American Physicians Capital, Inc. Reports Third Quarter 2009 Results and Increases Cash Dividend
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EAST LANSING, Mich.--(BUSINESS WIRE)-- American Physicians Capital, Inc. (APCapital) (NASDAQ: ACAP) today announced net income of $9.8 million or $.91 per diluted common share for the third quarter of 2009. This compares to net income of $11.2 million, or $.85 per diluted common share for the third quarter of 2008. Year-to-date, the Company has generated net income of $30.8 million or $2.73 per diluted common share in 2009, compared to $33.6 million or $2.53 per diluted common share in the first nine months of 2008. Also today, APCapital's Board of Directors elected to increase its quarterly cash dividend by 9% to $0.09 per common share payable on December 31, 2009 to shareholders of record on December 11, 2009.
The 2009 year-to-date net income represents a return on beginning GAAP equity of 16.2%. At September 30, 2009, APCapital's book value per share was $23.44, up 8.4% during 2009, with 10,424,706 shares outstanding.
"Careful underwriting, capital management and prudent investment strategy remain our focus," said President and Chief Executive Officer R. Kevin Clinton. "We continuously look for positive growth and investment opportunities, but only at terms that are beneficial to the long-term success of our Company."
Stock Split
As previously announced, on June 23, 2009, the Company's Board of Directors declared a four-for-three stock split of its common shares to shareholders of record on July 10, 2009. Shares resulting from the stock split were distributed to shareholders on July 31, 2009. All share and per share numbers disclosed in this press release have been adjusted for this stock split.
Reaffirm Annual Guidance for 2009
"If current trends in frequency, severity and pricing remain stable in our book of business throughout the remainder of 2009, we continue to believe that we should report operating earnings for 2009 of at least $3.45 per diluted share, as adjusted for the recent stock split," said Clinton.
The guidance and related assumptions are subject to the risks and uncertainties outlined in the Company's Forward-Looking Statements section of this press release.
Consolidated Income Statement
(Dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Direct Premiums Written $ 34,658 $ 37,820 $ 89,025 $ 97,935
Net Premiums Written $ 33,344 $ 36,257 $ 85,453 $ 93,931
Net Premiums Earned $ 28,260 $ 30,497 $ 85,948 $ 93,564
Incurred Loss and Loss
Adjustment Expenses:
Current Accident Year Losses 23,549 24,085 70,585 73,373
Prior Year Losses (8,865 ) (7,548 ) (27,176 ) (22,971 )
Total 14,684 16,537 43,409 50,402
Underwriting Expenses 6,674 6,366 21,125 20,005
Underwriting Income 6,902 7,594 21,414 23,157
Investment Income 7,375 8,886 23,593 28,078
Other Income (1) 166 180 601 (133 )
Other Expenses (820 ) (990 ) (2,638 ) (3,322 )
Pre-tax Income 13,623 15,670 42,970 47,780
Federal Income Taxes 3,872 4,502 12,142 14,195
Net Income $ 9,751 $ 11,168 $ 30,828 $ 33,585
Loss Ratio:
Current Accident Year 83.3 % 79.0 % 82.1 % 78.4 %
Prior Year Development -31.3 % -24.8 % -31.6 % -24.5 %
Calendar Year 52.0 % 54.2 % 50.5 % 53.9 %
Underwriting Expense Ratio 23.6 % 20.9 % 24.6 % 21.4 %
Combined Ratio 75.6 % 75.1 % 75.1 % 75.3 %
(1) Includes realized gains and losses
Direct premiums written were $34.7 million in the third quarter of 2009, down $3.2 million or 8.4% from the same period a year ago. Year-to-date, direct premiums written are down $8.9 million or 9.1%. The declines in direct premiums written were the result of rate reductions based on lower claims frequency trends and competitive pressures. We insured 8,832 physicians at September 30, 2009, an increase from last quarter, but down from 9,068 insureds at year end 2008.
Net premiums earned in the third quarter of 2009 were down $2.2 million or 7.3% from the third quarter of 2008 and were down $7.6 million or 8.1% year-to-date. The decline in net premiums earned varied from the declines in direct premiums written due to the lag between premiums written and earned and a slight increase in the percentage of reinsurance premiums ceded.
Although direct premiums written and net premiums earned are down for the third quarter of 2009, our active share repurchase program has resulted in an increase in both direct premiums written and net premiums earned this quarter on a per share basis as compared to the third quarter of 2008.
The 2009 third quarter loss ratio was 52.0% with $8.9 million of positive development from prior accident years. For the nine months ended September 30, 2009, the loss ratio was 50.5% with $27.2 million of positive prior year development. On an accident year basis, the loss ratio for the first nine months of 2009 was 82.1%, up from the 78.4% reported in the same period of 2008. This increase in accident year loss ratio reflects our recent premium rate decreases.
