American Physicians Service Group, Inc. Reports First Quarter Earnings


AUSTIN, Texas, May 16, 2002 (PRIMEZONE) -- American Physicians Service Group, Inc. ("APS") (Nasdaq:AMPH) today announced results for the first quarter of 2002. For the three months ended March 31, 2002, revenues increased by 72% to $9,623,000 from $5,588,000 in the comparable year-ago period. Excluding one-time investment gains, revenues increased $351,000 or 6%. Net earnings of $2,602,000, or $1.07 per diluted share in the current quarter, compares to net earnings of $125,000 or $.05 per diluted share in the same quarter of 2001. Excluding one-time investment gains, net income increased 36% to $170,000 or $0.07 per diluted share.

Ken Shifrin, APS Chairman of the Board, stated, "After two years in a difficult investment environment, we are happy to report significant gains this quarter on the sale of approximately two thirds of our Prime Medical Services, Inc. investment. Having used part of the proceeds from the sale to pay off all remaining bank debt, we are left with a strong and extremely liquid balance sheet. Cash, after allowing for future income tax payments on the investment gain, made up almost 40% of our total assets at March 31, 2002. We also recognized investment income in the quarter related to the November 2001 sale of our office building. Since the sale of that property was to Prime Medical, of which we owned 15% at that time, we had deferred approximately $760,000 of the $5,000,000 gain, as required by the equity method of accounting. With our Prime Medical ownership now below 5%, we are no longer accounting for our investment on the equity method and have therefore recognized this deferred income. Additionally, $2,500,000 of the building gain was deferred due to our leaseback arrangement on the office space. This is being amortized over the life of the lease, or approximately $120,000 per quarter through 2006. In summary, $3,685,000 of our $4,054,000 pretax income before minority interest was due to non recurring events, which included: the sale of Prime Medical shares, $2,802,000; the recognition of income from the building sale that had been deferred because of our Prime ownership, $760,000; and recognition of deferred income from the sale/leaseback of the building, $123,000. Recognition of the deferred income had no impact on 2002 cash flow, as the proceeds from the building sale were received in 2001."

Mr. Shifrin continued, "Our core insurance and financial services businesses also had excellent performances for the quarter, their combined results improving on an already good 2001 pretax income by 12%. We said in our year-end earnings release that we expected continuing improvement in these core businesses in 2002. The first quarter has supported this view and we remain optimistic for the balance of 2002."

APS is a management and financial services firm with subsidiaries and affiliates which provide: medical malpractice insurance services for doctors; brokerage and investment services to institutions and high net worth individuals; and dedicated care facilities for Alzheimer's patients. The Company is headquartered in Austin, Texas and maintains offices in Dallas and Houston.

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.

                        SELECTED FINANCIAL DATA
                 (In thousands, except per share data)

                                                 Three Months Ended
                                                      March 31,
                                                   2002       2001
                                                 -------    -------

 Revenue                                         $ 9,623    $ 5,588
 Expenses                                          5,339      5,232
                                                 -------    -------
 Operating income                                  4,284        356
 Equity in loss of unconsolidated
  affiliates                                        (230)      (137)
                                                 -------    -------

 Earnings from continuing operations
  before income taxes and
  minority interests                               4,054        219

 Income tax expense                                1,395        106

 Minority interests                                  (57)       (29)
                                                 -------    -------
 Earnings from continuing operations               2,602         84

 Discontinued operations:
 Profits from discontinued operations net of
  income tax of $21 in 2001                         --           41
                                                 -------    -------

 Net earnings                                    $ 2,602    $   125
                                                 =======    =======

 Diluted earnings per share:

 Earnings from continuing operations             $  1.07    $  0.03

 Discontinued operations                            --          .01

 Net earnings                                    $  1.07    $   .05

 Weighted average shares outstanding (diluted)     2,422      2,765

For further information, visit APS' website at 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


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