American Physicians Capital, Inc. Reports Second Quarter 2009 Results

"Our careful management of investments and capital, solid underwriting, and favorable reserve development resulted in a very strong quarter for APCapital," said President and Chief Executive Officer R. Kevin Clinton. "We continued to return value to our shareholders through dividends and share repurchases, and effective tomorrow, our shareholders will be distributed additional shares as a result of our recent four-for-three stock split."

"The market remains competitive, making premium growth challenging," added Clinton. "However, we remain a disciplined underwriter and continue to be patient as we search for growth opportunities."

Stock Split

On June 23, 2009, the Company's Board of Directors declared a four-for-three stock split of its common shares to shareholders of record on July 10, 2009. Shares resulting from the stock split will be distributed to shareholders July 31, 2009. All share and per share numbers disclosed in this press release are presented pre-stock split. Our quarterly report on Form 10-Q will be filed subsequent to the stock split, and as such will include disclosures of share and per share amounts on a split adjusted basis.

Updated Annual Guidance for 2009

"We have previously stated that we expect to report operating earnings of at least $4.25 per diluted share for 2009," said Clinton. "However, as a result of better than expected loss cost trends in the first six months of 2009, we are updating our annual guidance for 2009. We believe that if the trends in frequency, severity and pricing remain stable in our book of business throughout the second half of 2009, we should report operating earnings for 2009 of at least $4.60 per diluted share."

The guidance and related assumptions are subject to the risks and uncertainties outlined in the Company's Forward-Looking Statements section of this press release.

Consolidated Income Statement
(Dollars in thousands)
                                                    Three Months Ended          Six Months Ended
                                                    June 30,                    June 30,
                                                    2009          2008          2009          2008
Direct Premiums Written                             $ 24,245      $ 26,444      $ 54,367      $ 60,115
Net Premiums Written                                $ 23,389      $ 25,499      $ 52,109      $ 57,674
Net Premiums Earned                                 $ 28,382      $ 31,420      $ 57,688      $ 63,067
Incurred Loss and Loss Adjustment Expenses:
                      Current Accident Year Losses  23,200        24,670        47,036        49,288
                      Prior Year Losses             (10,087  )    (7,003   )    (18,311  )    (15,423  )
                      Total                         13,113        17,667        28,725        33,865
Underwriting Expenses                               7,319         6,623         14,451        13,639
                      Underwriting Income           7,950         7,130         14,512        15,563
Investment Income                                   8,028         9,235         16,218        19,192
Other Income (1)                                    212           280           435           (313     )
Other Expenses                                      (846     )    (1,115   )    (1,818   )    (2,332   )
                      Pre-tax Income                15,344        15,530        29,347        32,110
Federal Income Taxes                                4,354         4,487         8,270         9,693
                      Net Income                    $ 10,990      $ 11,043      $ 21,077      $ 22,417
Loss Ratio:
                      Current Accident Year         81.7     %    78.5     %    81.5     %    78.2     %
                      Prior Year Development        -35.5    %    -22.3    %    -31.6    %    -24.5    %
                      Calendar Year                 46.2     %    56.2     %    49.8     %    53.7     %
Underwriting Expense Ratio                          25.8     %    21.1     %    25.1     %    21.6     %
Combined Ratio                                      72.0     %    77.3     %    74.9     %    75.3     %
(1) Includes realized gains and losses

Direct premiums written were $24.2 million in the second quarter of 2009, down $2.2 million or 8.3% from the same period a year ago. Year-to-date, direct premiums written are down $5.7 million or 9.6%. The declines in direct premiums written were the result of rate reductions based on lower claims frequency trends and competitive pressures. We insured 8,693 physicians at June 30, 2009, down from 9,068 insureds at year end 2008.

Net premiums earned in the second quarter of 2009 were down $3.0 million or 9.7% from the second quarter of 2008 and were down $5.4 million or 8.5% year-to-date. The decline in net premiums earned varied from the declines in direct premiums written due to the lag between premiums written and earned and a slight increase in the percentage of reinsurance premiums ceded.

Although direct premiums written and net premiums earned are down for the second quarter of 2009, our active share repurchase program has resulted in an increase in both direct premiums written and net premiums earned this quarter as compared to the second quarter of 2008 on a per share basis.

The 2009 second quarter loss ratio was 46.2% with $10.1 million of positive development from prior accident years. For the six months ended June 30, 2009, the loss ratio was 49.8% with $18.3 million of positive prior year development. On an accident year basis, the loss ratio for the first half of 2009 was 81.5%, up from the 78.2% reported in the first half of 2008. This increase in accident year loss ratio reflects our recent premium rate decreases.

