEMENTS

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 is $800,000 each on an annual basis.
These employment agreements include a change in control clause providing that if
there is a change of the right
to exercise options upon the occurrence of certain events, including a
merger, liquidation or sale of substantially all the assets ofcontrol before December 31, 1999, the Company unlessshall
immediately pay each employee a total lump sum of $2.4 million and an amount
equal to three times the obligations under outstanding options are assumed, or
outstanding options are replaced, by a successor entity.highest annual bonus paid to the employee in the last
three years.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In consideration for their efforts in locating and hiring a president and
chief executive officer for Summit and for assisting in the renewal of
Summit Global Management,Inc.'s ("Summit") operations, Messrs.Mr. Langley and Mr. Hart together willentered into employment agreements with the Company,
effective December 31, 1997, see Summary Compensation Table, footnote 3. In
addition, Mr. Langley and Mr. Hart are entitled to receive 50% of the first $1,000,000$1
million of the profits attributable to Physicians ownership interest in Summit. To date, no
profits have been generated byof Summit or haveGlobal Management, Inc. No compensation has
been paid to either Mr.
Langley or Mr. Hart.

10
13
On November 1, 1992, Messrs. Sharpe, Burchfield and Mosier entered into Key
Employee Severance Agreements with Physicians which provide that in the
event of his termination of employment under certain circumstances during
the 24-month period (the "Effective Period") following a "change in
control" of Physicians, such employee will be entitled to certain severance
benefits. If the employee terminated his employment with Physicians during
the Effective Period for "good reason" or if Physicians terminates such
employee's employment during such period for any reason other than for
serious cause, Physicians will be obligated to continue the employee's
compensation at the base rate then in effect for the longer of (a) the
period remaining between the termination date of the employee's employment
and the second anniversary of the change of control, and (b) a period of
six months. A "change in control" is defined to include, among other
events, the acquisition by any person of shares possessing in the aggregate
more than 50% of the voting power of Physicians or the sale of all or
substantially all of the assets of Physicians.

On September 3, 1996, Physicians made a loan to Mr. Hart in the principal
amount of $280,000. The loan had a term of five years, with interest at a
rate of 6.5%, with principal and interest payable throughout the term or in
a balloon payment at the end of the term at Mr. Hart's election. The loan
was secured by Mr. Hart's Physicians stock options. The loan has been
repaid in full.this arrangement.

REPORT OF THE COMPENSATION COMMITTEE

This report of the Compensation Committee (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 statementProxy 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. Currently, Mr. Weil is the chairman.chairman and
Mr. Foulkrod and Dr. Ruppert are the other members.
Prior to the merger on November 20, 1996 Messrs. Weil, Foulkrod, and Dr.
Ruppert were the members of Physicians' Compensation Committee. Messrs.
Mariani, DiNapoli, Bancroft, and Glover were the members of the Company's
Compensation Committee.

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 proportion 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.

EXECUTIVE COMPENSATION PHILOSOPHY

The Board of Directors of Physicians 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 objectiveobjectives 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 competing
for senior executives with the skills, expertise and talent demonstrated by
the Company's top two executives.

14
*- - 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. 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.

*- - 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 once current options are
exercised or expire.

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.

The Compensation Committee has considered amendments to the Internal Revenue
Code denying deductions for annual compensation to certain executives in excess
of $1 million, subject to certain exceptions. The Company's compensation
structure has been such that it does not believe that it is likely that the $1
million cap will affect 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 respect to its existing plans.

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, changechanges in job
responsibilities, and the size of the Company and
GEC. Two-thirds of base compensation is to be paid by the Company and
one-third by GEC.Company.

9
12

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 or GEC 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 19971998 is 12%19%.

12
15

In addition, the Board of Directors of Physicians granted options under the
Physicians Insurance Company of Ohio 1995 Non-Qualified Stock Option Plan as
described in notes 3 and 4 under "Option Grants in Last Fiscal Year".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 GEC options of said
officers on an economically equivalent basis, to options to purchase shares of
the Company effective with the close of the PICO/GEC Combination.

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.

DISCUSSION OF 19961998 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER

As discussed above, in 1996 the Chief Executive Officer received fixed
consulting fees from Physicians Insurance Company of Ohio and a subsidiary of
GEC.

No bonus was paid with respect to the Company's performance in 19961998. 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. The terms of these employment agreements
are substantially similar to the terms of the consulting agreements.

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 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 1998,
this threshold was approximately 19%. Since the increase in the Company's book
value per share in 1998 was approximately 4.5%, and did not exceed the
threshold, no newbonus, i.e. short-term incentive, was payable for 1998.

The Compensation Committee awarded long term incentives in 1995 in the form of
175,347 non-qualified stock options wereat the then current market value. In
addition, the Committee recommended that the CEO's options with GEC, initially
granted in 1996.

May 7, 19971995, be converted on an economically equivalent basis to purchase
shares of the Company upon consummation of the GEC/PICO transaction, December
16, 1998. Finally, the Committee recommended and the Board agreed that the
Company assume in August 1998 GPG's obligations to the CEO and Chairman under
November 1993 Call Option Agreements.

