American Physicians Service 8-K Reports 36% Increase In Earnings Per Share

Exhibit 99.1

AMERICAN PHYSICIANS SERVICE GROUP, INC.

REPORTS 36% INCREASE IN EARNINGS PER SHARE

AUSTIN, TEXAS, November 3, 2008 - American Physicians Service Group, Inc. (“APS”) (NASDAQ:  AMPH) today announced results for the quarter and nine months ended September 30, 2008.  For the three months ended September 30, 2008, net earnings were $7,183,000 or $.99 per diluted share, compared to $5,292,000 or $.73 per diluted share, in the same period last year, or an increase of 36%.  For the nine months ended September 30, 2008, net earnings were $16,709,000 or $2.29 per diluted share, versus $17,268,000 or $3.37 per diluted share in the comparable period last year. Results for the nine months ended September 30, 2007 included an extraordinary gain of $2,264,000, or $.44 per diluted share, resulting from the acquisition of American Physicians Insurance Company (“API”) on April 1, 2007.

Ken Shifrin, APS Chairman of the Board, stated, “We continue to be pleased with the results from American Physicians Insurance Company, our medical malpractice subsidiary.  The excellent earnings and cash flow have been achieved while remaining true to our conservative underwriting, reserving and investing philosophies.  This conservatism is not incompatible with aggressively working to expand our business and during the quarter and nine months ended September 30, 2008 the number of policyholders grew by 4% and 6%, respectively, in a very competitive market.”

Tim LaFrey, president of APS added, “We said last quarter that our historical pattern of reserving at the upper end of the actuarial range increases the likelihood of recurring favorable quarterly reserve adjustments and, indeed, we recognized approximately $9.7 million of favorable development during the quarter just ended. Even with this adjustment, we remain at the high end of the actuarial reserve range in all periods, including the current year.  We have also reduced the number of pending claims since year end, while increasing our reserves per claim.  As Mr. Shifrin said, our investment policy has also been conservative.  We have no auction rate securities or sub-prime mortgage securities, have experienced no defaults in our fixed income securities and do not hold any direct interest in AIG, Lehman Brothers, Washington Mutual, or Freddie Mac or Fannie Mae common or preferred stock.  Our Alt-A mort gage-backed securities holdings now represent only $4.2 million of our $211 million portfolio.  Total cash and marketable securities continue to grow, being $229 million at September 30, 2008 versus $223 million at year end.”

Mr. LaFrey continued, “Our Financial Services business continues to be affected by the general market turmoil, but narrowed its loss significantly compared to the second quarter of 2008.  The full effect of our cost cutting measures is beginning to be reflected and we continue to adjust the business with the goal of achieving profitability at current activity levels.”

Mr. Shifrin concluded, “With our book value per share increasing to $18.69 at the end of the quarter and what we believe are excellent prospects for seeing it continue to grow, we took advantage of the general decline in stock prices during the quarter and repurchased approximately 41,000 of our common shares under our stock buy-back program.  Our board expressed further confidence in our ability to create shareholder value by authorizing an additional $4 million for future share repurchases, and adopting a 10b5-1 plan to provide greater flexibility to make repurchases.  While we may continue to make discretionary purchases as we have previously, the 10b5-1 plan will also permit us to make repurchases when we may otherwise be prohibited under insider trading laws.  We look forward to concluding a successful 2008 and reporting back to you following year-end."

APS is an insurance and financial services firm with subsidiaries and affiliates that provide medical malpractice insurance for physicians and other healthcare providers; and brokerage and 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.

For further information, visit APS’ website at  or contact:

Mr. Kenneth Shifrin, Chairman of the Board (or)

Mr. Tim LaFrey, President (or)

Mr. Marc Zimmermann, Chief Financial Officer

American Physicians Service Group, Inc.

1301 S. Capital of Texas Highway, Suite C-300

Austin, Texas 78746

(512) 328-0888

AMERICAN PHYSICIANS SERVICE GROUP, INC.

SELECTED FINANCIAL DATA

(in thousands, except per share data)	September 30,		December 31,
	2008		2007
	(Unaudited)
Assets
Investments	$	212,995	$	204,802
Cash and cash equivalents		16,491		18,391
Premium and maintenance fees receivables		18,995		15,946
Reinsurance recoverables		17,331		24,554
Deferred policy acquisition costs		2,720		2,514
Deferred tax assets		10,300		7,402
Property and equipment, net		609		350
Intangible assets		1,264		1,045
Federal income tax receivable		-		1,957
Prepaid and other assets		4,112		5,837
Total assets	$	284,817	$	282,798
Liabilities
Reserve for loss and loss adjustment expense	$	93,447	$	101,606
Unearned premiums and maintenance fees		39,807		35,417
Funds held under reinsurance treaties		4,363		4,651
Trade accounts payable		354		996
Accrued expenses and other liabilities		6,085		7,594
Mandatorily redeemable preferred stock		7,477		8,554
Total liabilities		151,533		158,818
Common stock		713		721
Additional paid-in capital		77,622		79,752
Accumulated other comprehensive income (loss)		(2,626)		545
Retained earnings		57,575		42,962
Total shareholders’ equity		133,284		123,980
Total liabilities and shareholders’ equity	$	284,817	$	282,798
Shares outstanding		7,131		7,214
Book value per share	$	18.69	$	17.19

SELECTED FINANCIAL DATA

(UNAUDITED)

(in thousands, except share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
REVENUES
Gross premiums written	$	21,246	$	22,239	$	51,106	$	37,284
Premiums ceded		711		504		1,087		3,922
Change in unearned premiums		(6,248)		(5,112)		(4,536)		(3,129)
Net premiums earned		15,709		17,631		47,657		38,077
Investment income, net of investment expense		2,996		2,904		9,011		5,743
Realized capital (loss), net		(474)		(3,195)		(4,312)		(3,659)
Management service and other revenue		97		105		150		3,834
Financial services		1,558		5,434		4,835		17,623
Total revenues		19,886		22,879		57,341		61,618
EXPENSES
Losses and loss adjustment expenses		2,259		4,624		11,347		7,786
Other underwriting expenses		2,817		2,818		8,116		5,409
Management service expenses		-		-		-		3,823
Financial services expenses		2,127		4,907		8,013		15,599
General and administrative expenses		1,502		1,608		4,221		3,800
Impairment of goodwill		-		-		-		1,247
Total expenses		8,705		13,957		31,697		37,664
Income tax expense		3,998		3,630		8,935		8,949
Minority interests		-		-		-		1
Net income before extraordinary gain	$	7,183	$	5,292	$	16,709	$	15,004
Extraordinary gain, net of tax		-		-		-		2,264
Net income	$	7,183	$	5,292	$	16,709	$	17,268
Diluted income per share	$	0.99	$	0.73	$	2.29	$	3.37
Diluted weighted average shares outstanding		7,244		7,253		7,286		5,114

SELECTED INSURANCE DATA FOR API, pre and post merger
Claims History
	Claims Reported in the Quarter	Open Claims at Quarter End
Date
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