SOURCE: American Physicians Service Group, Inc.

August 05, 2008 16:37 ET

American Physicians Service Group, Inc. Reports Excellent Second Quarter Earnings

AUSTIN, TX--(Marketwire - August 5, 2008) - American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the quarter and six months ended June 30, 2008. For the three months ended June 30, 2008, revenues were $17,823,000 compared to $29,927,000 for the same period last year. Net earnings were $6,146,000 or $.84 per diluted share, compared to $12,071,000 or $2.37 per diluted share, in the same period last year. For the six months ended June 30, 2008, revenues were $37,455,000 compared to $38,739,000 in the comparable last year period. Net earnings were $9,526,000 or $1.30 per diluted share, compared to $11,976,000 or $2.97 per diluted share in the comparable period last year. Included in net income in 2007 was an extraordinary gain resulting from the acquisition of American Physicians Insurance Company ("API") on April 1, 2007. The extraordinary gain was $2,264,000 or $.44 per diluted share and $.56 per diluted share in the three and six month periods ending June 30, 2007, respectively.

Ken Shifrin, APS Chairman of the Board, stated, "The results from American Physicians Insurance Company, our medical malpractice subsidiary, continue to be excellent. While we did not have the one-time gain we enjoyed last year or the same degree of favorable development in our claims reserves, we are pleased that we exceeded the analysts' consensus estimate and that our gross written premium showed a quarter over quarter increase, indications of our continued strong operating performance. Book value per share has benefited from this consistently superior performance, increasing from $15.17 at June 30, 2007 to $17.19 at December 31, 2007 and $17.88 at June 30, 2008."

Tim LaFrey, president of APS, added, "Equally consistent with the financial results has been our application of a conservative reserving philosophy. Our historical pattern of reserving at the upper end of the actuarial range, even during periods of favorable claim patterns, has lead to recurring favorable quarterly reserve adjustments, a pattern that should continue to repeat given the current claims environment. Our overall reserves for all reporting periods remain at the upper end of the range after recognizing $8.6 million of favorable development during the quarter just ended. Our accounting policy for investments has been no less conservative. We have no auction rate securities or sub-prime mortgage securities, but have been writing our lowest rated Alt A mortgage-backed securities down to market, due to the extended mortgage crisis. Even with these adjustments, total cash and marketable securities has grown to over $225 million."

Mr. LaFrey continued, "Our Financial Services business had a record year in 2007, but has not been immune to the general trend in the financial services arena and has reported losses in 2008. We have taken a number of steps to reduce costs and the resultant savings will begin to have an impact over the remainder of the year. While our Financial Services business no longer constitutes a significant amount of our overall operations since the acquisition of our insurance subsidiary, we continue to explore ways to reduce costs and return the segment to profitability."

Mr. Shifrin concluded, "Good results and a well-managed balance sheet ultimately lead to shareholder value and we were pleased to pay our fifth consecutive common stock dividend at the close of the quarter. We maintained our $.30 per share rate even with our expanded shareholder base. We also paid a dividend on our preferred shares and redeemed approximately $1 million of these shares at the same time. We look forward to reporting our progress as we move into the second half of 2008."

APS is an insurance and financial services firm with subsidiaries and affiliates which provide medical malpractice insurance for physicians and other healthcare providers; and brokerage and investment services to institutions and high net worth individuals. The Company is headquartered in Austin, Texas.

This press release includes forward-looking statements related to the Company that involve risks and uncertainties that could cause actual results to differ materially. These forward-looking statements are made in reliance on the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. For further information about these factors that could affect the Company's future results, please see the Company's recent filings with the Securities and Exchange Commission. Prospective investors are cautioned that forward-looking statements are not guarantees of future performance. Actual results may differ materially from management expectations. Copies of the filings are available upon request from the Company's investor relations department.

