AUSTIN, TX--(Marketwire - March 2, 2009) - American Physicians Service Group, Inc. ("APS") (NASDAQ: AMPH) today announced results for the quarter and year ended December 31, 2008. For the three months ended December 31, 2008, revenues were $17,408,000 compared to $22,785,000 for the same period last year. Net earnings were $2,454,000 or $.34 per diluted share, compared to $6,005,000 or $.82 per diluted share, in the same period last year. For the year ended December 31, 2008, revenues were $74,749,000 compared to $84,403,000 in the prior year. Net earnings were $19,163,000 or $2.64 per diluted share, compared to $23,273,000 or $4.09 per diluted share in 2007. Results for the year ended December 31, 2007 included an extraordinary gain of $2,264,000 or $.40 per diluted share, resulting from the acquisition of American Physicians Insurance Company ("API") on April 1, 2007 and earnings per share in 2007 did not reflect the full impact of an additional 4,300,000 shares issued during the year in connection with the acquisition and a stock offering.

Ken Shifrin, Chairman of the Board, stated, "2008 represented the first full year of operations as a fully integrated insurance company following our acquisition of API in 2007 and it was an eventful year. We were not immune to the severe turmoil in world economics in 2008, yet produced our second best earnings performance ever, grew book value per share by 13%, produced a 15% return on equity and grew our policy holder count by over 8%. Our share price increased over 7% during the year, a truly extraordinary performance for any public company in 2008. So while we did not entirely escape the economic crisis, we were still able to deliver excellent results in a very difficult market."

Tim LaFrey, President, added, "Our insurance base continued to grow in 2008. New premium business increased 62% over 2007, including meaningful contributions from expansion states Arkansas and Oklahoma, and our driven commitment to customer service yielded a 92% retention rate. The combined effect was an 8% increase in policyholder count during 2008. Total premiums do not fully reflect this increase, as very favorable claims trends in our primary market resulted in appropriate rate competition, with an average rate decrease of 6% in 2008, down significantly from the 14% decrease in 2007. Despite the favorable claims trend, we continue to underwrite with the systematic, conservative approach we have always followed. Consequently, though our number of pending claims declined 21% in 2008, our net reserve per open claim increased 22% and we remain very conservatively reserved at the upper end of the actuarial range in all periods."

Mr. LaFrey continued, "As Mr. Shifrin said, we were not immune from the impact of the decline in global financial markets and our overall revenue decline for the year was primarily the result of lower financial services revenues in 2008, following that segment's record year in 2007. Revenues for the financial services segment declined from $21.1 million in 2007 to $6.2 million in 2008. We reduced our expenses in 2008, narrowing our loss each quarter as the year progressed, but will not be satisfied until we return this segment to profitability."

Mr. Shifrin concluded, "We remain steadfast to our tenets of conservative management and maintaining a strong balance sheet. We have experienced no defaults in our fixed income securities and have avoided investments in AIG, Lehman Brothers and others who have dominated the headlines. We have taken a conservative approach in the valuation of some mortgage-backed products, recording impairment losses due to the length and depth of the housing crisis. We have also invested in ourselves, buying back approximately 323,000 of our shares during 2008. Even with the combined effect of the impairment write downs, stock repurchases, sixth consecutive common stock dividend and second payment on our redeemable preferred stock, we increased cash and investments to $232 million at the end of the year from $223 million at the end of 2007. With total shareholders' equity of over $136 million at year end, modest debt of approximately $7.5 million and strong prospects for continued profitability, we and our shareholders remain in a position to prosper during a period of economic uncertainty."

APS is an insurance and financial services firm with subsidiaries which provide medical malpractice insurance for physicians and other healthcare professionals and brokerage and other 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.