Claim frequency continued to be at historically low levels, but has leveled off. The number of claims reported in the third quarter of 2009 was 237, similar to the 233 reported in the third quarter of 2008. Our open claim count is down 4.1% from December 31, 2008 to 1,359 outstanding claims at September 30, 2009. Our average paid claims have trended up slightly in recent quarters. Our average net case reserve is $173,800 at September 30, 2009 as compared to $166,500 at December 31, 2008.
The underwriting expense ratio was 23.6% in the third quarter of 2009 up from 20.9% in the third quarter of 2008. Year-to-date the underwriting expense ratio was 24.6% compared to 21.4% a year ago. These increases in the underwriting expense ratio are primarily the result of implementing our new policy and claims information system. Effective in the first quarter of 2009 we discontinued capitalizing internally developed system costs, and we are now amortizing costs previously capitalized. In addition, the decline in premium volume also increased the underwriting expense ratio. Other expenses were down $170,000 in the third quarter of 2009 and $684,000 year-to-date as compared to the same periods last year as a result of lower interest expense on our trust preferred debt.
Investments
Investment income was $7.4 million in the third quarter of 2009, down from $8.9 million for the same period in 2008. Our investment income for the first nine months of 2009 was down $4.5 million compared to the same period in 2008. Year-to-date our investment yield was 3.88% through September 30, 2009 compared to 4.43% through September 30, 2008. These decreases were primarily attributable to our increased position in tax-exempt securities, which typically have a lower yield than comparable taxable securities, and the decline in short-term interest rates. Year-to-date our pre-tax investment yield decreased 55 basis points to 3.88% for the first nine months of 2009 compared to 4.43% for the same period a year ago. However, as a result of the additional tax savings associated with the increase in our tax-exempt investment income, our year-to-date after tax-yield decreased only 27 basis points to 3.05% in 2009, as compared to 3.32% a year ago. Our bond portfolio continued to perform well with no impairments in 2009.
Balance Sheet and Equity Information
APCapital's total assets were $969.9 million at September 30, 2009, down $36.0 million from December 31, 2008. At September 30, 2009, the Company's total shareholders' equity was $244.3 million, down $9.7 million from December 31, 2008. Our net income and investment market value gains have been more than offset by our use of $42.8 million of equity to repurchase our common shares and $2.7 million to pay shareholder dividends.
Capital Management
In the third quarter of 2009, APCapital repurchased 313,200 shares at an average cost of $30.60 per share. Year-to-date through September 30, 2009 we have repurchased 1,403,200 shares at an average cost of $30.47 per share. APCapital has the following outstanding share repurchase authorizations:
Type of (In thousands)
Date Approved Repurchase Amount Amount
By Board Plan Authorized Remaining (2)
June 23, 2009 Rule 10b5-1 $ 20,000 $ 9,509
October 2, 2009 Rule 10b5-1 $ 10,000 $ 10,000
February 7, 2008 Discretionary (1) $ 25,000 $ 15,955
$ 55,000 $ 35,464
All shares will be repurchased under management's discretion in the open
(1) market or in privately negotiated transactions during the Company's normal
trading window.
(2) As of September 30, 2009.
The share repurchase program remains an integral part of APCapital's capital management program. APCapital seeks to maintain an optimal, but flexible level of capital during this softer market cycle.
In the third quarter of 2009, the Board of Directors declared a third quarter cash dividend of $0.825 per common share, which was paid to shareholders on September 30, 2009.
Conference Call
APCapital will host a live conference call to discuss third quarter 2009 financial results on Friday, October 30, 2009 at 10:00 a.m. Eastern Time. Investors are invited to participate in our live call by dialing (888) 215-6825 or (913) 312-4373. A live webcast will also be available in a listen-only format on APCapital's website, http://www.apcapital.com. An archived edition of the Webcast can be accessed by going to APCapital's website and selecting "For Investors," then "Webcasts." For individuals unable to listen to the live conference call, a telephone replay will be available by dialing (888) 203-1112 or (719) 457-0820 and entering the conference ID code: 8078450. The replay will be available through 11:59 p.m. Eastern Time on Thursday, November 5, 2009.
Corporate Description
American Physicians Capital, Inc. is a regional provider of medical professional liability insurance focused primarily in the Midwest and New Mexico markets through American Physicians Assurance Corporation and its other subsidiaries. Further information about the companies is available on the Internet at http://www.apcapital.com.