The amount of positive reserve development in the second quarter of 2009 was $3.1 million higher than the second quarter of 2008 and higher than most other recent quarters. Several claims were settled this quarter at significant savings to amounts previously reserved. As a result, projected ultimate losses were reduced more this quarter.

Claim frequency continued to be at historically low levels, but appears to be leveling-off. The number of claims reported in the second quarter of 2009 was 254, down from 261 reported in the second quarter of 2008. Our open claim count fell 4.9% from December 31, 2008 to 1,349 outstanding claims at June 30, 2009. Our average paid claims have trended up slightly in recent quarters. Our average net case reserve increased to $178,500 at June 30, 2009 from $166,500 at December 31, 2008.

The underwriting expense ratio increased in the second quarter of 2009 to 25.8% from 21.1% in the second quarter of 2008. Year-to-date the underwriting expense ratio is up to 25.1% from 21.6% a year ago. This increase in the underwriting expense ratio is primarily the result of implementing our new policy and claims information system. Effective in the first quarter of 2009 we discontinued capitalizing internally developed system costs, and we are now amortizing costs previously capitalized. In addition, the decline in premium volume also increased the underwriting expense ratio. Other expenses were down $269,000 in the second quarter of 2009 and $514,000 year-to-date as a result of lower interest expense on our trust preferred debt.

Investments

Investment income was $8.0 million in the second quarter of 2009, down from $9.2 million for the same period in 2008. The overall investment yield decreased from 4.38% in the second quarter 2008 to 3.97% in the second quarter of 2009. Year-to-date our investment yield was 3.97% through June 2009 compared to 4.53% through June 30, 2008. These decreases were primarily attributable to our increased position in tax-exempt securities, and the decline in short-term interest rates. Our year-to-date after tax-yield was 3.11% through June 30, 2009 as compared to 3.36% a year ago. Our bond portfolio continued to perform well with no impairments in 2009.

Balance Sheet and Equity Information

APCapital's total assets were $972.2 million at June 30, 2009, down $33.6 million from December 31, 2008. At June 30, 2009, the Company's total shareholders' equity was $240.2 million, down $13.8 million from December 31, 2008. Our net income of $21.1 million through the second quarter of 2009 has been offset by the Company utilizing $33.2 million of equity to repurchase its common shares and $1.9 million to pay shareholder dividends.

Capital Management

In the second quarter of 2009, APCapital repurchased 522,300 shares at an average cost of $39.93 per share. Year-to-date through June 30, 2009 we have repurchased 817,500 shares at an average cost of $40.58 per share. The volume of share repurchases was up in the second quarter of 2009 due to the lower market price of our stock. APCapital has the following outstanding share repurchase authorizations:

                          Type of                 (In thousands)
Date Approved             Repurchase              Amount      Amount
By Board                  Plan                    Authorized  Remaining (2)
June 23, 2009             Rule 10b5-1             $20,000     $17,899
February 7, 2008          Discretionary (1)       $25,000     $17,149
                                                  $45,000     $35,048
(1) All shares will be repurchased under management's discretion in
the open market or in
privately negotiated transactions during the Company's normal
trading window.
(2) As of June 30, 2009.

The share repurchase program remains an integral part of APCapital's capital management program. APCapital seeks to maintain an optimal, but flexible, level of capital during this softer market cycle.

In the second quarter of 2009, the Board of Directors declared a second quarter cash dividend of $0.11 per common share, which was paid to shareholders on June 30, 2009. On a post-split basis, today, APCapital's Board of Directors declared a third quarter cash dividend of $0.0825 per common share payable on September 30, 2009 to shareholders of record on September 12, 2009.

Conference Call

APCapital will host a live conference call to discuss second quarter 2009 financial results on Friday, July 31, 2009 at 10:00 a.m. Eastern Time. Investors are invited to participate in our live call by dialing (888) 576-4398 or (719) 325-2301. A live webcast will also be available in a listen-only format on APCapital's website, http://www.apcapital.com. An archived edition of the Webcast can be accessed by going to APCapital's website and selecting "For Investors," then "Webcasts." For individuals unable to listen to the live conference call, a telephone replay will be available by dialing (888) 203-1112 or (719) 457-0820 and entering the conference ID code: 1742633. The replay will be available through 11:59 p.m. Eastern Time on Friday, August 7, 2009.

Corporate Description

American Physicians Capital, Inc. is a regional provider of medical professional liability insurance focused primarily in the Midwest and New Mexico markets through American Physicians Assurance Corporation and its other subsidiaries. Further information about the companies is available on the Internet at http://www.apcapital.com.

