8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 25, 2007

AMERICAN PHYSICIANS CAPITAL, INC.

(Exact Name of Registrant as Specified in Charter)

Michigan
(State or Other Jurisdiction
of Incorporation) 000-32057
(Commission
File Number) 38-3543910
(IRS Employer
Identification No.)

1301 North Hagadorn Road, East Lansing, Michigan 48823
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (517) 351-1150

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On October 25, 2007, American Physicians Capital, Inc. issued a press release announcing its financial results for the three months and nine months ended September 30, 2007 and certain other information. A copy of the press release is furnished herewith as Exhibit 99 and is incorporated herein by reference.

     The information furnished under Items 2.02 and 9.01 of this Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99	Press Release, dated October 25, 2007

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

October 25, 2007	AMERICAN PHYSICIANS CAPITAL, INC.
	By:	/s/ R. Kevin Clinton
		R. Kevin Clinton
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
99	Press Release, dated October 25, 2007

EX-99

Exhibit 99

For Immediate Release	Contact: Ann Storberg, Investor Relations
	(517) 324-6629

AMERICAN PHYSICIANS CAPITAL, INC. REPORTS
THIRD QUARTER 2007 RESULTS

East Lansing, Mich. (October 25, 2007) — American Physicians Capital, Inc. (APCapital) (NASDAQ:ACAP) today announced net income of $13.3 million or $1.21 per diluted common share for the third quarter of 2007. For the first nine months of 2007, APCapital has generated net income of $40.1 million, or $3.54 per diluted common share. At September 30, 2007, APCapital’s book value per share was $25.61 based on 10,575,799 shares outstanding, an increase of 10.1% from $23.26 at December 31, 2006.

APCapital generated net income of $11.0 million or $.91 per share in the third quarter of 2006 and net income of $30.6 million or $2.47 per share for the first nine months of 2006.

“We continue to be a disciplined underwriter and careful manager of capital,” said President and Chief Executive Officer R. Kevin Clinton. “To remain competitive and maintain our strong retention rate, we have selectively lowered our rates in most of our markets. However, our focus continues to be bottom-line driven. Our commitment to this philosophy has been the main driver for our strong financial results.”

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Consolidated Income Statement
(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Direct Premiums Written	$	45,213		$	51,819		$	109,362		$	125,742
Net Premiums Written	$	43,626		$	48,304		$	105,487		$	117,351
Net Premiums Earned	$	35,516		$	37,772		$	105,444		$	112,635
Incurred Loss and Loss Adjustment Expenses:
Current Accident Year Losses		26,191			27,693			78,632			85,352
Prior Year Losses		(7,958	)		(3,146	)		(25,121	)		(8,132	)
Total		18,233			24,547			53,511			77,220
Underwriting Expenses		7,275			7,373			22,202			22,784
Underwriting Income		10,008			5,852			29,731			12,631
Investment Income		10,737			11,338			33,066			34,010
Other Income (1)		113			298			435			2,273
Other Expenses		(1,361	)		(1,301	)		(4,030	)		(3,938	)
Pre-tax Income		19,497			16,187			59,202			44,976
Federal Income Taxes		6,216			5,162			19,083			14,376
Net Income	$	13,281		$	11,025		$	40,119		$	30,600
Loss Ratio:
Current Accident Year		73.7	%		73.3	%		74.5	%		75.8	%
Prior Year Development		-22.4	%		-8.3	%		-23.8	%		-7.2	%
Calendar Year		51.3	%		65.0	%		50.7	%		68.6	%
Underwriting Expense Ratio		20.5	%		19.5	%		21.1	%		20.2	%
Combined Ratio		71.8	%		84.5	%		71.8	%		88.8	%

(1) Includes realized gains and losses

Direct premiums written were $45.2 million in the third quarter of 2007, down $6.6 million or 12.7% from the same period a year ago. For the first nine months of 2007, direct premiums written were down $16.4 million, or 13.0%. The declines in direct premiums written were primarily the result of selective price reductions in our major markets. We insured 9,313 physicians at September 30, 2007, down just 1.5% from year end 2006.

Net premiums earned in the third quarter of 2007 were down $2.3 million or 6.0% from the third quarter of 2006 and year-to-date are down $7.2 million or 6.4%. The declines in net premiums earned were not as great as the declines in direct premiums written due to the reinsurance terms in place for 2007 whereby APCapital retained a greater portion of loss exposure and ceded less premium.

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The 2007 third quarter loss ratio was 51.3% with $8.0 million of positive development from prior accident years. For the nine months ended September 30, 2007, the loss ratio was 50.7% with $25.1 million of positive prior year development. On an accident year basis, the loss ratio in the third quarter of 2007 was 73.7%, up slightly from the 73.3% reported in the third quarter of 2006. Year-to-date the accident loss ratio was 74.5% in 2007 as compared to 75.8% in 2006. This accident year loss ratio reflects the strong book-of-business we have developed and our adherence to an adequate pricing and strict underwriting philosophy.