Forward-Looking Statements
Certain statements made by American Physicians Capital, Inc. in this release may constitute forward-looking statements within the meaning of the federal securities laws. When we discuss future operating results or use words such as "will," "should," "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements. These forward-looking statements represent our outlook only as of the date of this release. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive risks and uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, the following:
-- increased competition could adversely affect our ability to sell our
products at premium rates we deem adequate, which may result in a
decrease in premium volume, a decrease in our profitability, or both;
-- our reserves for unpaid losses and loss adjustment expenses are based on
estimates that may prove to be inadequate to cover our losses;
-- market liquidity and volatility associated with the current financial
crisis makes the fair values of our investments more difficult to
estimate and may have other unforeseen consequences that we are
currently unable to predict;
-- an interruption or change in current marketing and agency relationships
could reduce the amount of premium we are able to write;
-- if we are unable to obtain or collect on ceded reinsurance, our results
of operations and financial condition may be adversely affected;
-- our geographic concentration in certain Midwestern states and New Mexico
ties our performance to the business, economic, regulatory and
legislative conditions in those states;
-- a downgrade in the A.M. Best Company financial strength rating of our
primary insurance subsidiary could reduce the amount of business we are
able to write;
-- changes in interest rates could adversely impact our results of
operation, cash flows and financial condition;
-- the unpredictability of court decisions could have a material adverse
financial impact on our operations;
-- our business could be adversely affected by the loss of one or more of
our key employees;
-- the insurance industry is subject to regulatory oversight that may
impact the manner in which we operate our business, our ability to
obtain future premium rate increases, the type and amount of our
investments, the levels of capital and surplus deemed adequate to
protect policyholder interests, or the ability of our insurance
subsidiaries to pay dividends to the holding company;
-- our status as an insurance holding company with no direct operations
could adversely affect our ability to meet our debt obligations and fund
future cash dividends and share repurchases;
-- legislative or judicial changes in the tort system may have adverse or
unintended consequences that could materially and adversely affect our
results of operations and financial condition;
-- applicable law and certain provisions in our articles and bylaws may
prevent and discourage unsolicited attempts to acquire our Company that
may be in the best interest of our shareholders or that might result in
a substantial profit to our shareholders;
-- any other factors listed or discussed in the reports filed by APCapital
with the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
Other factors not currently anticipated by management may also materially and adversely affect our financial condition, liquidity or results of operations. APCapital does not undertake, and expressly disclaims any obligation, to update or alter its statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Return on Equity
As a way of evaluating our capital management strategies we measure and monitor our return on equity, or ROE, in addition to our results of operations. We measure ROE as our net income for the period divided by our total shareholders' equity as of the beginning of the period. Other companies sometimes calculate ROE by dividing annualized net income by an average of beginning and ending shareholders' equity. Accordingly, the ROE percentage we provide may not be comparable with those provided by other companies. We also use a modified version of ROE as the basis for determining performance-based compensation.
Definition of Non-GAAP Financial Measures
APCapital uses operating income, a non-GAAP financial measure, to evaluate APCapital's underwriting performance. Operating income differs from net income by excluding the after-tax effect of realized capital gains and (losses).
Although the investment of premiums to generate investment income and capital gains or (losses) is an integral part of an insurance company's operations, APCapital's decisions to realize capital gains or (losses) are independent of the insurance underwriting process. In addition, under applicable GAAP accounting requirements, losses may be recognized for accounting purposes as the result of other than temporary declines in the value of investment securities, without actual realization. APCapital believes that the level of realized gains and (losses) for any particular period is not indicative of the performance of our ongoing underlying insurance operations in a particular period. As a result, APCapital believes that providing operating income (loss) information makes it easier for users of APCapital's financial information to evaluate the success of APCapital's underlying insurance operations.
In addition to APCapital's reported loss ratios, management also uses accident year loss ratios, a non-GAAP financial measure, to evaluate APCapital's current underwriting performance. The accident year loss ratio excludes the effect of prior years' loss reserve development. APCapital believes that this ratio is useful to investors as it focuses on the relationships between current premiums earned and losses incurred related to the current year. Although considerable variability is inherent in the estimates of losses incurred related to the current year, APCapital believes that the current estimates are reasonable.
APCapital measures the performance of its investment portfolio through the use of both pre-tax and net of tax investment yields. Due to the federal income tax savings associated with state, municipal and other local government issued debt securities, and the attractive yields on these securities relative to Treasury securities with comparable durations, APCapital has increased its allocation of the overall investment portfolio into tax-exempt securities in recent years. As higher-yielding corporate, U.S. Government agency and mortgage-backed securities have matured, been called or paid down in recent years, the proceeds have been reinvested in tax-exempt securities, which typically have a lower pre-tax yield. The use of net of tax investment yields allows APCapital to monitor and measure investment performance on a more comparative basis by compensating for the decline in pre-tax yields on tax-exempt securities, with the benefit of the additional federal income tax savings.