Forward-Looking Statements

Certain statements made by American Physicians Capital, Inc. in this release may constitute forward-looking statements within the meaning of the federal securities laws. When we discuss future operating results or use words such as "will," "should," "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements. These forward-looking statements represent our outlook only as of the date of this release. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive risks and uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the following:

-- increased competition could adversely affect our ability to sell our products at premium rates we deem adequate, which may result in a decrease in premium volume, a decrease in our profitability, or both;

-- our reserves for unpaid losses and loss adjustment expenses are based on estimates that may prove to be inadequate to cover our losses;

-- market liquidity and volatility associated with the current financial crisis makes the fair values of our investments more difficult to estimate and may have other unforeseen consequences that we are currently unable to predict;

-- an interruption or change in current marketing and agency relationships could reduce the amount of premium we are able to write;

-- if we are unable to obtain or collect on ceded reinsurance, our results of operations and financial condition may be adversely affected;

-- our geographic concentration in certain Midwestern states and New Mexico ties our performance to the business, economic, regulatory and legislative conditions in those states;

-- a downgrade in the A.M. Best Company financial strength rating of our primary insurance subsidiary could reduce the amount of business we are able to write;

-- changes in interest rates could adversely impact our results of operation, cash flows and financial condition;

-- the unpredictability of court decisions could have a material adverse financial impact on our operations;

-- our business could be adversely affected by the loss of one or more of our key employees;

-- the insurance industry is subject to regulatory oversight that may impact the manner in which we operate our business, our ability to obtain future premium rate increases, the type and amount of our investments, the levels of capital and surplus deemed adequate to protect policyholder interests, or the ability of our insurance subsidiaries to pay dividends to the holding company;

-- our status as an insurance holding company with no direct operations could adversely affect our ability to meet our debt obligations and fund future cash dividends and share repurchases;

-- legislative or judicial changes in the tort system may have adverse or unintended consequences that could materially and adversely affect our results of operations and financial condition;

-- applicable law and certain provisions in our articles and bylaws may prevent and discourage unsolicited attempts to acquire our Company that may be in the best interest of our shareholders or that might result in a substantial profit to our shareholders;

-- any other factors listed or discussed in the reports filed by APCapital with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

Other factors not currently anticipated by management may also materially and adversely affect our financial condition, liquidity or results of operations. APCapital does not undertake, and expressly disclaims any obligation, to update or alter its statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Return on Equity

As a way of evaluating our capital management strategies we measure and monitor our return on equity, or ROE, in addition to our results of operations. We measure ROE as our net income for the period divided by our total shareholders' equity as of the beginning of the period. Other companies sometimes calculate ROE by dividing annualized net income by an average of beginning and ending shareholders' equity. Accordingly, the ROE percentage we provide may not be comparable with those provided by other companies. We also use a modified version of ROE as the basis for determining performance-based compensation.

Definition of Non-GAAP Financial Measures

APCapital uses operating income, a non-GAAP financial measure, to evaluate APCapital's underwriting performance. Operating income differs from net income by excluding the after-tax effect of realized capital gains and (losses).

Although the investment of premiums to generate investment income and capital gains or (losses) is an integral part of an insurance company's operations, APCapital's decisions to realize capital gains or (losses) are independent of the insurance underwriting process. In addition, under applicable GAAP accounting requirements, losses may be recognized for accounting purposes as the result of other than temporary declines in the value of investment securities, without actual realization. APCapital believes that the level of realized gains and (losses) for any particular period is not indicative of the performance of our ongoing underlying insurance operations in a particular period. As a result, APCapital believes that providing operating income (loss) information makes it easier for users of APCapital's financial information to evaluate the success of APCapital's underlying insurance operations.

In addition to APCapital's reported loss ratios, management also uses accident year loss ratios, a non-GAAP financial measure, to evaluate APCapital's current underwriting performance. The accident year loss ratio excludes the effect of prior years' loss reserve development. APCapital believes that this ratio is useful to investors as it focuses on the relationships between current premiums earned and losses incurred related to the current year. Although considerable variability is inherent in the estimates of losses incurred related to the current year, APCapital believes that the current estimates are reasonable.

