American Physicians Service 8-K American Physicians Service Group, Inc. Reports

Exhibit 99.1

AMERICAN PHYSICIANS SERVICE GROUP, INC. REPORTS

THIRD QUARTER EARNINGS

AUSTIN, TX – (MARKET WIRE) – November 2, 2010 – American Physicians Service Group, Inc. (“APS”) (NASDAQ:  AMPH) today announced results for the quarter and nine months ended September 30, 2010.  For the three months ended September 30, 2010, revenues were $18.3 million compared to $19.9 million for the same period last year.  For the nine months ended September 30, 2010, revenues were $55.4 million compared to $55.8 million in the same period last year.  Net earnings for the third quarter were $4.9 million or $.71 per diluted share, compared to $6.4 million or $.92 per diluted share, in the same period last year. Net earnings for the first nine months were $15.6 million or $2.25 per diluted share, compared to $16.1 million or $2.28 per diluted share in the same period last year.  

Ken Shifrin, APS Chairman of the Board, stated, “On September 1, 2010 we announced our agreement to merge with ProAssurance Corporation for $32.50 cash per common share.  While this quarter’s earnings were excellent, they declined from the prior period due to non-recurring transaction related expenses of $1.5 million, including legal and other professional expenses, a fairness opinion, and certain compensation expenses.”

Tim LaFrey, President of APS, added, “A competitive environment spurred by the success of tort reform in Texas continues to put pressure on prices and thus premium revenue in our largest market. Conversely, tort reform benefits us with low claims frequency and our underwriting margin continues to be very favorable. On the investment side, recurring investment income is beginning to stabilize at a lower level as interest rates have little room to fall any further; likewise, the investment portfolio has stabilized, with increased capital gains and fewer impairments in 2010. We continue to emphasize safeguarding our capital in our investment decisions.”

Mr. Shifrin concluded, “Our management team is focused on completing the requirements of the merger in order to achieve a 2010 closing.  We look forward to communicating further with you as that event approaches.”

As a result of the proposed acquisition of APS by ProAssurance Corporation, the Company has elected to discontinue hosting its earnings conference call.

APS is an insurance services firm with subsidiaries and affiliates which provide medical malpractice insurance and related services for physicians and other healthcare providers.  APS is headquartered in Austin, Texas.

This press release includes forward-looking statements related to APS 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 future results of APS, please see the 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 to APS.

For further information, visit the APS website atwww.amph.com 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, C-300

Austin, Texas  78746

(512) 328-0888

AMERICAN PHYSICIANS SERVICE GROUP, INC.
SELECTED FINANCIAL DATA
(Unaudited)
(in thousands, except per share data)
	September 30,		December 31,
	2010		2009
Assets
Investments	$	253,537	$	241,061
Cash and cash equivalents		15,330		18,277
Premiums receivable		16,817		15,678
Reinsurance recoverables		6,416		9,682
Deferred policy acquisition costs		2,426		2,335
Deferred tax assets		3,117		6,015
Property and equipment, net		378		406
Intangible assets		2,527		2,563
Income tax receivable		4,178		623
Prepaid and other assets		3,144		3,132
Total assets	$	307,870	$	299,772
Liabilities
Reserve for loss and loss adjustment expense	$	85,842	$	88,668
Unearned premiums		38,385		36,341
Funds held under reinsurance treaties		2,410		2,379
Accrued expenses and other liabilities		7,400		6,495
Mandatorily redeemable preferred stock		-		6,679
Total liabilities		134,037		140,562
Shareholders' Equity
Common stock		683		688
Additional paid-in capital		81,915		81,784
Accumulated other comprehensive income		7,570		5,345
Retained earnings		83,665		71,393
Total shareholders’ equity		173,833		159,210
Total liabilities and shareholders’ equity	$	307,870	$	299,772
Shares outstanding		6,827		6,876
Book value per share	$	25.46	$	23.15

