SOURCE: American Physicians Service Group, Inc.

May 05, 2008 17:13 ET

American Physicians Service Group, Inc. Reports Dramatic Quarter-Over-Quarter Growth in Earnings; Increase in Book Value per Share

AUSTIN, TX--(Marketwire - May 5, 2008) - American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the quarter ended March 31, 2008. For the three months ended March 31, 2008, revenues were $19,632,000 compared to $8,887,000 for the same period last year. Net earnings were $3,380,000 or $.46 per diluted share, compared to a loss of $95,000 or $.03 per diluted share in the same period last year.

Ken Shifrin, APS' Chairman of the Board, stated, "Our acquisition of American Physicians Insurance Company last year continues to drive our results, with strong profits this quarter, compared to a small loss a year ago. Equally important is our steady growth in book value per share. At March 31, 2008 our book value per share stood at $17.67 compared to $10.82 at March 31, 2007 and $17.19 at the end of 2007."

Tim LaFrey, President of APS, added, "We continue to experience a favorable claims environment as a result of tort reform and strong underwriting discipline, while our loss reserves, including those for the current accident year, remain conservatively positioned at the upper end of the actuarial range. Our cash and investments grew from $223 million to $234 million during the quarter and we continue to conservatively manage the investment portfolio. We have avoided exposure to sub-prime mortgage-backed securities and auction rate securities and have only $6.2 million, a relatively small part of our portfolio, in Alt A mortgage-backed securities."

Mr. LaFrey continued, "Operationally, our insurance segment has seen rates begin to firm. Retention for the quarter was strong at 92%. Claims continued to trend favorably and as a result we experienced favorable development of $4.2 million during the quarter, of which $1.5 million was in our retained layer and $2.7 million was in our reinsurance layer. These adjustments were made while continuing to maintain our very conservative philosophy, as evidenced by our average reserve per open claim increasing from approximately $110,000 at year-end 2007 to approximately $122,000 at the end of the quarter. In our Financial Services segment we experienced a loss, as the slowdown in overall activity we saw beginning in the fourth quarter of 2007 continued through the first quarter. Though we were not able to avoid the effects of volatile markets, we were able to be opportunistic in our recruiting efforts and expand our producer base, which we think will serve us well over the long term."

Mr. Shifrin concluded, "For over 20 years we have been opportunistic in repurchasing our stock when we thought it was in the interests of shareholders. During the quarter we were able to repurchase a little over 1% of our shares and our Board authorized an additional $4 million for future purchases. With our excellent cash flow and un-leveraged balance sheet this level of repurchases does not jeopardize our ability to pursue expansion opportunities. We are pleased with our results for the quarter and look forward to reporting our progress as we continue into 2008."

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

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)
                                                  March 31,   December 31,
                                                    2008          2007
                                                ------------- -------------
                                                 (Unaudited)
Assets

Investments                                     $     204,974 $     204,802
Cash and cash equivalents                              29,074        18,391
Premium and maintenance fees receivables               14,406        15,946
Reinsurance recoverables                               18,104        24,554
Deferred policy acquisition costs                       2,422         2,514
Deferred tax assets                                     8,618         7,402
Property and equipment, net                               516           350
Intangible assets                                       1,206         1,045
Federal income tax receivable                               -         1,957
Prepaid and other assets                                5,190         5,837
                                                ------------- -------------

Total assets                                    $     284,510 $     282,798
                                                ============= =============

Liabilities

Reserve for loss and loss adjustment expense    $     101,976 $     101,606
Unearned premiums and maintenance fees                 34,160        35,417
Funds held under reinsurance treaties                   5,311         4,651
Trade accounts payable                                  1,487           996
Accrued expenses and other liabilities                  2,957         7,594
Federal income tax payable                              3,132             -
Mandatorily redeemable preferred stock                  8,658         8,554
                                                ------------- -------------

Total liabilities                                     157,681       158,818

Total shareholders’ equity                            126,829       123,980
                                                ------------- -------------

Total liabilities and shareholders’ equity      $     284,510 $     282,798
                                                ============= =============

Shares outstanding                                      7,177         7,214

Book value per share                            $       17.67 $       17.19




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


(In thousands, except share data)                       Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2008      2007
                                                        --------  --------
REVENUES
Gross premiums written                                  $ 14,736  $      -
Premiums Ceded                                             1,395         -
Change in Unearned Premiums                                1,223         -
                                                        --------  --------

  Net premiums earned                                     17,354         -

Investment income, net of investment expense               3,056       334
Realized capital gain (loss), net                         (2,595)     (414)
Management service and other revenue                          17     3,675
Financial services                                         1,800     5,292
                                                        --------  --------

      Total revenues                                      19,632     8,887

EXPENSES
Loss and loss adjustment expenses                          7,509         -
Other underwriting expenses                                2,697         -
Management service expenses                                    -     3,823
Financial services expenses                                2,570     4,437
General and administrative expenses                        1,558       772
                                                        --------  --------

      Total expenses                                      14,334     9,032

Income tax expense (benefit)                               1,918       (49)
Minority interests                                             -        (1)
                                                        --------  --------

      Net income (loss)                                 $  3,380  $    (95)
                                                        ========  ========

Diluted income (loss) per share                         $   0.46  $  (0.03)
                                                        ========  ========

Diluted weighted average shares outstanding                7,297     2,822





SELECTED INSURANCE DATA FOR API, pre and post merger


Claims History

                               Claims Reported   Open Claims
Date                           in the Quarter  at Quarter End
                               --------------- ---------------
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
September 30, 2005                          99             756

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
    Vice President - Finance
    American Physicians Service Group, Inc.
    1301 S. Capital of Texas Highway, C-300
    Austin, Texas 78746
    (512) 328-0888