Investment yield represents the average return on investments as determined by annualizing investment income for the period and dividing by the average ending monthly investment balance for the period. The use of the average of month ending balances may result in slightly skewed results for certain individual asset classes that are subject to fluctuations in a given month, such as cash and cash equivalents. However, APCapital believes that when calculated for the cash and invested asset portfolio in its entirety, the overall investment yield is an accurate and reliable measure for evaluating investment performance. APCapital's calculation of investment yields may differ from those employed by other companies.
The following table shows the reconciliation of pre-tax investment yields and net of tax investment yields, in accordance with calculation described above. As a property and casualty insurance company, federal income tax law limits the tax benefit of exempt interest income APCapital may deduct to 85% of the exempt interest income.
For the Nine Months Ended
September 30,
2009 2008
Pre-tax investment income $ 23,593 $ 28,078
Less 85% of tax-exempt
investment income (9,217 ) (8,056 )
Taxable investment income 14,376 20,022
Federal statutory tax rate 35 % 35 %
Federal income tax expense $ 5,032 $ 7,008
Pre-tax investment income1 $ 31,457 $ 37,437
Federal income tax expense1 (6,709 ) (9,344 )
Net of tax investment income $ 24,748 $ 28,093
Average invested assets $ 810,694 $ 845,648
Pre-tax investment yield 3.88 % 4.43 %
Reduction in yield related to
federal income tax expense -0.83 % -1.10 %
Net of tax investment yield 3.05 % 3.33 %
1 These amounts represent corresponding amounts from the table immediately preceding, annualized to give effect to a full year's income.
Summary Financial Information
American Physicians Capital, Inc.
Balance Sheet Data September 30, December 31,
2009 2008
(In thousands, except per share data)
Assets:
Available-for-sale - bonds $ 243,482 $ 222,941
Held-to-maturity - bonds 398,364 481,750
Other invested assets 27,206 24,320
Cash and cash equivalents 145,020 101,637
Cash and investments 814,072 830,648
Premiums receivable 31,588 34,024
Reinsurance recoverable 74,949 86,397
Deferred federal income taxes 15,342 18,573
Other assets 33,910 36,181
Total assets $ 969,861 $ 1,005,823
Liabilities and Shareholders' Equity:
Unpaid losses and loss adjustment $ 625,036 $ 644,396
expenses
Unearned premiums 55,665 55,984
Long-term debt 25,928 25,928
Other liabilities 18,906 25,478
Total liabilities 725,535 751,786
Common stock - -
Additional paid-in-capital - -
Retained earnings 231,514 246,173
Accumulated other comprehensive income:
Net unrealized gains on investments,
net of deferred federal income taxes 12,812 7,864
Shareholders' equity 244,326 254,037
Total liabilities and shareholders' $ 969,861 $ 1,005,823
equity
Shares outstanding 10,425 11,749
Book value per share $ 23.44 $ 21.62
Summary Financial Information
American Physicians Capital, Inc.
Income Statement
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
(In thousands, except per share data)
Direct premiums written $ 34,658 $ 37,820 $ 89,025 $ 97,935
Net premiums written $ 33,344 $ 36,257 $ 85,453 $ 93,931
Net premiums earned $ 28,260 $ 30,497 $ 85,948 $ 93,564
Investment income 7,375 8,886 23,593 28,078
Net realized gains (losses) 3 22 3 (686 )
Other income 163 158 598 553
Total revenues 35,801 39,563 110,142 121,509
Losses and loss adjustment 14,684 16,537 43,409 50,402
expenses
Underwriting expenses 6,674 6,366 21,125 20,005
Other expenses 820 990 2,638 3,322
Total expenses 22,178 23,893 67,172 73,729
Income before income taxes 13,623 15,670 42,970 47,780
Federal income tax expense 3,872 4,502 12,142 14,195
Net income $ 9,751 $ 11,168 $ 30,828 $ 33,585
Adjustments to reconcile net
income to operating income:
Net income $ 9,751 $ 11,168 $ 30,828 $ 33,585
Addback:
Net realized (gains) losses, (2 ) (14 ) (2 ) 446
net of tax
Net operating income $ 9,749 $ 11,154 $ 30,826 $ 34,031
Ratios:
Loss ratio (1) 52.0 % 54.2 % 50.5 % 53.9 %
Underwriting ratio (2) 23.6 % 20.9 % 24.6 % 21.4 %
Combined ratio (3) 75.6 % 75.1 % 75.1 % 75.3 %
Earnings per share data:
Net income
Basic $ 0.92 $ 0.87 $ 2.77 $ 2.58
Diluted $ 0.91 $ 0.85 $ 2.73 $ 2.53
Net operating income
Basic $ 0.92 $ 0.87 $ 2.77 $ 2.61
Diluted $ 0.91 $ 0.85 $ 2.73 $ 2.56
Basic weighted average shares 10,580 12,893 11,113 13,028
outstanding
Diluted weighted average 10,750 13,153 11,293 13,290
shares outstanding
(1) The loss ratio is calculated by dividing incurred loss and loss adjustment
expenses by net premiums earned.