Summary Financial Information
American Physicians Capital, Inc.
Balance Sheet Data                                                            June 30,      December 31,
                                                                              2009          2008
                                                                              (In thousands, except per share data)
Assets:
               Available-for-sale - bonds                                     $ 238,378     $ 222,941
               Held-to-maturity - bonds                                       411,383       481,750
               Other invested assets                                          22,754        24,320
               Cash and cash equivalents                                      139,079       101,637
                                  Cash and investments                        811,594       830,648
               Premiums receivable                                            28,426        34,024
               Reinsurance recoverable                                        80,122        86,397
               Deferred federal income taxes                                  17,537        18,573
               Other assets                                                   34,530        36,181
                                  Total assets                                $ 972,209     $ 1,005,823
Liabilities and Shareholders' Equity:
Unpaid losses and loss adjustment expenses                                    $ 635,796     $ 644,396
Unearned premiums                                                             50,377        55,984
Long-term debt                                                                25,928        25,928
Other liabilities                                                             19,899        25,478
                                  Total liabilities                           732,000       751,786
Common stock                                                                  -             -
Additional paid-in-capital                                                    -             -
Retained earnings                                                             232,271       246,173
Accumulated other comprehensive income:
               Net unrealized gains on investments,
                                  net of deferred federal income taxes        7,938         7,864
               Shareholders' equity                                           240,209       254,037
                                  Total liabilities and shareholders' equity  $ 972,209     $ 1,005,823
Shares outstanding                                                            8,053         8,812
Book value per share                                                          $ 29.83       $ 28.83

Summary Financial Information
American Physicians Capital, Inc.
Income Statement
                                           Three Months Ended                 Six Months Ended
                                           June 30,                           June 30,
                                           2009                2008           2009           2008
                                           (In thousands, except per share data)
Direct premiums written                    $ 24,245            $ 26,444       $ 54,367       $ 60,115
Net premiums written                       $ 23,389            $ 25,499       $ 52,109       $ 57,674
Net premiums earned                        $ 28,382            $ 31,420       $ 57,688       $ 63,067
Investment income                          8,028               9,235          16,218         19,192
Net realized gains (losses)                -                   74             -              (708     )
Other income                               212                 206            435            395
Total revenues                             36,622              40,935         74,341         81,946
Losses and loss adjustment expenses        13,113              17,667         28,725         33,865
Underwriting expenses                      7,319               6,623          14,451         13,639
Other expenses                             846                 1,115          1,818          2,332
Total expenses                             21,278              25,405         44,994         49,836
Income before income taxes                 15,344              15,530         29,347         32,110
Federal income tax expense                 4,354               4,487          8,270          9,693
Net income                                 $ 10,990            $ 11,043       $ 21,077       $ 22,417
Adjustments to reconcile net income to operating income:
Net income                                 $ 10,990            $ 11,043       $ 21,077       $ 22,417
Addback:
Net realized (gains) losses, net of tax    -                   (48      )     -              460
Net operating income                       $ 10,990            $ 10,995       $ 21,077       $ 22,877
Ratios:
Loss ratio (1)                             46.2     %          56.2     %     49.8     %     53.7     %
Underwriting ratio (2)                     25.8     %          21.1     %     25.1     %     21.6     %
Combined ratio (3)                         72.0     %          77.3     %     74.9     %     75.3     %
Earnings per share data:
Net income
              Basic                        $ 1.32              $ 1.14         $ 2.47         $ 2.28
              Diluted                      $ 1.30              $ 1.11         $ 2.43         $ 2.24
Net operating income
              Basic                        $ 1.32              $ 1.13         $ 2.47         $ 2.33
              Diluted                      $ 1.30              $ 1.11         $ 2.43         $ 2.28
Basic weighted average shares outstanding  8,331               9,728          8,535          9,822
Diluted weighted average shares outstanding8,456               9,928          8,673          10,019
(1) The loss ratio is calculated by dividing incurred loss and
loss adjustment expenses by net premiums earned.
(2) The underwriting ratio is calculated by dividing underwriting
expenses by net premiums earned.
(3) The combined ratio is the sum of the loss and underwriting
ratios.

Summary Financial Information
American Physicians Capital, Inc.
Selected Cash Flow Information
                                           Six Months Ended
                                           June 30,
                                           2009           2008
                                           (In thousands)
Net cash from operating activities         $ 17,247       $ 18,202
Net cash from investing activities         $ 54,908       $ 28,806
Net cash for financing activities          $ (34,713 )    $ (22,436 )
Net increase in cash and cash equivalents  $ 37,442       $ 24,572