AMERICAN PHYSICIANS SERVICE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
						;
(in thousands, except  per share data)	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
REVENUES
						;
Gross premiums written	$	17,782	$	21,446	$	50,862	$	53,668
Premiums ceded		(243)		676		(496)		1,339
Change in unearned premiums		(1,397)		(4,527)		(2,044)		(4,130)
Net premiums earned		16,142		17,595		48,322		50,877
Investment income, net of investment expense		2,268		2,351		6,989		7,358
Realized capital gains (losses), net		347		150		526		(352)
Other-than-temporary impairments		(457)		(238)		(557)		(2,245)
Other revenue		33		70		105		172
Total revenues		18,333		19,928		55,385		55,810
EXPENSES
Losses and loss adjustment expenses:
Current accident year losses		11,312		11,183		35,870		33,699
Prior year losses		(7,084)		(4,762)		(19,827)		(14,360)
Total losses and loss adjustment expenses		4,228		6,421		16,043		19,339
Other underwriting expenses		2,804		3,079		8,541		8,866
Change in deferred policy acquisition costs		(57)		(331)		(91)		(248)
General and administrative expenses		2,864		1,358		5,914		3,788
Total expenses		9,839		10,527		30,407		31,745
						;
Income from continuing operations		8,494		9,401		24,978		24,065
						;
Income tax expense		3,392		3,139		8,981		8,270
						;
Net income from continuing operations		5,102		6,262		15,997		15,795
Net income (loss) from discontinued operations, net of tax		(200)		180		(367)		298
Net income	$	4,902	$	6,442	$	15,630	$	16,093
						;
Diluted income per share	$	0.71	$	0.92	$	2.25	$	2.28
						;
Diluted weighted average shares outstanding		6,936		6,989		6,950		7,073
						;
Operating Income	$	6,515	$	6,319	$	17,578	$	17,483
						;
Diluted operating income per share	$	0.94	$	0.90	$	2.53	$	2.48

Non-GAAP Financial Measures

Operating Income is a “Non-GAAP” financial measure which is widely used in the insurance industry to evaluate the performance of underwriting operations. Operating Income excludes the after-tax effects of realized investment gains or losses and infrequent items that are not considered core to the underwriting performance of our insurance segment or the operating performance of our financial services segment, and we believe presents a more appropriate view of the performance of our core operations. We present this information to facilitate industry peer comparisons by investors and by outside industry analysts. While we believe disclosure of certain non-GAAP information is appropriate, you should not consider this information without also considering the information we present in accordance with GAAP.  The following table is a reconciliation of Net Income to Operating Income:

Reconciliation of Net Income to Operating Income (in thousands, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Net Income	$	4,902	$	6,442	$	15,630	$	16,093
Adjustments, net of tax effects:
Realized capital (gains) losses, net		(225)		(98)		(342)		229
Other-than-temporary impairments		297		155		362		1,459
Discontinued operations		200		(180)		367		(298)
Non-recurring transaction expenses*		1,341		-		1,561		-
Operating Income	$	6,515	$	6,319	$	17,578	$	17,483
Per diluted share:
Net Income	$	0.71	$	0.92	$	2.25	$	2.28
Effect of adjustments	$	0.23	$	(0.02)	$	0.28	$	0.20
Diluted operating income per share	$	0.94	$	0.90	$	2.53	$	2.48

* Subject to closing conditions, the Company anticipates an additional $2,500,000 of non-recurring transaction expenses in the fourth quarter of 2010 as a result of the proposed acquisition of APS by ProAssurance Corporation.

SELECTED INSURANCE DATA FOR API

Claims History
	Claims Reported	Open Claims
Date	in the Quarter	at Quarter End
September 30, 2010	85	515
June 30, 2010	107	521
March 31, 2010	84	537
December 31, 2009	90	572
September 30, 2009	100	578
June 30, 2009	100	565
March 31, 2009	104	583
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