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American Physicians Service Group, Inc.: American Physicians Service Group, Inc. Reports Excellent Fourth Quarter and Annual Re

^{Published on 2009-03-02 13:14:48, Last Modified on 2009-03-02 13:17:10 - Market Wire}
 

AUSTIN, TX--(Marketwire - March 2, 2009) - American Physicians Service Group, Inc. ("APS") (NASDAQ: [ AMPH ]) today announced results for the quarter and year ended December 31, 2008. For the three months ended December 31, 2008, revenues were $17,408,000 compared to $22,785,000 for the same period last year. Net earnings were $2,454,000 or $.34 per diluted share, compared to $6,005,000 or $.82 per diluted share, in the same period last year. For the year ended December 31, 2008, revenues were $74,749,000 compared to $84,403,000 in the prior year. Net earnings were $19,163,000 or $2.64 per diluted share, compared to $23,273,000 or $4.09 per diluted share in 2007. Results for the year ended December 31, 2007 included an extraordinary gain of $2,264,000 or $.40 per diluted share, resulting from the acquisition of American Physicians Insurance Company ("API") on April 1, 2007 and earnings per share in 2007 did not reflect the full impact of an additional 4,300,000 shares issued during the year in connection with the acquisition and a stock offering.

Ken Shifrin, Chairman of the Board, stated, "2008 represented the first full year of operations as a fully integrated insurance company following our acquisition of API in 2007 and it was an eventful year. We were not immune to the severe turmoil in world economics in 2008, yet produced our second best earnings performance ever, grew book value per share by 13%, produced a 15% return on equity and grew our policy holder count by over 8%. Our share price increased over 7% during the year, a truly extraordinary performance for any public company in 2008. So while we did not entirely escape the economic crisis, we were still able to deliver excellent results in a very difficult market."

Tim LaFrey, President, added, "Our insurance base continued to grow in 2008. New premium business increased 62% over 2007, including meaningful contributions from expansion states Arkansas and Oklahoma, and our driven commitment to customer service yielded a 92% retention rate. The combined effect was an 8% increase in policyholder count during 2008. Total premiums do not fully reflect this increase, as very favorable claims trends in our primary market resulted in appropriate rate competition, with an average rate decrease of 6% in 2008, down significantly from the 14% decrease in 2007. Despite the favorable claims trend, we continue to underwrite with the systematic, conservative approach we have always followed. Consequently, though our number of pending claims declined 21% in 2008, our net reserve per open claim increased 22% and we remain very conservatively reserved at the upper end of the actuarial range in all periods."

Mr. LaFrey continued, "As Mr. Shifrin said, we were not immune from the impact of the decline in global financial markets and our overall revenue decline for the year was primarily the result of lower financial services revenues in 2008, following that segment's record year in 2007. Revenues for the financial services segment declined from $21.1 million in 2007 to $6.2 million in 2008. We reduced our expenses in 2008, narrowing our loss each quarter as the year progressed, but will not be satisfied until we return this segment to profitability."

Mr. Shifrin concluded, "We remain steadfast to our tenets of conservative management and maintaining a strong balance sheet. We have experienced no defaults in our fixed income securities and have avoided investments in AIG, Lehman Brothers and others who have dominated the headlines. We have taken a conservative approach in the valuation of some mortgage-backed products, recording impairment losses due to the length and depth of the housing crisis. We have also invested in ourselves, buying back approximately 323,000 of our shares during 2008. Even with the combined effect of the impairment write downs, stock repurchases, sixth consecutive common stock dividend and second payment on our redeemable preferred stock, we increased cash and investments to $232 million at the end of the year from $223 million at the end of 2007. With total shareholders' equity of over $136 million at year end, modest debt of approximately $7.5 million and strong prospects for continued profitability, we and our shareholders remain in a position to prosper during a period of economic uncertainty."

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.

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, 2008 2007 -------------- -------------- Assets Investments $ 209,709 $ 204,802 Cash and cash equivalents 22,060 18,391 Premium and maintenance fees receivables 17,186 15,946 Reinsurance recoverables 15,293 24,554 Deferred policy acquisition costs 2,500 2,514 Deferred tax assets 9,488 7,402 Property and equipment, net 590 350 Intangible assets 2,264 1,045 Federal income tax receivable 738 1,957 Prepaid and other assets 3,726 5,837 -------------- -------------- Total assets $ 283,554 $ 282,798 ============== ============== Liabilities Reserve for loss and loss adjustment expense $ 92,141 $ 101,606 Unearned premiums and maintenance fees 36,785 35,417 Funds held under reinsurance treaties 3,978 4,651 Trade accounts payable 290 996 Accrued expenses and other liabilities 6,327 7,594 Mandatorily redeemable preferred stock 7,568 8,554 -------------- -------------- Total liabilities 147,089 158,818 Common stock 701 721 Additional paid-in capital 75,367 79,752 Accumulated other comprehensive income (loss) 368 545 Retained earnings 60,029 42,962 -------------- -------------- Total shareholders' equity 136,465 123,980 -------------- -------------- Total liabilities and shareholders’ equity $ 283,554 $ 282,798 ============== ============== Shares outstanding 7,014 7,214 Book value per share $ 19.46 $ 17.19 AMERICAN PHYSICIANS SERVICE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, -------------------- -------------------- 2008 2007 2008 2007 --------- --------- --------- --------- REVENUES Gross premiums and maintenance fees written $ 13,011 $ 12,836 $ 64,117 $ 50,120 Premiums ceded 456 891 1,543 4,813 Change in unearned premiums & maintenance fees 2,956 4,235 (1,579) 1,106 --------- --------- --------- --------- Net premiums and maintenance fees earned 16,423 17,962 64,081 56,039 Investment income, net of investment expense 2,988 2,950 11,999 8,693 Realized capital loss, net (3,437) (1,597) (7,749) (5,256) Management service 25 38 88 3,803 Financial services 1,358 3,433 6,193 21,056 Other revenue 50 (1) 137 68 --------- --------- --------- --------- Total revenues 17,408 22,785 74,749 84,403 EXPENSES Losses and loss adjustment expenses 7,222 5,909 18,569 13,695 Other underwriting expenses 2,752 2,624 11,074 8,320 Change in deferred policy acquisition costs 220 177 14 (110) Management service expenses - - - 3,823 Financial services expenses 1,735 3,431 9,749 19,030 General and administrative expenses 1,531 1,659 5,752 5,459 Loss from impairment of goodwill - - - 1,247 --------- --------- --------- --------- Total expenses 13,460 13,800 45,158 51,464 --------- --------- --------- --------- Income from operations 3,947 8,985 29,591 32,939 Federal income tax expense 1,493 2,980 10,428 11,929 Minority interests - - - 1 --------- --------- --------- --------- Net income before extraordinary gain $ 2,454 $ 6,005 $ 19,163 $ 21,009 Extraordinary gain - - - 2,264 --------- --------- --------- --------- Net income $ 2,454 $ 6,005 $ 19,163 $ 23,273 ========= ========= ========= ========= Diluted income per share $ 0.34 $ 0.82 $ 2.64 $ 4.09 ========= ========= ========= ========= Diluted weighted average shares outstanding 7,134 7,316 7,248 5,695 ========= ========= ========= ========= SELECTED INSURANCE DATA FOR API, pre and post merger Claims History Claims Reported Open Claims Date in the Quarter at Quarter End -------------- -------------- December 31, 2008 77 585 September 30, 2008 114 681 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