(2) The underwriting ratio is calculated by dividing underwriting expenses by
net premiums earned.
(3) The combined ratio is the sum of the loss and underwriting ratios.
Summary Financial Information
American Physicians Capital, Inc.
Selected Cash Flow Information
Nine Months Ended
September 30,
2009 2008
(In thousands)
Net cash from operating activities $ 23,436 $ 25,736
Net cash from investing activities $ 65,014 $ 38,815
Net cash for financing activities $ (45,067 ) $ (33,480 )
Net increase in cash and cash equivalents $ 43,383 $ 31,071
American Physicians Capital, Inc.
Supplemental Statistics
Medical Professional Liability
Reported Net Premium
Three Months Ended Claim Count Earned
(In thousands)
September 30, 2009 237 $ 28,261
June 30, 2009 254 28,383
March 31, 2009 244 29,302
December 31, 2008 182 30,704
September 30, 2008 233 30,494
June 30, 2008 261 31,420
March 31, 2008 232 31,657
December 31, 2007 245 33,471
September 30, 2007 191 35,517
June 30, 2007 269 34,896
March 31, 2007 247 35,034
December 31, 2006 267 37,051
September 30, 2006 297 37,774
June 30, 2006 296 37,517
March 31, 2006 308 37,448
Average Net
Average Net Paid Claim
Open Case Reserve (Trailing Four
Three Months Ended Claim Count Per Open Claim Quarter Average)
September 30, 2009 1,359 $ 173,800 $ 83,400
June 30, 2009 1,349 178,500 76,200
March 31, 2009 1,429 179,000 74,500
December 31, 2008 (1) 1,418 166,500 72,500
September 30, 2008 1,540 153,100 69,200
June 30, 2008 1,639 150,000 65,700
March 31, 2008 1,672 148,600 63,100
December 31, 2007 1,741 144,800 67,500
September 30, 2007 1,913 144,200 70,400
June 30, 2007 2,124 136,200 69,600
March 31, 2007 2,200 138,800 56,600
December 31, 2006 2,256 137,900 59,100
September 30, 2006 2,347 138,800 57,600
June 30, 2006 2,558 136,300 63,000
March 31, 2006 2,976 120,400 78,800
Retention Ratio
Nine Months Ended Year Ended Nine Months Ended
September 30, 2009 December 31, 2008 September 30, 2008
Michigan 90 % 87 % 88 %
Illinois 89 % 88 % 89 %
Ohio 87 % 85 % 86 %
New Mexico 89 % 86 % 87 %
Kentucky 91 % 90 % 91 %
Total (all states) 88 % 87 % 87 %
(1) Excludes the effect of approximately $16.6 million of negative paid losses
resulting from the commutation of the Company's 2005 medical professional
liability reinsurance treaty.
CONSOLIDATED FIXED-INCOME SECURITY AND
CASH AND CASH EQUIVALENTS PORTFOLIO
APCAPITAL, INC. AND SUBSIDIARIES
Fair Amortized Par
CUSIP Description Value (1) Cost Value
AVAILABLE-FOR-SALE DEBT SECURITIES (in thousands)
States And Political Subdivisions
709141-Q5-7 PENNSYLVANIA ST $ 10,018 $ 9,328 $ 9,000
196454-FL-1 CO DEPT TRANSN REV 7,553 6,899 6,575
718814-XK-7 PHOENIX ARIZ 7,283 6,589 6,300
