Exhibit 99.1
AMERICAN PHYSICIANS SERVICE GROUP, INC.
REPORTS THIRD QUARTER EARNINGS
AUSTIN, TEXAS, November 10, 2006 - American Physicians Service Group, Inc.
("APS") (NASDAQ: AMPH) today announced results for the quarter and nine months
ended September 30, 2006. For the three months ended September 30, 2006,
revenues were $6,769,000 compared to $9,182,000 for the three months ended
September 30, 2005. Net earnings were $409,000 or $.14 per diluted share,
compared to $1,395,000 or $.48 per diluted share for the three months ended
September 30, 2005. For the nine months ended September 30, 2006, revenues were
$21,977,000 compared to $22,877,000 for the nine months ended September 30,
2005. Net earnings were $1,569,000 or $.53 per diluted share, compared to
$3,615,000 or $1.24 per diluted share, for the nine months ended September 30,
2005.
Ken Shifrin, APS Chairman of the Board stated, "While our emphasis in
running American Physicians has always been on building long-term value, we
never-the-less do not like to see a quarterly decline, even when comparing
against what was a very good third quarter in 2005. Investment gains from sales
of stock of $1,114,000 and $3,091,000 in the three and nine month periods last
year, versus only $90,000 and $110,000 in the current three and nine month
periods, accounting for 74% and 99% of the decline in pretax income for the
three and nine month period ended September 30, 2006, respectively."
Mr. Shifrin continued, "Our insurance segment has performed well in 2006,
with revenues keeping pace with 2005 despite rate decreases in the Texas
malpractice insurance market. This has been accomplished by additional marketing
emphasis and has enabled us to meet objectives for new business and retention,
though at lower premium rates and at higher cost. Similarly, in the current
quarter we incurred $125,000 in consulting costs related to analyzing a new
information system to improve future processing efficiencies.
Our financial services segment experienced a significant decline for the
quarter ended September 30, 2006, compared to the same period in 2005, with
revenue declining 44% and pretax income by 79%. We have been faced over the last
couple of years with the gradual, although recently accelerating commoditization
of trading in corporate bonds, with the resultant reduction in margins.
Additionally, trading in investment grade government and agency bonds has been
less profitable in a market characterized by low interest rates, a flat to
inverted yield curve, and relatively low volatility. This environment ultimately
led to the closing in September of our Houston office, which concentrated in
these investment grade products. The contribution of this office to the firm's
profitability had been flat to negative for some time and showed little sign of
immediate rebound. The two new expanding segments of our financial services
business, investment banking and bank debt/trade claims trading, have continued
to grow nicely. We believe the expansion of these areas will continue to
compliment our efforts in building a more profitable and diversified product
mix. Due to the relatively small number of large transactions that make up these
activities, timing of completed transactions can impact results, which was the
case in the third quarter.
The merger with our long-time client APIE, that was announced in June of
this year, continues to make its way through the regulatory process. We remain
both optimistic and excited about the benefits that this merger will have for
the policyholders of APIE and our shareholders. Detailed information of this
transaction is available in the S-4 registration statement that we filed in
August and amended in September 2006."
Mr. Shifrin concluded, "We continue to emphasize a strong balance sheet. In
this quarter, our current ratio of 3.7 to 1 and our equity of $27.7 million
remain approximately the same as at December 31, 2005, even after paying a $.30
dividend and spending over $2,000,000 in a stock repurchase program. We remain
debt free."
APS is a management and financial services firm with subsidiaries that
provide: medical malpractice insurance services for doctors, and brokerage and
investment services to institutions and high net worth individuals. The Company
is headquartered in Austin, Texas and maintains offices in Dallas.
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 the 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.
AMERICAN PHYSICIANS SERVICE GROUP, INC.
SELECTED FINANCIAL DATA
(In thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- --------------------------
2006 2005 2006 2005
---- ---- ---- ----
Revenues:
Insurance services $3,726 $3,732 $10,556 $10,462
Financial services 3,043 5,450 11,421 12,415
----- ----- ------ ------
Total revenues 6,769 9,182 21,977 22,877
Expenses:
Insurance services 3,147 2,931 8,548 7,856
Financial services 2,905 4,788 10,348 11,009
General and administrative 436 573 1,436 1,961
Gain on sale of assets (13) (47) (15) (131)
------- ------- ------ -------
Total expenses 6,475 8,245 20,317 20,695
------- ------- ------ -------
Operating income 294 937 1,660 2,182
Sale of investments and other 90 1,042 110 2,922
------- ------- ------ ------
Income before interest, income
taxes and minority interest 384 1,979 1,770 5,104
Interest and other income 264 169 694 500
Interest expense 9 6 11 10
Income tax expense 230 747 882 1,966
Minority interest -- -- 2 13
------- ------- ------ ------
Net Income $ 409 $ 1,395 $1,569 $3,615
======= ====== ====== ======
Diluted income per share:
Net income $0.14 $0.48 $0.53 $1.24
======= ===== ===== =====
Weighted average shares outstanding
(diluted) 2,892 2,885 2,942 2,920
AMERICAN PHYSICIANS SERVICE GROUP, INC.
SELECTED FINANCIAL DATA, continued
(In thousands)
September 30
--------------------------------
2006 2005
---- ----
ASSETS
Current assets $25,023 $17,690
Notes receivable, less current portion 347 344
Property and equipment 588 696
Investment in available for sale equity and
fixed income securities-non-current 6,546 8,739
Goodwill 1,247 1,247
Other assets 805 977
-------- -------
Total Assets $34,556 $29,693
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 6,826 4,189
Other liabilities -- 49
-------- -------
Total liabilities 6,826 4,238
Minority interests 20 14
Shareholders' Equity:
Common stock 279 273
Additional paid-in capital 7,502 7,727
Retained earnings 19,486 16,892
Accumulated other comprehensive income
net of taxes 443 549
-------- -------
Total shareholders' equity 27,710 25,441
-------- -------
Total Liabilities and Shareholders' Equity $34,556 $29,693
======= =======
For further information, visit APS's Website at www.amph.com or contact:
Mr. Kenneth Shifrin, Chairman of the Board (or)
Mr. W. H. Hayes, Sr. Vice President - Finance
American Physicians Service Group, Inc.
1301 Capital of Texas Highway, C-300
Austin, Texas 78746
(512) 328-0888