SOURCE: American Physicians Service Group, Inc.

November 05, 2007 08:30 ET

American Physicians Service Group, Inc. Reports Quarterly EPS Up Over 400% on Tripling of Revenue

AUSTIN, TX--(Marketwire - November 5, 2007) - American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the quarter and nine months ended September 30, 2007. For the three months ended September 30, 2007, revenues were $22,879,000 compared to $7,125,000 for the same period last year. Net earnings were $5,292,000 or $.73 per diluted share, compared to $409,000 or $.14 per diluted share, in the same period last year. For the nine months ended September 30, 2007, revenues were $61,618,000 compared to $22,782,000 in the comparable period last year. Net earnings were $17,268,000 or $3.37 per diluted share, compared to $1,569,000 or $.53 per diluted share in the comparable period last year.

Ken Shifrin, APS' Chairman of the Board, stated, "Another outstanding quarter, following our acquisition of American Physicians Insurance Company ('API') on April 1, 2007, has reinforced the soundness of our plan to emphasize and expand the insurance side of our business. We saw favorable trends during the quarter with our Insurance Services segment reporting an 8% increase in total policyholder count at the end of September, compared to a year ago, primarily due to the 93% retention rate that our service-oriented staff was able to achieve in the quarter just ended. We also saw a slowing in the rate pressure that we have experienced for the last two years. Claims continued to trend favorably and as a result we experienced favorable development of $5.6 million during the quarter, of which $3.2 million was in our retained layer and $2.4 million was in our reinsurance layer. These adjustments were made while maintaining our very conservative philosophy of being reserved at the upper end of the actuarial range."

Mr. Shifrin continued, "Not all trends in the quarter were favorable, as we were affected by the accelerating weakness in the U.S. housing market. While we hold no sub-prime mortgage obligations, we do hold investment grade Alt A mortgage-backed securities, which declined significantly during the quarter. We determined that the decline in those securities rated 'A' was other than temporary and wrote them down to market value, a write off of approximately $3.1 million."

Tim LaFrey, president and chief operating officer of APS, added, "We continued to strengthen the Company operationally and financially during the quarter. We moved through the regulatory process and were approved to do business in Oklahoma. While we are just getting started there, we have issued our first policies and look forward to introducing more Oklahoma physicians to what we believe is a superior level of service. Our financial services segment again contributed to our success, revenues being up 55% and pretax profits being up 98% in the nine month period, compared to a year ago."

Mr. LaFrey continued, "During the quarter, our investment bankers exercised their over allotment option from the secondary offering that we completed late in the second quarter. That additional capital plus our excellent earnings brought total equity to over $115 million and book value per share to $16.18 at September 30, 2007, compared to $15.17 at June 30, 2007 and $9.92 at September 30, 2006. With our price to book value ratio hovering in the 1.2 to 1 range, below the norm for comparable public medical malpractice insurance companies, our board authorized an additional $1 million in funds for stock repurchases, bringing the total authorized, but not yet utilized, to just over $2 million."

Mr. Shifrin concluded, "These are exciting times in our company history. We continue to actively seek opportunities to employ our capital and look forward to reporting our progress in the coming quarters."

Conference Call

A conference call to discuss third quarter results will be held Tuesday, November 6, 2007 at 10:30 A.M. central time. Dial (800) 909-5202 or (785) 830-7975 outside North America. Use access code 4225268. The call will also be broadcast in listen-only format on our website, www.AMPH.com. A replay of the call will be available through November 12, 2007 at (888) 203-1112 or (719) 457-0820, use access code 4225268.

About APS

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

Forward-Looking Statements

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)

                                        September 30,    December 31,
                                            2007             2006
                                        ------------    ------------
                                         (Unaudited)
Assets


Investments                               $206,241        $ 21,039
Cash and cash equivalents                   15,583           6,122
Premium and maintenance
 fees receivables                           19,134               -
Reinsurance recoverables                    25,934               -
Deferred policy acquisition costs            2,691               -
Deferred tax assets                          7,987           1,321
Goodwill                                         -           1,247
Property and equipment, net                  1,049             556
Prepaid and other assets                     4,259           5,991
                                        ------------    ------------

Total assets                              $282,878        $ 36,276
                                        ============    ============


Liabilities

Reserve for loss and loss adjustment
 expense                                 $104,858         $      -
Unearned premiums and maintenance
 fees                                      39,677                -
Funds held under reinsurance
 treaties                                   5,929                -
Trade accounts payable                      1,152            2,228
Accrued expenses and other
 liabilities                                6,828            4,323
Federal income tax payable                    269              136
Mandatorily redeemable preferred
 stock                                      8,397                -
                                        ------------    ------------

Total liabilities                         167,110            6,687

Minority interest                              --               21

Total shareholders’ equity                115,768           29,568
                                        ------------    ------------

Total liabilities and
 shareholders’ equity                    $282,878          $36,276
                                        ============    ============

Shares outstanding                          7,154            2,818

Book value per share                       $16.18           $10.49




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

(In thousands, except share data)

                                     Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                     ------------------   -----------------
                                       2007      2006       2007      2006
                                     -------   -------    -------   -------
REVENUES

 Net premiums earned                 $17,631   $     -    $38,077   $     -

 Investment income, net of
  investment expense                   2,904       249      5,743       668
 Realized capital gain (loss), net    (3,195)       90     (3,659)      110
 Management service and other
  revenue                                105     3,738      3,834    10,621
 Financial services                    5,434     3,048     17,623    11,383
                                     -------   -------    -------   -------

        Total revenues                22,879     7,125     61,618    22,782


EXPENSES

Loss and loss adjustment expenses      4,624         -      7,786         -
Other underwriting expenses            2,818         -      5,409         -
Management service expenses                -     3,147      3,823     8,548
Financial services expenses            4,907     2,914     15,599    10,359
General and administrative expenses    1,608       423      3,800     1,421
Loss from impairment of goodwill           -         -      1,247         -
                                     -------   -------    -------   -------

        Total expenses                13,957     6,484     37,664    20,328
                                     -------   -------    -------   -------

Federal income tax expense             3,630       232      8,949       883
Minority interests                         -         -          1         2

Extraordinary gain, net of tax             -         -      2,264         -
                                     -------   -------    -------   -------

        Net income                  $  5,292   $   409    $17,268   $ 1,569
                                     =======   =======    =======   =======

Diluted income per share:

  Net income before extraordinary
   gain                                $0.73     $0.14      $2.93     $0.53
  Extraordinary gain                       -         -       0.44         -
                                     -------   -------    -------   -------

        Net income                     $0.73     $0.14      $3.37     $0.53
                                     =======   =======    =======   =======

  Diluted weighted average shares
   outstanding                         7,253     2,892      5,114     2,942


SELECTED INSURANCE DATA

   Claims History
                            Claims
                           Reported   Open Claims
                            in the    at Quarter
Date                        Quarter       End
                          ----------- -----------
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
September 30, 2005            99          756
June 30, 2005                 78          812
March 31, 2005                72          930

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
    American Physicians Service Group, Inc.
    1301 S. Capital of Texas Highway, Suite C-300
    Austin, Texas 78746
    512.328.0888