95667Q-AN-6 WEST VA ST SCH BLDG AUTH REV 7,253 6,795 6,500
646135-2Y-8 NEW JERSEY ST TRANSN TR FD 7,193 6,786 6,500
AUTH
646039-JA-6 NEW JERSEY ST 7,118 6,497 6,225
741701-VD-5 PRINCE GEORGES CNTY MD 6,960 6,274 6,000
928172-HL-2 VIRGINIA ST PUB BLDG AUTH 6,664 6,199 6,000
167723-BD-6 CHICAGO ILL TRAN AUTH 6,663 6,329 6,000
709141-Z7-3 PENNSYLVANIA ST 6,606 6,155 5,965
977056-8D-5 WISCONSIN ST 6,594 6,183 6,000
373383-N7-9 GEORGIA ST 6,234 5,738 5,485
391554-AP-7 GREATER ALBANY SCH DIST OR 5,757 5,225 5,000
592013-7M-2 METROPOLITAN GOVT NASHVILLE & 5,721 5,207 5,000
DAV
186343-UR-8 CLEVELAND OHIO 5,692 5,347 5,050
419780-S5-1 HAWAII ST REF-SER DG 5,530 5,159 5,000
79575D-LQ-1 SALT RIV PROJ ARIZ AGRIC IMPT 5,504 5,222 5,000
575827-3X-6 MASSACHUSETTS ST CONS LN-SER C 5,503 5,184 5,000
594700-CA-2 MICHIGAN ST TRUNK LINE FD 5,479 5,168 5,000
527839-BY-9 LEWIS CNTY WASH PUB UTIL 5,474 5,172 5,000
181054-7U-5 CLARK CNTY NEV SCH DIST 5,462 5,156 5,000
452151-PZ-0 ILLINOIS ST 5,426 5,142 5,000
92817F-XF-8 VIRGINIA ST PUB SCH AUTH 5,409 5,161 5,000
972176-6H-9 WILSON CNTY TENN 3,523 3,258 3,075
972176-6J-5 WILSON CNTY TENN 3,334 3,168 3,005
665093-EF-3 NORTHERN COOK CNTY ILL SOLID 1,348 1,260 1,200
WASTE
665093-EE-6 NORTHERN COOK CNTY ILL SOLID 1,336 1,258 1,200
WASTE
969073-HN-8 WILL CNTY ILL CMNTY HIGH SCH 1,146 1,071 1,000
250092-F4-0 DES MOINES IOWA 1,107 1,034 1,000
615401-HU-3 MOON AREA SCH DIST PA 564 522 500
708796-AP-2 PENNSYLVANIA HSG FIN AGY 552 500 500
Subtotal States And Political Subdivisions 160,006 148,986 143,080
Corporate Securities
59156R-AU-2 METLIFE INC 7,812 7,028 7,000
459200-AL-5 INTERNATIONAL BUSINESS MACHS 6,977 6,344 6,000
904764-AG-2 UNILEVER CAP CORP 6,939 6,595 6,500
00508Y-AB-8 ACUITY BRANDS INC 6,555 6,497 6,500
002824-AS-9 ABBOTT LABS 6,420 5,995 6,000
084664-AD-3 BERKSHIRE HATHAWAY FIN CORP 6,347 5,775 6,000
26353L-JB-8 DU PONT E I DE NEMOURS & CO 6,313 5,696 6,000
369604-BC-6 GENERAL ELEC CO 6,158 5,389 6,000
210805-DP-9 CONTINENTAL AIRLS EETC 6,149 6,500 6,500
149123-BM-2 CATERPILLAR INC 5,348 4,744 5,000
456866-AK-8 INGERSOLL RAND CO 5,340 4,777 5,000
717081-CZ-4 PFIZER INC 5,311 4,994 5,000
24713@-AA-4 DELOITTE & TOUCHE USA LLP 3,966 4,000 4,000
45072G-AA-0 I-PRETSL II COMBINATION 2,176 2,176 2,176
369604-AY-9 GENERAL ELEC CO 1,055 970 1,000
075887-AS-8 BECTON DICKINSON & CO 533 481 500
Subtotal Corporate Securities 83,399 77,961 79,176
Mortgage-Backed Securities
393505-XC-1 GREEN TREE FINANCIAL CORP 77 87 87
Subtotal Mortgage-Backed Securities 77 87 87
TOTAL AVAILABLE-FOR-SALE DEBT SECURITIES $ 243,482 $ 227,034 $ 222,343
(1) = Available-for-sale debt securities are carried in the balance sheet at
fair value.
