A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of American Physicians Group and its primary member, American Physicians Assurance Corporation (American Physicians). American Physicians is the lead subsidiary of American Physicians Capital Inc (APCapital) (NASDAQ: ACAP). A.M. Best also has affirmed the ICR of “bbb-” of APCapital and the FSR of B+ (Good) and ICR of “bbb-” of APSpecialty Insurance Corporation (APSpecialty). The outlook for all ratings is stable. Each of the above companies is domiciled in East Lansing, MI. The ratings reflect the group’s conservative balance sheet, its business position as a leading specialty provider of medical professional liability coverage within its four core states and its favorable operating performance over the last five years. Improved underwriting profitability and stable investment results also have allowed American Physicians to maintain a solid risk-adjusted capital level despite funding APCapital’s capital management strategies via extensive stockholder dividends. The outlook takes into account American Physicians’ guidance for 2010, favorable earnings prospects over the near term and A.M. Best’s expectation that risk-adjusted capital levels will remain near current levels. The ratings further consider the financial flexibility afforded by APCapital, its ready access to the capital markets, strong interest coverage and modest financial leverage (total debt/total capital), which as of year-end 2009 was 9.9%. In recent years, the dividend stream from American Physicians has been utilized to repurchase stock, redeem trust preferred debt and fund stock dividends. Going forward, A.M. Best expects that APCapital’s future demands on subsidiary capital will be neutralized by earnings. Partially offsetting these positive rating factors are the group’s poor historical operating performance prior to 2004 and the inherent market risks associated with the medical professional liability sector with regard to price competition, legislative (tort) reform, loss cost trends and regulatory challenges. Recently, some of these risks have become elevated to an extent as a result of the continued soft market conditions and the Illinois Supreme Court decision that declared caps on non-economic damages unconstitutional.