We continue to experience favorable development in our reserves. The number of reported claims in the third quarter of 2007 was 191 down 35.7% from the 297 reported in the third quarter of 2006. Year-to-date there have been 707 claims reported in 2007 as compared to 901 through September 30, 2006 — a 21.5% decrease. Claim severity has remained relatively stable and claims have been settling for amounts below established case reserves. As a result of this better than anticipated claim frequency and severity, prior year reserves have continued to develop favorably.

The underwriting expense ratio increased in the third quarter of 2007 to 20.5% from 19.5% in the third quarter of 2006. The 2007 year-to-date underwriting expense ratio was 21.1%, up from 20.2% a year ago. The increases in the underwriting ratio were principally the result of our lower premium volume giving APCapital a smaller base over which to spread its fixed costs. Other expenses in 2007 for the third quarter and year-to-date were approximately the same as a year ago.

Investment income

Investment income was down slightly in the third quarter of 2007 and year-to-date. The overall investment yields decreased from 5.29% in the third quarter 2006 to 4.93% in the third quarter of 2007. For the first nine months of 2007, our investment yield was 5.05% compared to 5.33% a year ago. The decrease in investment yield is a result of a greater allocation of our portfolio to tax-exempt securities.

Balance Sheet and Equity Information

APCapital’s total assets were $1.088 billion at September 30, 2007, down $8.3 million from December 31, 2006. At September 30, 2007, APCapital’s total shareholders’ equity was $270.8 million, up from $268.8 million at December 31, 2006. The increase in shareholders’ equity is a result of net income of $40.1 million for the first nine months of 2007 being partially offset by the use of $37.3 million of equity to repurchase shares and $1.1 million to pay APCapital’s first cash dividend in the third quarter of 2007.

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Capital Management

In the third quarter of 2007 APCapital repurchased 506,400 shares at an average cost of $37.12 per share. Year-to-date, APCapital has repurchased 995,600 shares utilizing $37.3 million of equity. APCapital has the following outstanding share repurchase authorizations:

	Type of	(In thousands)
	Repurchase	Amount		Amount
Date Approved By Board	Plan	Authorized		Remaining (2)
October 27,2006	Rule 10b5-1	$	32,000	$	21,397
May 22, 2007	Discretionary (1)	$	15,000	$	5,459
August 16, 2007	Discretionary (1)	$	20,000	$	20,000
		$	67,000	$	46,856

(1)	All shares will be repurchased under management’s discretion in the open market or in privately negotiated transactions during the Company’s normal trading windows.
(2)	As of September 30, 2007.

The share repurchase program remains an integral part of APCapital’s capital management program. APCapital seeks to maintain an optimal but flexible level of capital during this softer market cycle.

In the third quarter of 2007, the Board of Directors declared its first regular quarterly cash dividend of $0.10 per common share, which was paid to shareholders on September 28, 2007. Today, APCapital’s Board of Directors declared a fourth quarter cash dividend of $0.10 per common share payable on December 31, 2007 to shareholders of record on December 13, 2007.

Stock Split

In September 2006, APCapital’s Board of Directors declared a three-for-two stock split of its common shares to shareholders. All prior year share and per share numbers disclosed in this press release are split adjusted.

Stilwell Standstill Agreement

APCapital also announced that, by mutual consent of the parties, the Standstill Agreement with Joseph Stilwell, Spencer Schneider and various related parties has been terminated, effective immediately. Mr. Stilwell and Mr. Schneider will continue to serve as directors of APCapital following the termination.

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Conference Call

APCapital’s website, http://www.apcapital.com, will host a live Webcast of its conference call in a listen-only format to discuss 2007 third quarter results on October 26, 2007 at 10:00 a.m. Eastern time. An archived edition of the Webcast can be accessed by going to APCapital’s website and selecting “For Investors,” then “Webcasts.” For individuals unable to access the Webcast, a telephone replay will be available by dialing 1-888-286-8010 or (617) 801-6888 and entering the conference ID code: 54959353. The replay will be available through 11:59 p.m. Eastern time on October 31, 2007.

Corporate Description

American Physicians Capital, Inc. is a regional provider of medical professional liability insurance focused primarily in the Midwest markets through American Physicians Assurance Corporation and its other subsidiaries. Further information about the companies is available on the Internet at http://www.apcapital.com.