American Physicians Capital, Inc.
Supplemental Statistics
Medical Professional Liability
                       Reported          Net Premium
Three Months Ended     Claim Count       Earned
                                         (In thousands)
June 30, 2009          254               $ 28,383
March 31, 2009         244               29,302
December 31, 2008      182               30,704
September 30, 2008     233               30,494
June 30, 2008          261               31,420
March 31, 2008         232               31,657
December 31, 2007      245               33,471
September 30, 2007     191               35,517
June 30, 2007          269               34,896
March 31, 2007         247               35,034
December 31, 2006      267               37,051
September 30, 2006     297               37,774
June 30, 2006          296               37,517
March 31, 2006         308               37,448
                                                            Average Net
                                         Average Net        Paid Claim
                       Open              Case Reserve       (Trailing Four
Three Months Ended     Claim Count       Per Open Claim     Quarter Average)
June 30, 2009          1,349             $ 178,500          $ 76,200
March 31, 2009         1,429             179,000            74,500
December 31, 2008 (1)  1,418             166,500            72,500
September 30, 2008     1,540             153,100            69,200
June 30, 2008          1,639             150,000            65,700
March 31, 2008         1,672             148,600            63,100
December 31, 2007      1,741             144,800            67,500
September 30, 2007     1,913             144,200            70,400
June 30, 2007          2,124             136,200            69,600
March 31, 2007         2,200             138,800            56,600
December 31, 2006      2,256             137,900            59,100
September 30, 2006     2,347             138,800            57,600
June 30, 2006          2,558             136,300            63,000
March 31, 2006         2,976             120,400            78,800
                       Retention Ratio
                       Six Months Ended  Year Ended         Six Months Ended
                       June 30, 2009     December 31, 2008  June 30, 2008
Michigan               89%               87%                86%
Illinois               89%               88%                88%
Ohio                   86%               85%                90%
New Mexico             88%               86%                88%
Kentucky               89%               90%                91%
Total (all states)     88%               87%                88%
(1) Excludes the effect of approximately $16.6 million of negative
paid losses resulting from the commutation of the Company's 2005
medical professional liability reinsurance treaty.

CONSOLIDATED FIXED-INCOME SECURITY AND
CASH AND CASH EQUIVALENTS PORTFOLIO
APCAPITAL, INC. AND SUBSIDIARIES
                                                        Fair       Amortized       Par
CUSIP                Description                        Value (1)  Cost            Value
AVAILABLE-FOR-SALE DEBT SECURITIES                                 (in thousands)
States And Political Subdivisions
709141-Q5-7          PENNSYLVANIA ST                    $ 10,001   $ 9,355         $ 9,000
196454-FL-1          CO DEPT TRANSN REV                 7,346      6,914           6,575
718814-XK-7          PHOENIX ARIZ                       7,109      6,603           6,300
646135-2Y-8          NEW JERSEY ST TRANS                7,068      6,808           6,500
95667Q-AN-6          WEST VA ST SCH BLDG AUTH           7,060      6,809           6,500
646039-JA-6          NEW JERSEY ST                      6,948      6,510           6,225
741701-VD-5          PRINCE GEORGES CNTY MD             6,830      6,287           6,000
928172-HL-2          VIRGINIA ST PUB BLDG AUTH          6,653      6,215           6,000
