S&P Revises Otlk on Amer Physicians Assurance to Neg.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

Sept. 4, 2001--Standard & Poor's today affirmed its single-'A' counterparty credit and financial strength ratings on American Physicians Assurance Corp. (APA; formerly Mutual Insurance Corp. of America).

The outlook has been revised to negative from stable.

APA is a subsidiary of American Physicians Capital Inc. (APCapital) and underwrites professional liability and workers' compensation insurance.

Major Rating Factors:

 
-- Extremely strong capitalization. Capitalization is extremely strong and is a 
significant strength for the rating. APA's capital adequacy ratio, based on 
Standard & Poor's capital adequacy model, was 376% as of Dec. 31, 2000, up from 
305% at year-end 1999. The strong capital position is supported by a 
conservative investment strategy and adequate reserves. 
 
-- Strong market position. APA is the leading writer of medical malpractice 
insurance in Michigan, Kentucky, and New Mexico, with additional positions in 
Florida and Ohio. The company also has the endorsement of more medical 
societies than any other carrier. Standard & Poor's believes this is a 
competitive advantage. 
 
-- Increased geographic diversification. APA benefits from increased 
diversification because of a reduction in vulnerability to both competitive 
pressures and regulatory risk in a particular state. However, the company is 
still in the process of culling out the more unprofitable business acquired in 
previous acquisitions. 
 
-- Improved operating performance. APA's operating performance improved in 1999 
and 2000. The company had consolidated pretax GAAP earnings of $16.7 million in 
2000, a 7.6% pretax return on total revenues. The combined ratio for the same 
period was 108.6%, down from 115% in 1999 and 117.2% in 1998. However, the 
first-quarter 2001 combined ratio rose to 111.2%, reflecting a spike in 
workers' compensation claims (about one quarter of its total business mix) but 
offset by more favorable experience in the professional liability line (about 
60% of the business). 
 
-- Conservative ...