Forward-Looking Statements

Certain statements made by American Physicians Capital, Inc. in this release may constitute forward-looking statements within the meaning of the federal securities laws. When we use words such as “will,” “should,” “believes,” “expects,” “anticipates,” “estimates” or similar expressions, we are making forward-looking statements. While we believe any forward-looking statements we have made are reasonable, they are subject to risks and uncertainties, and actual results could differ materially. These risks and uncertainties include, but are not limited to, the following:

• increased competition could adversely affect our ability to sell our products at premium rates we deem adequate, which may result in a decrease in premium volume, a decrease in our profitability, or both;

• our reserves for unpaid losses and loss adjustment expenses are based on estimates that may prove to be inadequate to cover our losses;

• tort reform legislation may have adverse or unintended consequences that could materially and adversely affect our results of operations and financial condition;

• if we are unable to obtain or collect on ceded reinsurance, our results of operations and financial condition may be adversely affected;

• the insurance industry is subject to regulatory oversight that may impact the manner in which we operate our business;

• our geographic concentration in certain Midwestern states and New Mexico ties our performance to the business, economic, regulatory and legislative conditions in those states;

• an interruption or change in current marketing and agency relationships could reduce the amount of premium we are able to write;

• a downgrade in the financial strength rating of our insurance subsidiaries could reduce the amount of business we are able to write;

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• changes in interest rates could adversely impact our results of operation, cash flows and financial condition;

• our status as an insurance holding company with no direct operations could adversely affect our ability to meet our debt obligations and fund future share repurchases;

• the loss of one or more of our key employees could adversely affect our business;

• unpredictable court decisions could have a material adverse financial impact on our business operations if the amount of the award is expanded beyond the intended insurance coverage;

• applicable law and certain provisions in our articles and bylaws may prevent and discourage unsolicited attempts to acquire our Company that may be in the best interest of our shareholders;

• any other factors listed or discussed in the reports filed by APCapital with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

APCapital does not undertake, and expressly disclaims any obligation, to update or alter its statements whether as a result of new information, future events or otherwise, except as required by law.

Definition of Non-GAAP Financial Measures

APCapital uses operating income, a non-GAAP financial measure, to evaluate APCapital’s underwriting performance. Operating income differs from net income by excluding the after-tax effect of realized capital gains and (losses).

Although the investment of premiums to generate investment income and capital gains or (losses) is an integral part of an insurance company’s operations, APCapital’s decisions to realize capital gains or (losses) are independent of the insurance underwriting process. In addition, under applicable GAAP accounting requirements, losses may be recognized for accounting purposes as the result of other than temporary declines in the value of investment securities, without actual realization. APCapital believes that the level of realized gains and (losses) for any particular period is not indicative of the performance of our ongoing underlying insurance operations in a particular period. As a result, APCapital believes that providing operating income (loss) information makes it easier for users of APCapital’s financial information to evaluate the success of APCapital’s underlying insurance operations.

In addition to APCapital’s reported loss ratios, management also uses accident year loss ratios, a non-GAAP financial measure, to evaluate APCapital’s current underwriting performance. The accident year loss ratio excludes the effect of prior years’ loss reserve development. APCapital believes that this ratio is useful to investors as it focuses on the relationships between current premiums earned and losses incurred related to the current year. Although considerable variability is inherent in the estimates of losses incurred related to the current year, APCapital believes that the current estimates are reasonable.

###

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Summary Financial Information
American Physicians Capital, Inc.

Balance Sheet Data

	September 30,		December 31,
	2007		2006
	(In thousands, except per share data)
Assets:
Available-for-sale — bonds	$	279,066	$	255,001
Held-to-maturity — bonds		498,940		505,572
Other invested assets		12,180		6,476
Cash and cash equivalents		81,525		108,227
Cash and investments		871,711		875,276
Premiums receivable		41,342		43,068
Reinsurance recoverable		111,573		109,013
Deferred federal income taxes		26,643		32,795
Other assets		36,277		35,663
Total assets	$	1,087,546	$	1,095,815
Liabilities and Shareholders’ Equity:
Unpaid losses and loss adjustment expenses	$	680,096	$	688,031
Unearned premiums		68,744		70,744
Long-term debt		30,928		30,928
Federal income taxes payable		2,737		189
Other liabilities		34,202		37,113
Total liabilities		816,707		827,005
Common stock		—		—
Additional paid-in-capital		4,348		41,106
Retained earnings		261,992		222,935
Accumulated other comprehensive income:
Net unrealized gains on investments, net of deferred federal income taxes		4,499		4,769
Shareholders’ equity		270,839		268,810
Total liabilities and shareholders’ equity	$	1,087,546	$	1,095,815
Shares outstanding		10,576		11,557
Book value per share	$	25.61	$	23.26

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Summary Financial Information
American Physicians Capital, Inc.

