Exhibit 99.1

                [GRAPHIC OMITTED]   PRESS RELEASE
06-3

                     AMERICAN PHYSICIANS SERVICE GROUP, INC.
           ANNOUNCES STRATEGIC MERGER WITH MEDICAL MALPRACTICE PARTNER


     AUSTIN,  TEXAS,  June 5, 2006 - American  Physicians  Service  Group,  Inc.
("APS") (NASDAQ:  AMPH) today announced that its Board of Directors has approved
the acquisition of its long-time client,  American Physicians Insurance Exchange
("APIE").  APIE's Board of Directors has also approved the  transaction  and the
companies anticipate  completing the merger prior to the end of 2006, subject to
approval by the Texas Department of Insurance,  necessary  filings with the SEC,
and the  approval of the  shareholders  of APS and  subscriber-policyholders  of
APIE.  The purchase price will include  approximately  1.7 million shares of APS
common  stock  issued  to the  policyholders  of  APIE  and  the  assumption  of
approximately  $10.4  million in  obligations,  which will be  converted  to APS
preferred stock with a cash redemption requirement.

     Mr. Ken Shifrin,  Chairman of the Board of APS said,  "We are excited to be
combining  with APIE, a client whose  operations we have been managing since its
founding in the mid 1970s.  As manager,  APS has a strong  working  knowledge of
APIE and expects a very smooth transition as a result of this relationship. With
post-merger  consolidated  assets expected to exceed $180 million,  consolidated



equity exceeding $50 million and consolidated revenues exceeding $80 million, we
believe this merger builds an  organization  that is  positioned  for growth and
success.  Dr. Norris  Knight and Dr.  William  Peche,  who have over 50 years of
combined  service on the APIE Board of  Directors,  will be joining the Board of
APS. The  experience  and  dedication  they bring will be  invaluable as we move
forward."

     Norris Knight,  M.D., Chairman of the Board of APIE said, "This new chapter
in our  history  will  give us  access  to  capital  not  previously  available.
Additional capital will strengthen our company, provide a platform for growth by
increasing  our  market  capacity,  and  provide  the  opportunity  to  obtain a
favorable A.M. Best rating. Our  subscriber-policyholders  will benefit directly
from this new strength,  as well as from the liquidity and  opportunity of being
shareholders of APS. No changes in coverage or other contractual  obligations in
existing  policies will result from this  transaction.  We have  structured  the
transaction to retain the involvement of our physician insureds in the fabric of
the insurance operations and we look forward to working together to build on our
mutual past successes."

     Mr. Shifrin  concluded,  "This  combination is the natural evolution of two
companies  founded  simultaneously  with  similar  purposes.  It is, in  effect,
uniting two halves of a whole.  We believe  that our  shareholders  will benefit
from the growth opportunity this merger provides, while still enjoying the value
qualities that APS has represented in the past.

     APS is a management  and  financial  services  firm with  subsidiaries  and
affiliates which provide:  medical  malpractice  insurance services for doctors;



and  brokerage  and  investment  services  to  institutions  and high net  worth
individuals. The Company is headquartered in Austin, Texas and maintains offices
in Dallas and Houston.

     This  press  release  includes  forward-looking  statements  related to the
Company that involve risks and uncertainties  that could cause actual results to
differ materially.  These forward-looking statements are made in reliance on the
"safe harbor"  provisions  of the Private  Securities  Litigation  Reform Act of
1995.  For  further  information  about  these  factors  that  could  affect the
Company's  future  results,  please see the  Company's  recent  filings with the
Securities  and Exchange  Commission.  Prospective  investors are cautioned that
forward-looking  statements  are not  guarantees of future  performance.  Actual
results  may  differ  materially  from  management  expectations.  Copies of the
filings  are  available  upon  request  from the  Company's  investor  relations
department.  For further  information,  visit APS'  website at  www.amph.com  or
contact:

Mr. Kenneth Shifrin, Chairman of the Board (or)
Mr. W. H. Hayes, Sr. VicePresident - Finance
American Physicians Service Group, Inc.
1301 Capital of Texas Highway, C-300
Austin, Texas  78746
(512)328-0888