709141-Z7-3          PENNSYLVANIA ST                    6,600      6,171           5,965
977056-8D-5          WISCONSIN ST                       6,575      6,199           6,000
167723-BD-6          CHICAGO ILL TRAN AUTH              6,486      6,345           6,000
373383-N7-9          GEORGIA ST                         6,072      5,748           5,485
391554-AP-7          GREATER ALBANY SCH DIST NO 8J OR   5,625      5,236           5,000
592013-7M-2          METROPOLITAN GOVT NASHVILLE        5,613      5,218           5,000
186343-UR-8          CLEVELAND OHIO                     5,557      5,360           5,050
419780-S5-1          HAWAII ST                          5,523      5,173           5,000
575827-3X-6          MASSACHUSETTS ST                   5,495      5,205           5,000
79575D-LQ-1          SALT RIV PROJ ARIZ AGRIC           5,445      5,240           5,000
594700-CA-2          MICHIGAN ST TRUNK LINE             5,444      5,182           5,000
527839-BY-9          LEWIS CNTY WASH PUB UTIL           5,425      5,186           5,000
92817F-XF-8          VIRGINIA ST PUB SCH AUTH           5,419      5,175           5,000
181054-7U-5          CLARK CNTY NEV SCH DIST            5,413      5,169           5,000
452151-PZ-0          ILLINOIS ST                        5,408      5,156           5,000
972176-6H-9          WILSON CNTY TENN                   3,394      3,265           3,075
972176-6J-5          WILSON CNTY TENN                   3,185      3,175           3,005
665093-EE-6          NO COOK CNTY ILL SOLID WASTE       1,301      1,261           1,200
665093-EF-3          NO COOK CNTY ILL SOLID WASTE       1,301      1,262           1,200
969073-HN-8          WILL CNTY ILL CMNTY HIGH SCH       1,122      1,073           1,000
250092-F4-0          DES MOINES IOWA                    1,105      1,037           1,000
615401-HU-3          MOON AREA SCH DIST PA              564        523             500
708796-AP-2          PENNSYLVANIA HSG FIN AGY           540        500             500
Subtotal States And Political Subdivisions              157,627    149,360         143,080
Corporate Securities
59156R-AU-2          METLIFE INC                        7,126      7,029           7,000
904764-AG-2          UNILEVER CAP CORP                  6,940      6,617           6,500
459200-AL-5          INTERNATIONAL BUSINESS MACHS CORP  6,830      6,364           6,000
00508Y-AB-8          ACUITY BRANDS                      6,544      6,496           6,500
002824-AS-9          ABBOTT LABS                        6,410      5,994           6,000
084664-AD-3          BERKSHIRE HATHAWAY FIN CORP        6,266      5,763           6,000
26353L-JB-8          DU PONT E I DE NEMOURS & CO        6,157      5,676           6,000
369604-BC-6          GENERAL ELEC CO                    5,892      5,375           6,000
210805-DP-9          CONTINENTAL AIRLS EETC             5,464      6,500           6,500
717081-CZ-4          PFIZER INC                         5,246      4,994           5,000
149123-BM-2          CATERPILLAR INC                    5,085      4,737           5,000
456866-AK-8          INGERSOLL RAND CO                  5,009      4,775           5,000
24713@-AA-4          DELOITTE & TOUCHE USA LLP          3,954      4,000           4,000
45072G-AA-0          PVTPL I-PRETSL II COMBINATION LTD  2,192      2,192           2,192
369604-AY-9          GENERAL ELEC CO                    1,041      968             1,000
075887-AS-8          BECTON DICKINSON & CO              520        479             500
Subtotal Corporate Securities                           80,676     77,959          79,192
Mortgage-Backed Securities
393505-XC-1    GREEN TREE FINANCIAL CORP  75         90         90
Subtotal Mortgage-Backed Securities       75         90         90
TOTAL AVAILABLE-FOR-SALE DEBT SECURITIES  $ 238,378  $ 227,409  $ 222,362
(1) = Available-for-sale debt securities are carried in the balance
sheet at fair value.

