SOURCE: American Physicians Service Group, Inc.

March 29, 2007 09:00 ET

APS Announces Fourth Quarter and 2006 Annual Results

AUSTIN, TX -- (MARKET WIRE) -- March 29, 2007 -- American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the fourth quarter and year-end 2006.

For the three months ended December 31, 2006, revenues were $10,383,000 versus $11,096,000 in the comparable period a year ago. Net earnings for the quarter were $1,625,000, compared to $1,845,000 in last year's fourth quarter. Diluted earnings per share were $0.56 for the quarter ended December 31, 2006 versus $0.64 in the year-ago period. For the year ended December 31, 2006, APS reported total revenues of $32,360,000 versus $33,973,000 in 2005. Net earnings were $3,194,000 in 2006 compared to $5,640,000 in 2005. Diluted earnings per share were $1.09 versus $1.86 in 2005.

Ken Shifrin, Chairman of the Board, stated, "While our 2006 net income of approximately 10% on sales would be an enviable return for many companies, it represented a decline from 2005 for us. We said at this time last year that we would not repeat the one-time investment gains that we enjoyed in 2005. We had approximately $2 million less in after tax investment gains in 2006 than in 2005, representing about 85% of the decline in net income in 2006 compared to 2005."

Mr. Shifrin continued, "Operationally, we worked very hard to match last year's record revenues in our insurance operations. To offset reduced premium rates, our team increased the number of insured physicians by over 20%, compared to 2005. This effort required additional resources, with marketing, increased service personnel, and information technology initiatives combining to increase costs by approximately 10%. Revenues in our Investment Services division declined approximately 9%, but associated cost reductions kept our margin on sales within 2% of last year. This division continues to expand its bank debt/trade claims clearing and investment banking operations."

Bill Hayes, APS' CFO, added, "We did not neglect our balance sheet in 2006. Working capital grew from approximately $15.9 million to approximately $19.2 million, and book value per share grew to $10.49 at December 31, 2006 from $9.95 a year earlier. Even while accomplishing this growth we were able to reward shareholders with a 20% dividend increase -- from $0.25 per share in 2005 to $0.30 in 2006. We also repurchased approximately $2.4 million of our stock in announced buy-back plans. We remain debt free."

Mr. Shifrin concluded, "As important as these historical results are, I believe that APS' real story is contained in our announcement last week of the completion of the acquisition of American Physicians Insurance Exchange. With this new vehicle in place we are eager to move forward into 2007, capitalizing on the growth opportunities that we believe are now open for us. Following the effective date of the merger we will resume our stock buyback, which has been suspended during the proxy process."

APS is a management and financial services firm with subsidiaries and affiliates which provide: medical malpractice insurance services for doctors; and brokerage and 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)

                               Three Months Ended          Year Ended
                                   December 31,           December 31,
                             ---------------------   ---------------------
                               2006          2005      2006          2005
                             -------       -------   -------       -------
Revenues                     $10,383       $11,096   $32,360       $33,973
Expenses                       8,203         8,436    28,535        29,262
Gain on sale of assets            14             3        29           134
                             -------       -------   -------       -------
Operating income               2,194         2,663     3,854         4,845
Gain on investments (net)        110            45       240         2,967
                             -------       -------   -------       -------

Earnings from operations
 before interest, income
 taxes, and minority interest  2,304         2,708     4,094         7,812

Interest and other income
(net)                            282           211       945           701
Income tax expense               957         1,073     1,839         3,039
Minority interest                  4             1         6            14
                             -------       -------   -------       -------

Net earnings                 $ 1,625       $ 1,845   $ 3,194       $ 5,460
                             =======       =======   =======       =======

Diluted earnings per share:

        Net earnings         $  0.56       $  0.64   $  1.09       $  1.86
                             =======       =======   =======       =======

Weighted average shares
 outstanding (diluted)         2,926         2,896     2,933         2,931
                             =======       =======   =======       =======


                     AMERICAN PHYSICIANS SERVICE GROUP, INC.
                       SELECTED FINANCIAL DATA, continued

  (In thousands)                                           December 31
                                                      --------------------
                                                        2006         2005
                                                      -------      -------
ASSETS

Current assets                                        $25,934      $21,663

Notes receivable, less current portion                     --          326
Property and equipment                                    556          687
Investment in available-for-sale equity and fixed
 income securities                                      6,293        8,601
Deferred income taxes                                   1,192          686
Goodwill                                                1,247        1,247
Other assets                                            1,054          295
                                                      -------      -------

        Total Assets                                  $36,276      $33,505
                                                      =======      =======

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities                                   $ 6,687      $ 5,783
                                                      -------      -------

        Total liabilities                               6,687        5,783

Minority interests                                         21           15

Shareholders' Equity:

Common stock                                              282          278
Additional paid-in capital                              7,944        8,204
Retained earnings                                      21,111       18,737
Accumulated other comprehensive income,
 net of taxes                                             231          488
                                                      -------      -------

        Total shareholders' equity                     29,568       27,707
                                                      -------      -------

Total Liabilities and Shareholders' Equity            $36,276      $33,505
                                                      =======      =======

Contact Information

  • For further information, visit APS' Website at www.amph.com or contact:

    Mr. Kenneth Shifrin, Chairman of the Board (or)
    Mr. W. H. Hayes, Sr. Vice President - Finance
    American Physicians Service Group, Inc.
    1301 Capital of Texas Highway, C-300
    Austin, Texas 78746
    (512) 328-0888