CONSOLIDATED FIXED-INCOME SECURITY AND
CASH AND CASH EQUIVALENTS PORTFOLIO
APCAPITAL, INC. AND SUBSIDIARIES
Fair Amortized Par
CUSIP Description Value Cost (2) Value
HELD-TO-MATURITY DEBT SECURITIES (in thousands)
U.S. Government and Agency Obligations
31331S-JW-4 FFCB NOTE 15,014 14,953 15,000
Subtotal U.S. Government and Agency 15,014 14,953 15,000
Obligations
States And Political Subdivisions
64711R-BD-7 NM FIN AUTH ST TRANSN REV 7,689 7,212 6,805
677519-SC-5 OHIO ST 7,390 6,878 6,615
29270C-HK-4 ENERGY N W WASH ELEC REV 7,383 6,822 6,500
341150-QU-7 FLORIDA ST 7,249 6,817 6,500
576002-AS-8 MASSACHUSETTS ST SPL OBLIG 7,342 6,803 6,500
645916-WU-7 NEW JERSEY ECONOMIC DEV AUTH REV 7,096 6,769 6,500
93974A-NH-3 WA ST REF-VAR PURP-SER R-03-A 6,895 6,667 6,500
736742-MA-2 PORTLAND ORE SWR SYS REV 6,867 6,515 6,000
167484-3S-1 CHICAGO ILL 6,662 6,359 6,000
576000-AZ-6 MASSACHUSETTS ST SCH BLDG AUTH 6,851 6,288 6,000
928109-JY-4 VIRGINIA ST 6,758 6,279 6,000
455393-AM-0 INDIANAPOLIS IND THERMAL ENERGY 6,396 6,261 6,000
040654-KT-1 ARIZONA ST TRANSN BRD HWY REV 6,637 6,237 6,000
647310-G3-9 NEW MEXICO ST SEVERANCE TAX 6,287 6,029 6,000
20772F-JN-1 CONNECTICUT ST 6,522 6,027 5,730
837147-XX-0 SC ST PUB SVC AUTH REV REF-SER D 6,046 5,669 5,430
341426-PT-5 FLORIDA ST BRD OF ED PUB ED-SER J 5,941 5,547 5,290
472682-LZ-4 JEFFSN CNTY ALA SWR REV CAP IMPT 5,638 5,402 5,230
591745-F5-8 METROPOLITAN ATLANTA RAPID TRAN 5,721 5,350 5,040
478700-B2-2 JOHNSON CNTY KANS UNI SCH DIST 5,649 5,324 5,000
181324-MB-7 CLARK CNTY WASH SCH DIST NO 119 5,535 5,261 5,000
262608-NQ-1 DU PAGE & WILL CNTYS ILL CMNTY 5,616 5,224 5,000
SCH
677519-3S-7 OHIO ST 5,584 5,214 5,000
576004-ED-3 MASSACHUSETTS ST SPL OBLIG REV 5,517 5,202 5,000
442436-2F-7 HSTN TEX WTR & SWR SYS 5,601 5,183 5,000
199820-QY-0 COMAL TEX INDPT SCH DIST 5,386 5,169 5,000
604128-3H-9 MINNESOTA ST 5,529 5,165 5,000
46613Q-AM-6 JEA FLA ST JOHNS RIV PWR PK SYS 5,327 5,147 5,000
40785E-MW-3 HAMILTON SOUTHEASTERN IND CONS 5,240 5,036 4,725
SCH
235416-ZU-1 DALLAS TEX WTRWKS & SWR SYS REV 5,081 4,618 4,455
385640-FG-7 GRAND IS NEB ELEC REV SYS 4,769 4,580 4,485
509228-EQ-1 LAKE CNTY ILL ADLAI E STEVENSON 4,239 3,935 3,750
SCH
491552-PM-1 KENTUCKY ST TPK AUTH 3,909 3,640 3,500
040663-2J-4 ARIZONA ST UNIV REVS 3,699 3,418 3,220
927793-NT-2 RPAR HOLDINGS REF-US RT 58 CORRID 3,376 3,138 3,000
927793-NU-9 VIRGINIA COMWLTH TRANSN BRD 3,376 3,132 3,000
509228-ER-9 LAKE CNTY ILL ADLAI E STEVENSON 3,164 2,919 2,795
SCH
040663-2K-1 ARIZONA ST UNIV REVS 2,983 2,794 2,645
259291-DD-1 DOUGLAS CNTY NEB SCH DIST NO 001 2,796 2,605 2,500
97705L-FZ-5 WISCONSIN ST 2,236 2,108 2,000
235416-A7-9 DALLAS TEX WTRWKS & SWR SYS REV 2,286 2,103 2,045
438670-FF-3 HONOLULU HAWAII CITY & CNTY 2,097 1,947 1,855
678519-FD-6 OKLAHOMA CITY OKLA 1,204 1,136 1,075
345874-PH-8 FOREST LAKE MINN INDPT SCH DIST 1,108 1,057 1,000
463813-GW-9 IRVING TEX INDPT SCH DIST 1,121 1,054 1,000
659048-CN-0 NORTH DAVIESS IND SCH BLDG CORP 1,123 1,043 1,000
718814-UE-4 PHOENIX ARIZ 1,088 1,034 1,000
93974A-NL-4 WA ST REF-VAR PURP-SER R-03-A 1,068 1,020 1,000
452001-WT-3 ILL EDL AUTH REVS 812 770 750
181211-DJ-9 CLARK CNTY WASH SCH DIST NO 101 629 594 570
263417-GJ-0 DU PAGE CNTY ILL CMNTY HS 549 532 520
