On September 1, 2010 we annou nced the signing of a definitive agreement which calls for ProAssurance to acquire all of the outstanding common stock of American Physicians Service Group (American Physicians) in an all cash merger at a price of $32.50 per share. The total purchase price will be approximately $233 million and we intend to fund this transaction from cash on hand—there are no financing contingencies to the transaction. American Physicians may not solicit “Acquisition Proposals” (as defined in the Merger Agreement) or, subject to exceptions that permit the American Physicians' board of directors to take action required by their fiduciary duties, participate in any discussions or negotiations regarding any Acquisition Proposal. The merger agreement provides for a termination fee of $8.5 million to be paid to ProAssurance if the board of directors of American Physicians, in the exercise of its fiduciary duty, elects to terminate the agreement in order to pursue a c ompetitive offer. ProAssurance has reserved the right to match the terms of a competitive offer before American Physicians can exercise its termination right. The transaction is subject to a vote of the shareholders of American Physicians, and customary regulatory approvals, including that of the Texas Department of Insurance. We are making every effort to close this transaction by December 31, 2010.The foregoing summary does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is attached as Exhibit 2.1 and incorporated herein by reference. American Physicians has registered its common stock under the Securities Exchange Act of 1934 and files reports with the Securities and Exchange Commission. The common stock is traded on NASDAQ under the symbol AMPH. The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the American Physicians. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk among the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual s tate of facts or condition of the American Physicians or ProAssurance or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the public disclosures of ProAssurance and American Physicians. | 
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