CONSOLIDATED FIXED-INCOME SECURITY AND
CASH AND CASH EQUIVALENTS PORTFOLIO
APCAPITAL, INC. AND SUBSIDIARIES
                                                     Fair            Amortized  Par
CUSIP            Description                         Value           Cost (2)   Value
HELD-TO-MATURITY DEBT SECURITIES                     (in thousands)
U.S. Government and Agency Obligations
31331S-JW-4      FFCB NOTE                           14,869          14,952     15,000
Subtotal U.S. Government and Agency Obligations      14,869          14,952     15,000
States And Political Subdivisions
64711R-BD-7      NM FIN AUTH ST TRANSN REV           7,419           7,231      6,805
677519-SC-5      OHIO ST                             7,208           6,895      6,615
29270C-HK-4      ENERGY N W WASH ELEC REV            7,187           6,842      6,500
341150-QU-7      FLORIDA ST                          7,039           6,833      6,500
576002-AS-8      MASSACHUSETTS ST                    7,130           6,819      6,500
645916-WU-7      NEW JERSEY ECONOMIC DEV AUTH        6,967           6,785      6,500
93974A-NH-3      WA ST REF-VAR PURP-SER R-03-A       6,821           6,684      6,500
736742-MA-2      PORTLAND ORE SWR SYS REV            6,618           6,530      6,000
167484-3S-1      CHICAGO ILL                         6,462           6,379      6,000
576000-AZ-6      MASSACHUSETTS ST SCH BLDG           6,464           6,299      6,000
928109-JY-4      VIRGINIA ST                         6,482           6,293      6,000
455393-AM-0      INDIANAPOLIS IND THERMAL ENERGY     6,337           6,285      6,000
040654-KT-1      ARIZONA ST TRANSN BRD HWY REV       6,380           6,251      6,000
20772F-JN-1      CONNECTICUT ST                      6,512           6,049      5,730
647310-G3-9      NEW MEXICO ST SEVERANCE TAX         6,143           6,031      6,000
837147-XX-0      SC ST PUB SVC AUTH REV              5,915           5,686      5,430
341426-PT-5      FLORDIA ST BRD OF ED                5,813           5,560      5,290
472682-LZ-4      JEFFSN CNTY ALA SWR REV CAP IMPT    5,598           5,417      5,230
591745-F5-8      METROPOLITAN ATLANTA RAPID TRAN     5,415           5,360      5,040
478700-B2-2      JOHNSON CNTY KANS UNI SCH DIST      5,375           5,336      5,000
181324-MB-7      CLARK CNTY WASH SCH DIST NO 119     5,331           5,271      5,000
262608-NQ-1      DU PAGE & WILL CNTYS ILL CMNTY SCH  5,581           5,240      5,000
677519-3S-7      OHIO ST                             5,458           5,225      5,000
576004-ED-3      MASSACHUSETTS ST                    5,500           5,219      5,000
442436-2F-7      HSTN TEX WTR & SWR SYS              5,580           5,197      5,000
199820-QY-0      COMAL TEX INDPT SCH DIST            5,285           5,180      5,000
604128-3H-9      MINNESOTA ST                        5,435           5,179      5,000
46613Q-AM-6      JEA FLA ST JOHNS RIV PWR PK SYS     5,287           5,165      5,000
40785E-MW-3      HAMILTON SOUTHEASTERN IND SCH       5,027           5,048      4,725
235416-ZU-1      DALLAS TEX WTRWKS & SWR SYS REV     5,044           4,627      4,455
385640-FG-7      GRAND IS NEB ELEC REV SYS           4,743           4,593      4,485
509228-EQ-1      LAKE CNTY ILL ADLAI E STEVENSON HS  4,086           3,942      3,750
491552-PM-1      KENTUCKY ST TPK AUTH                3,704           3,645      3,500
040663-2J-4      ARIZONA ST UNIV REVS                3,577           3,428      3,220
927793-NT-2      RPAR HOLDINGS REF-US RT 58 CORRID   3,250           3,145      3,000
927793-NU-9      VIRGINIA COMWLTH TRANSN BRD         3,230           3,138      3,000
509228-ER-9      LAKE CNTY ILL ADLAI E STEVENSON HS  3,033           2,924      2,795
040663-2K-1      ARIZONA ST UNIV REVS                2,862           2,801      2,645
259291-DD-1      DOUGLAS CNTY NEB SCH DIST           2,690           2,611      2,500
97705L-FZ-5      WISCONSIN ST                        2,149           2,112      2,000
235416-A7-9      DALLAS TEX WTRWKS & SWR SYS REV     2,219           2,106      2,045
438670-FF-3      HONOLULU HAWAII CITY & CNTY         2,028           1,951      1,855
678519-FD-6      OKLAHOMA CITY OK                    1,146           1,139      1,075
345874-PH-8      FOREST LAKE MINN INDPT SCH DIST     1,050           1,060      1,000
463813-GW-9      IRVING TEX INDPT SCH DIST           1,086           1,056      1,000
659048-CN-0      NORTH DAVIESS IND SCH BLDG CORP     1,082           1,045      1,000
718814-UE-4      PHOENIX ARIZ                        1,054           1,036      1,000
93974A-NL-4      WA ST REF-VAR PURP-SER R-03-A       1,042           1,022      1,000
452001-WT-3      ILL EDL AUTH REVS MED TERM          814             773        750
181211-DJ-9     CLARK CNTY WASH SCH DIST NO 101  608      596      570
263417-GJ-0     DU PAGE CO ILL SCH               548      534      520
341535-PW-6     FLORIDA ST BRD ED PUB ED         547      526      500
517840-WW-0     LAS VEGAS VALLEY NEV WTR DIST    531      523      500
799098-DD-7     SAN MIGUEL CNTY COLO SCH DIST    534      523      500
442352-AH-3     HOUSTON TEX AREA WTR CORP        552      522      500
040654-JV-8     AZ ST TRANSN BRD HWY REV         543      521      500
51166F-AD-1     LAKELAND FLA ENERGY SYS REV      538      519      500
54811B-EP-2     LOWER COLO RIV AUTH TEX          505      510      500
159195-MY-9     CHANNELVIEW TEX INDPT SCH DIST   506      485      475
655181-BJ-3     NOBLESVILLE-SOUTHEASTN PUB LIBR  492      480      460
Subtotal States And Political Subdivisions       233,562  226,182  215,965