341535-PW-6 FLORIDA ST BRD ED PUB ED 561 525 500
517840-WW-0 LAS VEGAS VALLEY NEV WTR DIST 544 522 500
799098-DD-7 SAN MIGUEL CNTY COLO SCH DIST 548 521 500
442352-AH-3 HOUSTON TEX AREA WTR CORP 551 520 500
040654-JV-8 AZ ST TRANSN BRD HWY REV SER B 554 519 500
51166F-AD-1 LAKELAND FLA ENERGY SYS REV 542 517 500
54811B-EP-2 LOWER COLO RIV AUTH TEX 514 509 500
159195-MY-9 CHANNELVIEW TEX INDPT SCH DIST 513 484 475
655181-BJ-3 NOBLESVILLE-SOUTHEASTN PUB LIBR 503 479 460
Subtotal States And Political Subdivisions 239,897 225,629 215,965
CONSOLIDATED FIXED-INCOME
SECURITY AND
CASH AND CASH EQUIVALENTS
PORTFOLIO
APCAPITAL, INC. AND
SUBSIDIARIES
Fair Amortized Par
CUSIP Description Value Cost (2) Value
HELD-TO-MATURITY DEBT (in thousands)
SECURITIES
Corporate Securities
74740F-GF-7 QUAKER OATS CO 6,585 6,313 6,000
134429-AM-1 CAMPBELL SOUP CO 6,439 6,175 6,000
41011W-AH-3 HANCOCK JOHN 6,292 6,156 6,000
GLOBAL FDG
855707-AB-1 ST AUTO FINL CORP 5,906 6,043 6,000
SR NT
035229-CD-3 ANHEUSER BUSCH 4,414 4,338 4,310
438516-AK-2 HONEYWELL INTL INC 3,092 3,037 3,000
615337-AA-0 THE MONY GROUP 2,572 2,550 2,510
075887-AR-0 BECTON DICKINSON 1,000 1,000 1,000
CO
751277-AM-6 RALSTON PURINA CO 501 501 500
Subtotal Corporate Securities 36,801 36,113 35,320
Mortgage-Backed Securities
31394N-4U-9 FHLMC MULTICLASS 15,463 15,073 15,000
SER 2713
31394P-3P-6 FHLMC MULTICLASS 15,394 15,066 15,000
SER 2740
31394K-AD-6 FHLMC MULTICLASS 15,152 14,919 14,858
SER 2687
31395L-VJ-7 FHLMC MULTICLASS 14,382 13,680 13,586
PREASSIGN 00465
31394M-A2-6 FHLMC MULTICLASS 11,063 10,967 10,932
SER 2708
31394K-G6-5 FHLMC MULTICLASS 10,196 10,035 10,000
SER 2693
31395K-CV-3 FHLMC MULTICLASS 10,362 9,996 10,000
SER 2905
31395K-PG-2 FHLMC MULTICLASS 7,080 7,010 7,047
SER 2903
31394W-HE-1 FHLMC MULTICLASS 5,172 5,112 5,125
SER 2784
31393T-CP-9 FNMA REMIC TRUST 3,666 3,612 3,644
2003-92
31394G-H7-1 FHLMC REMIC SERIES 3,665 3,494 3,592
2649
31394Y-LZ-5 FHLMC MULTICLASS 2,745 2,666 2,684
SER
31394G-N8-2 FHLMC REMIC SERIES 2,307 2,272 2,296
2659
31393D-DS-7 FNMA REMIC TRUST 2,308 2,239 2,295
2003-58
31394W-HQ-4 FHLMC MULTICLASS 2,197 2,166 2,164
SER 2784
31394Y-NA-8 FHLMC MULTICLASS 1,324 1,291 1,299
PREASSIGN
31395A-LR-4 FHLMC MULTICLASS 1,074 1,080 1,066
SER 2807
31393Y-XE-0 FNMA REMIC SER 883 881 881
2004-45
31362J-E6-8 FNMA ARM #062257 58 58 58
36224V-H5-7 GNMA POOL #339652 35 34 32
36225A-ET-3 GNMA PLATINUM P/T 10 10 9
780146
31375A-G3-7 FNMA P/T 328818 6 6 6
31368H-US-0 FNMA ARM MEGA POOL 2 2 2
#190593
Subtotal Mortgage-Backed 124,544 121,669 121,576
Securities
TOTAL HELD-TO-MATURITY DEBT $ 416,256 $ 398,364 $ 387,861
SECURITIES
(2) Held-to-maturity debt securities are carried in
the balance sheet at amortized cost.
CUSIP Description Cost
CASH & CASH EQUIVALENTS (in thousands)
31846V-41-9 FIRST AMER TREAS 825
OBLIG
665278-70-1 NORTHERN INSTL FDS 132,281
GOVT SELECT
Subtotal Money Market Funds 133,106
2470C2-ZE-8 DELL INC 10,495
89233G-XP-6 TOYOTA MOTOR 1,000
CREDIT
Subtotal Commercial Paper 11,495
CERTIFICATE OF 100
DEPOSIT
ZERO BALANCE CASH 319
SWEEP ACCOUNTS
Subtotal Cash and CDs 419
TOTAL CASH & CASH EQUIVALENTS $ 145,020
Source: American Physicians Capital, Inc.
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