SOURCE: American Physicians Service Group, Inc.

March 10, 2008 06:00 ET

American Physicians Service Group, Inc. Reports Record Annual Results: 275% Increase in EPS; 64% Increase in Book Value per Share

AUSTIN, TX--(Marketwire - March 10, 2008) - American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the quarter and year ended December 31, 2007. For the three months ended December 31, 2007, revenues were $22,785,000 compared to $10,822,000 for the same period last year. Net earnings were $6,005,000 or $.82 per diluted share, compared to $1,625,000 or $.56 per diluted share, in the same period last year. For the year ended December 31, 2007, revenues were $84,403,000 compared to $33,564,000 in the prior year. Net earnings were $23,273,000 or $4.09 per diluted share, compared to $3,194,000 or $1.09 per diluted share in 2006.

Ken Shifrin, APS' Chairman of the Board, stated, "As the numbers dramatically indicate, we had a successful conclusion to an historic year. During 2007 we acquired American Physicians Insurance Company ('API'), effectively transforming ourselves from an insurance management company to a fully integrated insurance company. Soon after the acquisition, we raised $35 million in a secondary stock offering, which allowed us to strengthen the surplus of API and gave us additional capital to pursue our expansion plans. With the new surplus, API was able to seek and receive its first ever A.M. Best rating, an 'Excellent' or 'A-', which we believe will be a real positive as we pursue growth in both new and existing markets."

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 remain conservatively positioned at the upper end of the actuarial range. We also continue to conservatively manage our investment portfolio. As we have said previously, we hold no sub-prime mortgage securities, but the depth of the housing crisis has also affected investment grade Alt-A mortgage-backed securities and we recorded a $1.4 million write down on such securities in the fourth quarter. Since the beginning of the fourth quarter, and continuing through today, we have reduced our holdings of Alt-A securities by $3.2 million, realizing a modest gain and mitigating future risks from the securities. I would be remiss not to mention the successes of our insurance staff, whose quality service can be credited for the 91% retention rate we enjoyed in 2007, and the outstanding performance of our financial services segment, which delivered a return of over 150% on their average invested capital in 2007."

Mr. Shifrin concluded, "The successful results Tim mentioned enabled us to continue to improve our already strong balance sheet. At year end, shareholders' equity had grown to almost $124 million from less than $30 million a year earlier. Book value per share, likewise, increased from $10.49 to $17.19 over that time period. Our cash and investments increased from approximately $27 million to approximately $223 million and our only debt is approximately $8.5 million of redeemable preferred stock, which we issued in the acquisition of API. As always, our goal is to transfer this success to increased value for our shareholders and we look forward to continuing to do so in 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)

                                          December 31,     December 31,
                                             2007              2006
                                           ----------       ----------
                                          (unaudited)

Assets

Investments                                $  204,802       $   21,057
Cash and cash equivalents                      18,391            4,242
Premium and maintenance fees receivables       15,946                -
Reinsurance recoverables                       24,554                -
Deferred policy acquisition costs               2,514                -
Deferred tax assets                             7,402            1,321
Goodwill                                            -            1,247
Property and equipment, net                       350              276
Intangible assets                               1,045              280
Federal income tax receivable                   1,957                -
Prepaid and other assets                        5,837            7,853
                                           ----------       ----------

Total assets                               $  282,798       $   36,276
                                           ==========       ==========


Liabilities

Reserve for loss and loss adjustment
 expense                                   $  101,606       $        -
Unearned premiums and maintenance fees         35,417                -
Funds held under reinsurance treaties           4,651                -
Trade accounts payable                            996            2,228
Accrued expenses and other liabilities          7,594            4,323
Federal income tax payable                          -              136
Mandatorily redeemable preferred stock          8,554                -
                                           ----------       ----------

Total liabilities                             158,818            6,687

Minority interest                                  --               21

Total shareholders' equity                    123,980           29,568
                                           ----------       ----------

Total liabilities and shareholders' equity $  282,798       $   36,276
                                           ==========       ==========

Shares outstanding                              7,214            2,818

Book value per share                       $    17.19       $    10.49



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

(In thousands, except share data)  Three months Ended        Year Ended
                                      December 31,          December 31,
                                  -------------------   -------------------
                                    2007        2006      2007        2006
                                  -------     -------   -------     -------
REVENUES
Gross premiums written            $12,836           -   $50,120           -
Premiums Ceded                        891           -     4,813           -
Change in Unearned Premiums         4,235           -     1,106           -
                                  -------               -------

  Net premiums earned              17,962           -    56,039           -

Investment income, net of
 investment expense                 2,950         228     8,693         915
Realized capital gain (loss),
 net                               (1,597)         64    (5,256)        155
Management service and other
 revenue                               37       4,172     3,871      15,644
Financial services                  3,433       6,358    21,056      16,850
                                  -------     -------   -------     -------

        Total revenues             22,785      10,822    84,403      33,564

EXPENSES
Loss and loss adjustment expenses   5,909           -    13,695           -
Other underwriting expenses         2,801           -     8,210           -
Management service expenses             -       2,714     3,823      11,262
Financial services expenses         3,431       4,838    19,030      15,157
General and administrative
 expenses                           1,659         685     5,459       2,106
Impairment of goodwill                  -           -     1,247           -
                                  -------     -------   -------     -------

        Total expenses             13,800       8,237    51,464      28,525
                                  -------     -------   -------     -------

Federal income tax expense          2,980         956    11,929       1,839
Minority interests                      -           4         1           6
Extraordinary gain, net of tax          -           -     2,264           -
                                  -------     -------   -------     -------

        Net income                $ 6,005     $ 1,625   $23,273     $ 3,194
                                  =======     =======   =======     =======

Diluted income per share:
  Net income before
   extraordinary gain             $  0.82     $  0.56   $  3.69     $  1.09
  Extraordinary gain                    -           -      0.40           -
                                  -------     -------   -------     -------

        Net income                $  0.82     $  0.56   $  4.09     $  1.09
                                  =======     =======   =======     =======

Diluted weighted average shares
 outstanding                        7,316       2,926     5,695       2,933



SELECTED INSURANCE DATA FOR API, pre and post merger

   Claims History

                              Claims Reported      Open Claims
Date                           in the Quarter     at Quarter End
-----------------             ---------------     --------------
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
June 30, 2005                        78                 812

Contact Information

  • For further information, visit APS' website at www.amph.com or contact:
    Mr. Kenneth Shifrin
    Chairman of the Board

    Mr. Tim LaFrey
    President

    Mr. Marc Zimmermann
    Vice President - Finance

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