                  AMERICAN PHYSICIANS SERVICE GROUP, INC.
                          SELECTED FINANCIAL DATA

(in thousands, except per share data)

                                                    June 30,   December 31,
                                                      2008         2007
                                                  ------------ ------------
                                                  (Unaudited)
Assets

Investments                                       $    201,409 $    204,802
Cash and cash equivalents                               23,783       18,391
Premium and maintenance fees receivables                16,299       15,946
Reinsurance recoverables                                18,276       24,554
Deferred policy acquisition costs                        2,317        2,514
Deferred tax assets                                     10,243        7,402
Property and equipment, net                                634          350
Intangible assets                                        1,260        1,045
Federal income tax receivable                              144        1,957
Prepaid and other assets                                 4,297        5,837
                                                  ------------ ------------

Total assets                                      $    278,662 $    282,798
                                                  ============ ============

Liabilities

Reserve for loss and loss adjustment expense      $     98,103 $    101,606
Unearned premiums and maintenance fees                  33,627       35,417
Funds held under reinsurance treaties                    5,399        4,651
Trade accounts payable                                     531          996
Accrued expenses and other liabilities                   5,802        7,594
Mandatorily redeemable preferred stock                   7,416        8,554
                                                  ------------ ------------

Total liabilities                                      150,878      158,818

Total shareholders’ equity                             127,784      123,980
                                                  ------------ ------------

Total liabilities and shareholders’ equity        $    278,662 $    282,798
                                                  ============ ============

Shares outstanding                                       7,147        7,214

Book value per share                              $      17.88 $      17.19




                  AMERICAN PHYSICIANS SERVICE GROUP, INC.
                          SELECTED FINANCIAL DATA
                                (UNAUDITED)

(In thousands, except share data)

                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
REVENUES
Gross premiums written          $  15,124  $  15,045  $  29,860  $  15,045
Premiums Ceded                     (1,019)     3,418        376      3,418
Change in Unearned Premiums           489      1,983      1,712      1,983
                                ---------  ---------  ---------  ---------

  Net premiums earned              14,594     20,446     31,948     20,446

Investment income, net of
 investment expense                 2,959      2,506      6,015      2,839
Realized capital gain (loss),
 net                               (1,243)       (49)    (3,838)      (464)
Management service and other
 revenue                               36         52         53      3,729
Financial services                  1,477      6,972      3,277     12,189
                                ---------  ---------  ---------  ---------

      Total revenues               17,823     29,927     37,455     38,739

EXPENSES
Loss and loss adjustment
 expenses                           1,579      3,162      9,088      3,162
Other underwriting expenses         2,602      2,591      5,299      2,591
Management service expenses             -          -          -      3,823
Financial services expenses         3,316      6,330      5,886     10,692
General and administrative
 expenses                           1,161      1,421      2,719      2,192
Impairment of goodwill                  -      1,247          -      1,247
                                ---------  ---------  ---------  ---------

      Total expenses                8,658     14,751     22,992     23,707

Income tax expense                  3,019      5,368      4,937      5,319
Minority interests                      -          1          -          1
                                ---------  ---------  ---------  ---------

      Net income before
       extraordinary gain       $   6,146  $   9,807  $   9,526  $   9,712

      Extraordinary gain, net
       of tax                           -      2,264          -      2,264
                                ---------  ---------  ---------  ---------
      Net income                $   6,146  $  12,071  $   9,526  $  11,976
                                =========  =========  =========  =========

Diluted income per share        $    0.84  $    2.37  $    1.30  $    2.97
                                =========  =========  =========  =========

Diluted weighted average shares
 outstanding                        7,284      5,091      7,305      4,026





SELECTED INSURANCE DATA FOR API, pre and post merger

Claims History

                               Claims Reported   Open Claims
Date                            in the Quarter  at Quarter End
                               ---------------  --------------
June 30, 2008                         92             667
March 31, 2008                        98             688
December 31, 2007                    128             740
September 30, 2007                    89             746
June 30, 2007                         84             822
March 31, 2007                       113             848
December 31, 2006                    102             808
September 30, 2006                   160             770
June 30, 2006                        143             710
March 31, 2006                       106             665
December 31, 2005                     84             705

Contact Information

  • For further information, visit APS' website at www.amph.com or contact:
    Mr. Kenneth Shifrin
    Chairman of the Board
    or
    Mr. Tim LaFrey
    President
    or
    Mr. Marc Zimmermann
    Chief Financial Officer
    American Physicians Service Group, Inc.
    1301 Capital of Texas Highway, C-300
    Austin, Texas 78746
    (512)328-0888