American Physicians Capital Inc. (ACAP) filed Quarterly Report for the period ended 2009-09-30.
American Physicians Capital Inc. is a holding company for severalentities including both insurance and financial services companies. American Physicians Capital Inc. has a market cap of $320.7 million; its shares were traded at around $28.5 with a P/E ratio of 7.8 and P/S ratio of 2. The dividend yield of American Physicians Capital Inc. stocks is 1.2%.
Highlight of Business Operations:
Our net cash flow from operations decreased during the nine months ended September 30, 2009 compared to the same period of 2008. The decrease was primarily the result of decreases in premium receipts and investment income collected of $3.5 million and $3.4 million, respectively. Partially offsetting the decreases in premium receipts and investment income collected was a $4.3 million decrease in loss and loss adjustment expense payments.
At September 30, 2009, we had $21.2 million of cash at APCapital, and our insurance and other operating subsidiaries had $123.8 million of cash and cash equivalents on hand to meet short-term cash flow needs. In addition, we had $243.5 million of available-for-sale fixed-income securities that could be sold to generate cash. Our held-to-maturity fixed-income security portfolio includes $11.4 million, $68.0 million $158.4 million and $38.9 million of securities that mature in the next year, one to five years, five to 10 years, and more than 10 years, respectively. In addition, we have $121.7 million of mortgage-backed securities classified as held-to-maturity that provide periodic principal repayments.
Our run-off workers’ compensation net reserves at September 30, 2009 were $23.7 million compared with $22.3 million at December 31, 2008. Workers’ compensation net reserves developed unfavorably in the first nine months of 2009 by $3.8 million. The increase in reserves and the adverse development were mostly the result of increases in the case reserves related to claims in Kentucky and Minnesota. These case reserve increases reflect an increase in claim severity that was not contemplated in our December 31, 2008 projection of ultimate losses and thus have resulted in adverse prior year development. Open workers compensation claims decreased to 181 at September 30, 2009 from 210 at December 31, 2008. Workers’ compensation, like medical professional liability, is a long-tailed line of business, and as a result, it will be several years until we settle all workers’ compensation claims.
Assets, other than our cash and invested assets, at September 30, 2009 decreased approximately $19.4 million from December 31, 2008. The principal components of this decrease were reinsurance recoverables $11.4 million, deferred federal income taxes, $3.2 million, premiums receivable $2.4 million and other assets $1.8 million. The decrease in reinsurance recoverables was due to a decrease in ceded IBNR reserves, as paid claim severity has emerged at lower than anticipated levels, as well as to the collection of the remaining $3.8 million due from reinsurers at December 31, 2008 related to the commutation of our 2005 reinsurance treaty. The decrease in deferred federal income taxes was primarily a result of an increase in the taxable temporary difference associated with the increase in unrealized gains on our investment securities. The premiums receivable decrease was the result of the decrease in our direct premiums written and the decrease in other assets was primarily the result of the amortization of internally developed software, which was placed in service during the fourth quarter of 2008 and first quarter of 2009.
Shareholders’ equity decreased $9.7 million from December 31, 2008 to $244.3 million at September 30, 2009. This decrease was the result of share repurchases, which totaled $42.8 million during the nine months ended September 30, 2009 and shareholder dividend payments of $2.7 million. Net income of $30.8 million, as well as a $4.9 million, net of tax, increase in unrealized appreciation on investments during the first nine months of 2009 partially offset the decreases in shareholders’ equity. Shares outstanding at September 30, 2009 were 10,424,706, a decrease of 1,324,363 from December 31, 2008, as a result of share repurchases, partially offset by the effect of employee stock option exercises. Book value per share increased 8.4% to $23.44 at September 30, 2009, from $21.62 at December 31, 2008.
At September 30, 2009 the fair value of our available-for-sale equity securities was $21.9 million. These securities are subject to equity price risk, which is the potential for loss in fair value due to a decline in equity prices. The weighted average “Beta” of this group of securities was 0.74 at September 30, 2009. Beta measures the price sensitivity of an equity security, or group of equity securities, to a change in the broader equity market, in this case the S&P 500 Index. If the value of the S&P 500 Index increased by 10% the fair value of our equity securities would be expected to increase by 7.4% to $23.5 million based on the weighted average Beta. Conversely, a 10% decrease in the S&P 500 Index would result in an expected decrease of 7.4% in the fair value of our equity securities to $20.3 million. The selected hypothetical changes of plus or minus 10% assumed in this illustration are not intended to reflect what could be considered the best or worst case scenarios and are used for illustrative purposes only. In addition, Beta is calculated using historical information and does not take into account current or future changes in a company’s financial condition, results of operations or liquidity that may have an impact, either positive or negative, on the company’s stock price.
Rate This Article: |
  |