                AMERICAN PHYSICIANS SERVICE GROUP, INC.
                        SELECTED FINANCIAL DATA


(in thousands, except per share data)
                                             December 31,    December 31,
                                                 2008            2007
                                             --------------  --------------
Assets

Investments                                  $      209,709  $      204,802
Cash and cash equivalents                            22,060          18,391
Premium and maintenance fees receivables             17,186          15,946
Reinsurance recoverables                             15,293          24,554
Deferred policy acquisition costs                     2,500           2,514
Deferred tax assets                                   9,488           7,402
Property and equipment, net                             590             350
Intangible assets                                     2,264           1,045
Federal income tax receivable                           738           1,957
Prepaid and other assets                              3,726           5,837
                                             --------------  --------------

Total assets                                 $      283,554  $      282,798
                                             ==============  ==============

Liabilities

Reserve for loss and loss adjustment expense $       92,141  $      101,606
Unearned premiums and maintenance fees               36,785          35,417
Funds held under reinsurance treaties                 3,978           4,651
Trade accounts payable                                  290             996
Accrued expenses and other liabilities                6,327           7,594
Mandatorily redeemable preferred stock                7,568           8,554
                                             --------------  --------------

Total liabilities                                   147,089         158,818

Common stock                                            701             721
Additional paid-in capital                           75,367          79,752
Accumulated other comprehensive income
 (loss)                                                 368             545
Retained earnings                                    60,029          42,962
                                             --------------  --------------

Total shareholders' equity                          136,465         123,980
                                             --------------  --------------

Total liabilities and shareholders’ equity   $      283,554  $      282,798
                                             ==============  ==============

Shares outstanding                                    7,014           7,214

Book value per share                         $        19.46  $        17.19




                  AMERICAN PHYSICIANS SERVICE GROUP, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)



(in thousands, except per share
 data)
                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------  --------------------
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
REVENUES

  Gross premiums and
   maintenance fees written     $  13,011  $  12,836  $  64,117  $  50,120
  Premiums ceded                      456        891      1,543      4,813
  Change in unearned premiums &
   maintenance fees                 2,956      4,235     (1,579)     1,106
                                ---------  ---------  ---------  ---------

     Net premiums and
      maintenance fees earned      16,423     17,962     64,081     56,039

  Investment income, net of
   investment expense               2,988      2,950     11,999      8,693
  Realized capital loss, net       (3,437)    (1,597)    (7,749)    (5,256)
  Management service                   25         38         88      3,803
  Financial services                1,358      3,433      6,193     21,056
  Other revenue                        50         (1)       137         68
                                ---------  ---------  ---------  ---------

     Total revenues                17,408     22,785     74,749     84,403

EXPENSES

  Losses and loss adjustment
   expenses                         7,222      5,909     18,569     13,695
  Other underwriting expenses       2,752      2,624     11,074      8,320
  Change in deferred policy
   acquisition costs                  220        177         14       (110)
  Management service expenses           -          -          -      3,823
  Financial services expenses       1,735      3,431      9,749     19,030
  General and administrative
   expenses                         1,531      1,659      5,752      5,459
  Loss from impairment of
   goodwill                             -          -          -      1,247
                                ---------  ---------  ---------  ---------

     Total expenses                13,460     13,800     45,158     51,464
                                ---------  ---------  ---------  ---------

     Income from operations         3,947      8,985     29,591     32,939


  Federal income tax expense        1,493      2,980     10,428     11,929
  Minority interests                    -          -          -          1
                                ---------  ---------  ---------  ---------

     Net income before
      extraordinary gain        $   2,454  $   6,005  $  19,163  $  21,009

  Extraordinary gain                    -          -          -      2,264
                                ---------  ---------  ---------  ---------

     Net income                 $   2,454  $   6,005  $  19,163  $  23,273
                                =========  =========  =========  =========

  Diluted income per share      $    0.34  $    0.82  $    2.64  $    4.09
                                =========  =========  =========  =========

  Diluted weighted average
   shares outstanding               7,134      7,316      7,248      5,695
                                =========  =========  =========  =========




SELECTED INSURANCE DATA FOR API, pre and post merger

Claims History


                        Claims
                       Reported       Open Claims
Date                 in the Quarter  at Quarter End
                     --------------  --------------
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
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