Income Statement

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
	(In thousands, except per share data)						(In thousands, except per share data)
Direct premiums written	$	45,213		$	51,819		$	109,362		$	125,742
Net premiums written	$	43,626		$	48,304		$	105,487		$	117,351
Net premiums earned	$	35,516		$	37,772		$	105,444		$	112,635
Investment income		10,737			11,338			33,066			34,010
Net realized (losses) gains		(73	)		100			(139	)		1,448
Other income		186			198			574			825
Total revenues		46,366			49,408			138,945			148,918
Losses and loss adjustment expenses		18,233			24,547			53,511			77,220
Underwriting expenses		7,275			7,373			22,202			22,784
Other expenses		1,361			1,301			4,030			3,938
Total expenses		26,869			33,221			79,743			103,942
Income before income taxes		19,497			16,187			59,202			44,976
Federal income tax expense		6,216			5,162			19,083			14,376
Net income	$	13,281		$	11,025		$	40,119		$	30,600
Adjustments to reconcile net income to operating income:
Net income	$	13,281		$	11,025		$	40,119		$	30,600
Add back:
Realized losses (gains), net of tax		47			(65	)		90			(941	)
Net operating income	$	13,328		$	10,960		$	40,209		$	29,659
Ratios:
Loss ratio (1)		51.3	%		65.0	%		50.7	%		68.6	%
Underwriting ratio (2)		20.5	%		19.5	%		21.1	%		20.2	%
Combined ratio (3)		71.8	%		84.5	%		71.8	%		88.8	%
Earnings per share data:
Net income
Basic	$	1.23		$	0.93		$	3.61		$	2.52
Diluted	$	1.21		$	0.91		$	3.54		$	2.47
Net operating income
Basic	$	1.23		$	0.93		$	3.61		$	2.45
Diluted	$	1.21		$	0.91		$	3.55		$	2.39
Basic weighted average shares outstanding		10,801			11,796			11,124			12,123
Diluted weighted average shares outstanding		11,015			12,062			11,339			12,390

(1)	The loss ratio is calculated by dividing incurred loss and loss adjustment expenses by net premiums earned.
(2)	The underwriting ratio is calculated by dividing underwriting expenses by net premiums earned.
(3)	The combined ratio is the sum of the loss and underwriting ratios.

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Summary Financial Information
American Physicians Capital, Inc.

Selected Cash Flow Information

	For the Nine Months Ended
	September 30,
	2007			2006
	(In thousands)
Net cash from operating activities	$	39,433		$	41,145
Net cash for investing activities	$	(28,021	)	$	(237,482	)
Net cash for financing activities	$	(38,114	)	$	(26,216	)
Net decrease in cash and cash equivalents	$	(26,702	)	$	(222,553	)

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American Physicians Capital, Inc.
Supplemental Statistics

Medical Professional Liability

	Reported
Three Months Ended	Claim Count
September 30, 2007		191
June 30, 2007		269
March 31, 2007		247
December 31, 2006		267
September 30, 2006		297
June 30, 2006		296
March 31, 2006		308
December 31, 2005		347
September 30, 2005		361
June 30, 2005		401
March 31, 2005		404

	Net Premium Earned (in thousands)
	APCapital
Three Months Ended	Excluding PIC Florida		PIC Florida		Total
September 30, 2007	$	35,517	$	—	$	35,517
June 30, 2007		34,896		—		34,896
March 31, 2007		35,034		—		35,034
December 31, 2006		37,051		—		37,051
September 30, 2006		37,774		—		37,774
June 30, 2006		37,517		—		37,517
March 31, 2006		37,448		—		37,448
December 31, 2005		39,918		671		40,589
September 30, 2005		39,305		975		40,280
June 30, 2005		39,677		869		40,546
March 31, 2005		41,356		799		42,155

					Average Net
			Average Net		Paid Claim
	Open		Case Reserve		(Trailing Four
Three Months Ended	Claim Count		Per Open Claim		Quarter Average)
September 30, 2007		1,913	$	144,200	$	70,400
June 30, 2007		2,124		136,200		69,600
March 31, 2007		2,200		138,800		56,600
December 31, 2006		2,256		137,900		59,100
September 30, 2006		2,347		138,800		57,600
June 30, 2006		2,558		136,300		63,000
March 31, 2006		2,976		120,400		78,800
December 31, 2005		2,991		122,400		75,900
September 30, 2005		3,109		119,100		67,900
June 30, 2005		3,211		116,300		68,200
March 31, 2005		3,344		114,900		65,200

	Retention Ratio
	Nine Months Ended			Year Ended			Nine Months Ended
	September 30, 2006			2006			September 30, 2007
Illinois		82	%		81	%		81	%
Kentucky		69	%		70	%		85	%
Michigan		86	%		85	%		86	%
New Mexico		81	%		82	%		89	%
Ohio		83	%		83	%		88	%
Total (all states)		82	%		82	%		86	%

Notes:

All values, except net premiums earned, exclude experience from investment in Physicians Insurance Company (Florida).

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