Fitch Comments on FPIC's Acquisition of Advocate MD

FPIC currently has a 'BBB-' senior debt rating and 'BBB' Issuer Default Rating (IDR). In addition, FPIC's wholly owned insurance subsidiaries (see list below) have an 'A-' Insurer Financial Strength (IFS) rating. All ratings have a Stable Outlook.

Fitch views this transaction to be consistent with FPIC's core business and operating strategy as a specialty medical malpractice writer. In particular, this transaction will reduce FPIC's Florida concentration, which was approximately 80% at year-end 2008, by approximately 10 percentage points and make Texas FPIC's second largest state.

Given the relatively small size of Advocate compared to FPIC and the 1.3 times (x) multiple purchase price to book value the proposed transaction will have a modest effect on operating leverage. FPIC's statutory operating leverage which was 0.67x at year-end will rise to a pro forma 0.8x, still within current rating expectations. Since this is an all cash transaction this will have no impact on debt-to-capital which was 15% as of March 31, 2009. Additionally, this transaction should have minimal impact on FPIC's strong earnings based interest coverage ratio which was 15.0x as of March 31, 2009.

Advocate is the fourth largest medical malpractice insurer carrier in Texas and also writes some medical malpractice insurance in Mississippi. Advocate was founded in 2003 following the significant tort reform initiatives in Texas and is headquartered in Austin, Texas. Advocate wrote $25.4 million in direct written premium and had a statutory surplus of $28.5 million as of year-end 2008.

Fitch has taken no rating action on the following ratings with a Stable Outlook

FPIC Insurance Group, Inc.

--IDR 'BBB';

--Senior debt 'BBB-';

Fitch has taken no rating on the following 'A-' IFS ratings of the following companies with a Stable Outlook:

--First Professional Insurance Company

-- Anesthesiologists Professional Assurance Company

--Intermed Insurance Company

--Interlex Insurance Company

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

SOURCE: Fitch Ratings

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Gerald B. Glombicki, 312-606-2354 
James B. Auden, 312-368-3146 
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Email: brian.bertsch@fitchratings.com