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

August 3, 1998 Compensation Committee

John D. Weil, Chairman
S. Walter Foulkrod, III, Esq.
Richard D. Ruppert, MD

1310

1613

STOCK PRICE PERFORMANCE GRAPH

The graph below compares cumulative total return of the Company, the Nasdaq
Insurance StockStocks Index, and the Nasdaq Stock Market (U.S. Companies) for the
period January 1, 19921994 through December 31, 1996.1998.

COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PICO HOLDINGS, INC., NASDAQ MARKET-
U.S.MARKET INDEX (U.S. COS.)
AND NASDAQ INSURANCE STOCK INDEX

Fiscal Years End DecemberFISCAL YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1991 1992---------------------------------------------------------
1993 1994 1995 1996 (DOLLARS)1997 1998

PICO Holdings Inc. $100 128.57 180.95 52.38 66.67 78.57
Nasdaq$100.00 28.95 36.84 43.42 67.76 27.59
NASDAQ Market Index (Excluding ADRs) $100.00 97.56 137.12 168.90 206.73 289.90
NASDAQ Insurance Stock Index $100 135.34 144.75 136.25 193.54 213.77
Nasdaq Market - U.S. Cos. $100 116.38 133.6 130.59 184.68 227.17$100.00 100.57 140.41 159.18 195.00 195.18

The graph assumes $100 was invested on January 1, 19921994 in the Company's Common
Stock, the Nasdaq Stock Market (U.S. Companies) Index, and the Nasdaq Insurance
StockStocks 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, 1996.

14
17
APPOINTMENT1998.

INDEPENDENT AUDITORS OF INDEPENDENT AUDITING FIRM FOR 1997 AUDIT

The Company's Audit Committee is currently going through the process of
interviewing and evaluating independent auditing firms to conductPICO

Deloitte & Touche LLP was the Company's
1997 audit. At the conclusion of this process, which is not yet finalized, the
Audit Committee will make a recommendation to the Board of Directors.

The Company's current auditing firm is Coopers & Lybrand L.L.P. Coopers &
Lybrand L.L.P. has been the independent auditing firm for Physicians since 1976fiscal
year 1998 and has been appointed as the Company's independent auditing firm for
the Company since the Merger.fiscal year 1999. Representatives of CoopersDeloitte & Lybrand
L.L.P.Touche LLP are expected to be
present at the meeting, will have the opportunity to make any statements they
desire, and will be at the Annual Meeting of Shareholders.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.

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
35 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 January 7, 1998,2000, 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.

By Order of the Board of Directors

/s/ Ronald Langley

Ronald Langley
Chairman of the Board
May 8, 1997June 11, 1999

12
15
18PROXY PROXY

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

THIS PROXY ISFOR ANNUAL MEETING OF SHAREHOLDERS SOLICITED ON BEHALF OFBY 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 May 7, 1997June 4, 1999 at the Annual Meeting of Shareholders to be
held at The Empress Hotel, 7766 Fay Avenue,the Museum of Contemporary Art, Coast Room, 700 Prospect Street, La
Jolla, California 92037 on Thursday, June 5, 1997Monday, July 19, 1999 at 10:9:00 a.m. (Pacific)(PDT), and at any
adjournment thereof.

1. Election of Three Directors, to Serve for Three-Year Terms Until the Annual
Meeting of Shareholders in 2000.

__ FOR ALL NOMINEES LISTED BELOW FOR __ WITHHOLD AUTHORITY TOPLEASE VOTE, FOR ALL
THREE-YEAR TERMS NOMINEES LISTED BELOW
(except as marked to the contrary)

S. Walter Foulkrod, III, Esq. Richard D. Ruppert, MD Dr. Gary H. Weiss

To withhold authority to vote for an individual nominee strike a
line through the nominee's name in the list above

2. In their discretion, the above named Proxies are authorized to vote upon
each other item of business as may properly come before the meeting or any
adjournment thereof.SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE

(Continued and to be signed on reverse side)

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

(Continued from other side)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED13

16
PICO HOLDINGS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL
LISTED ABOVE.

Please sign exactly as your name appears on your stock certificate. If such
stock is held by joint tenants, both persons should sign. When signing as
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.

-----------------------------------------
(Signature)

-----------------------------------------
(Signature if held jointly)

Dated: __________________________________

I PLAN TO ATTEND THE ANNUAL SHAREHOLDERS MEETING:
__ YES __ NO

PLEASE MARK, SIGN, AND DATE THIS PROXY CARD AND
RETURN IT IN THE ENCLOSED ENVELOPE.

16USING DARK INK ONLY [X]

FOR WITHHOLD FOR ALL
1. Election of Three Directors, to Serve for Three-Year ALL ALL EXCEPT 2. In their discretion, the above named
Terms until the Annual Meeting of Shareholders in 2002. Proxies are authorized to vote upon
NOMINEES: John R. Hart, Ronald Langley, John D. Weil [ ] [ ] [ ] each other item of business as may
properly come before the meeting or
any adjournment thereof.

- ------------------------------------------------------------- THIS PROXY, WHEN PROPERLY EXECUTED, WILL
(To withhold authority to vote for an individual nominee, BE VOTED IN THE MANNER DIRECTED HEREIN,
strike a line through the nominee's name in the list above.) IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE PROPOSAL LISTED ABOVE.

-------------------------------
(Signature)

-------------------------------
(Signature if held jointly)

Dated:
-------------------------

Please sign exactly as your name(s) appears on your
stock certificate. If such stock is held by joint
tenants, both persons should sign. When signing as
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.