American Physicians Service ( AMPH) is an insurance and financial services firm. Its subsidiaries and affiliates provide medical malpractice insurance, as well as brokerage and investment services to institutions and high net worth individuals.

American Physicians Service has been rated a buy since May 2003. While the company reported year-over-year declines in revenue and net earnings for the second quarter of fiscal 2008, it is important to bear in mind that its 2007 results included an extraordinary gain of $2.26 million in the second quarter from the acquisition of American Physicians Insurance Company, its medical malpractice subsidiary. Management indicated that the results from that subsidiary continue to be excellent and that the company exceeded the analysts' consensus estimate for the most recent quarter. In addition, management reported that the company showed a quarter-over-quarter increase in gross written premium, which it sees as an indication of continued strong performance.

Management acknowledged that, although its financial services business does not make up a significant portion of its overall operations since the acquisition of its insurance subsidiary, the company has not been immune to the general trend in the financial services sector and has experienced losses. However, the company has taken steps to limit costs, with the expectation that the resulting savings will have an impact on the rest of its fiscal year. The company was able to pay its fifth consecutive common stock dividend at the close of the second quarter. Although the company may harbor some minor weaknesses, we feel that they are unlikely to have a significant impact on future financial results.

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