CONSOLIDATED FIXED-INCOME SECURITY AND
CASH AND CASH EQUIVALENTS PORTFOLIO
APCAPITAL, INC. AND SUBSIDIARIES
Corporate Securities
74740F-GF-7   QUAKER OATS CO                  6,563      6,340           6,000
134429-AM-1   CAMPBELL SOUP CO                6,491      6,206           6,000
41011W-AH-3   HANCOCK JOHN GLOBAL FDG         6,288      6,183           6,000
855707-AB-1   ST AUTO FINL CORP               5,848      6,045           6,000
035229-CD-3   ANHEUSER BUSCH                  4,439      4,351           4,310
438516-AK-2   HONEYWELL INTL INC              3,134      3,059           3,000
615337-AA-0   THE MONY GROUP                  2,593      2,572           2,510
075887-AR-0   BECTON DICKINSON CO             1,012      1,007           1,000
693506-AY-3   PPG INDUSTRIES INC              834        833             830
751277-AM-6   RALSTON PURINA CO               511        506             500
Subtotal Corporate Securities                 37,713     37,102          36,150
Mortgage-Backed Securities
31394N-4U-9   FHLMC MULTICLASS SER 2713       15,412     15,096          15,000
31394P-3P-6   FHLMC MULTICLASS SER 2740       15,384     15,090          15,000
31394K-AD-6   FHLMC MULTICLASS SER 2687       15,362     15,085          15,000
31395L-VJ-7   FHLMC MULTICLASS PREASSIGN      14,187     13,691          13,586
31394M-A2-6   FHLMC MULTICLASS SER 2708       13,260     13,063          13,000
31394K-G6-5   FHLMC MULTICLASS SER 2693       10,234     10,054          10,000
31395K-CV-3   FHLMC MULTICLASS SER 2905       10,274     9,995           10,000
31395K-PG-2   FHLMC MULTICLASS SER 2903       8,451      8,405           8,453
31394W-HE-1   FHLMC MULTICLASS SER 2784       5,705      5,649           5,667
31393T-CP-9   FNMA REMIC TRUST 2003-92        4,219      4,225           4,265
31394G-H7-1   FHLMC REMIC SERIES 2649         4,246      4,154           4,277
31394Y-LZ-5   FHLMC MULTICLASS SER            3,212      3,166           3,187
31394G-N8-2   FHLMC REMIC SERIES 2659         3,171      3,149           3,186
31393D-DS-7   FNMA REMIC TRUST 2003-58        2,807      2,710           2,783
31394W-HQ-4   FHLMC MULTICLASS SER 2784       2,517      2,475           2,471
31393Y-XE-0   FNMA REMIC SER 2004-45          2,275      2,267           2,268
31394Y-BU-7   FHLMC MULTICLASS PREASSIGN      1,745      1,735           1,736
31395A-LR-4   FHLMC MULTICLASS SER 2807       1,652      1,641           1,614
31394Y-NA-8   FHLMC MULTICLASS PREASSIGN      1,410      1,373           1,382
31362J-E6-8   FNMA ARM #062257                59         60              59
36224V-H5-7   GNMA POOL #339652               35         34              32
31375A-G3-7   FNMA P/T 328818                 18         17              17
36225A-ET-3   GNMA PLATINUM P/T 780146        10         11              9
31368H-US-0   FNMA ARM MEGA POOL #190593      2          2               2
Subtotal Mortgage-Backed Securities           135,647    133,147         132,994
TOTAL HELD-TO-MATURITY DEBT SECURITIES        $ 421,791  $ 411,383       $ 400,109
(2) Held-to-maturity debt securities are carried in the balance
sheet at amortized cost.
CUSIP         Description                                Cost
CASH & CASH EQUIVALENTS                                  (in thousands)
31846V-41-9   FIRST AMER TREAS OBLIG                     825
665278-70-1   NORTHERN INSTL FDS GOVT SELECT             93,110
Subtotal Money Market Funds                              93,935
1667T0-UA-9   CHEVRON CORP                               10,997
19121A-WN-7   COCA-COLA CO                               10,993
02665J-WG-1   AMERICAN HONDA FIN CORP                    10,992
89233G-U6-1   TOYOTA MOTOR CREDIT                        9,995
89233G-VQ-6   TOYOTA MOTOR CREDIT                        1,000
7426M4-VD-6   PRIVATE EXPT FDG CORP                      1,000
Subtotal Commercial Paper                      44,976
           CERTIFICATE OF DEPOSIT              100
           ZERO BALANCE CASH SWEEP ACCOUNTS    68
Subtotal Cash and CDs                          168
TOTAL CASH & CASH EQUIVALENTS                  $ 139,079

SOURCE: American Physicians Capital, Inc.

American Physicians Capital, Inc. 
Ann Storberg, Investor Relations (517) 324-6629