FPIC Insurance Group, Inc. q2 2005 Results Press Release

Exhibit 99

FPIC INSURANCE GROUP, INC.

REPORTS SECOND QUARTER 2005 RESULTS

JACKSONVILLE, Fla. (Business Wire) - August 8, 2005 - FPIC Insurance Group, Inc. (“FPIC”) (Nasdaq: FPIC) today reported net income of $10.3 million, or $0.97 per diluted share, for the second quarter 2005, up from net income of $6.5 million, or $0.62 per diluted share, for the second quarter 2004. Operating earnings increased to $8.5 million, or $0.80 per diluted share, for the second quarter 2005, up from operating earnings of $5.6 million, or $0.54 per diluted share, for the second quarter 2004.

For the six months ended June 30, 2005, net income was $17.1 million, or $1.61 per diluted share, up from net income of $13.5 million, or $1.30 per diluted share, for the six months ended June 30, 2004. For the six months ended June 30, 2005, operating earnings increased to $15.0 million, or $1.41 per diluted share, up from operating earnings of $10.8 million, or $1.05 per diluted share, for the six months ended June 30, 2004.

Operating earnings is a non-GAAP measure widely used in the insurance industry to evaluate financial performance over time. Operating earnings is also an often-used tool of investors and analysts in our sector to facilitate understanding of results by excluding the net effects of realized capital gains and losses, which are tied to the financial markets, and the cumulative effects of accounting changes and other infrequent or non-recurring items, which can affect comparability across reporting periods. The table below reconciles net income to operating earnings.

	Three Months Ended					Six Months Ended
Reconciliation of Net Income to Operating Earnings (In Thousands)	June 30, 2005			June 30, 2004		June 30, 2005			June 30, 2004

Net income	$	10,310			6,457		17,125			13,467

Adjustments to reconcile net income to operating earnings:
Less: Net realized investment (losses) gains, net of income taxes ^(a)		(107	)		410		(24	)		2,133
Less: Discontinued operations, net of income taxes		1,913			408		2,102			506
Total adjustments		1,806			818		2,078			2,639

Operating earnings	$	8,504			5,639		15,047			10,828

^(a) All net realized investment gains, net of income taxes, for the periods reported relate to the insurance segment.

“The second quarter was a strong quarter for us,” said John Byers, President and Chief Executive Officer. “We delivered significant growth in revenue and profits, while continuing to grow our balance sheet. We have successfully sustained in 2005 the strong momentum that we achieved in 2004.”

Financial Highlights: Second Quarter 2005 (as compared to second quarter 2004 unless otherwise indicated)

•	Consolidated operating earnings up 51%;
•	Fourteen consecutive quarters of positive consolidated operating earnings;
•	Net premiums earned up 70% as the result of reduction of reinsurance and pricing improvements;
•	Combined ratio down 1% to 89% from 90%; overall underwriting margin improved $2.9 million, or 95%;
•	Twenty-six consecutive quarters of positive operating earnings from insurance management operations;
•	Insurance management fees up 14% due to revenue growth of managed carriers;
•	Increase in assets, reserves, shareholders’ equity and statutory surplus since year-end;
•	Book value per share and tangible book value per share increased since year-end;
•	15% return on average equity for the trailing twelve months.

Operational Highlights: Second Quarter 2005

•	Continued targeted market focus;
•	Policyholder retention in Florida remained strong at over 90%;
•	Built-in revenue growth resulting from reduction of reinsurance;
•	Solid underwriting results;
•	Overall claims results consistent with expectations; continued favorable trends in the number of newly reported claims and incidents;
•	Over $34 million of cash flow generated by operations;
•	Completed divestiture of third party administration operations.

“Our business strategy drives our performance,” continued Mr. Byers. “Our two business segments, insurance underwriting and insurance management, continue to complement one another and together create a distinct competitive advantage for us. Throughout 2005, our focus will continue to be on performance throughout our organization and on delivering long-term value for our shareholders.”

Conference Call

FPIC will host a conference call at 11:00 a.m., Eastern Time, Tuesday, August 9, 2005, to review second quarter 2005 results. Mr. Byers and Kim D. Thorpe, Executive Vice President and Chief Financial Officer, will host the call. Messrs. Byers and Thorpe, together with Robert E. White, Jr., the leader of FPIC’s insurance operations, will answer questions from analysts and investors. To access the conference call, please dial (800) 260-8140 (USA) or (617) 614-3672 (International) and use the access code 35933826.

The conference call will also be broadcast live over the Internet in a listen-only format via FPIC’s corporate website at http://www.fpic.com. To access the call from FPIC’s home page, click on “Investor Relations” and a conference call link will be provided to connect listeners to the broadcast.

Questions can be submitted in advance of the call until 10:00 a.m., Eastern Time, Tuesday, August 9, 2005 via e-mail at ir@fpic.com or through FPIC’s corporate website at http://www.fpic.com, where a link on the “Investor Relations” page has been provided.

For individuals unable to participate in the conference call, a telephone replay will be available beginning at 1:00 p.m., Eastern Time, Tuesday, August 9, 2005 and ending at 11:59 p.m., Eastern Time, Thursday, August 11, 2005. To access the telephone replay, dial (888) 286-8010 (USA) or (617) 801-6888 (International) and use the access code 21633612. A replay of the conference call webcast will also be available beginning at 1:00 p.m., Eastern Time, Tuesday, August 9, 2005 on FPIC’s website.

Corporate Profile

FPIC Insurance Group, Inc., through its subsidiary companies, is a leading provider of medical professional liability insurance for physicians, dentists and other healthcare providers, and a provider of insurance management services to other medical professional liability insurance carriers.

Caution Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Any written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. These forward-looking statements can be identified by such words as, but not limited to, “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “plan,” “foresee,” “hope,” “should,” “will,” “will likely result” or “will continue” and other similar expressions. These forward-looking statements are subject to certain risks, uncertainties and other factors that could cause actual results to differ materially from such statements. These risks, uncertainties and other factors that could adversely affect our operations or cause actual results to differ materially from anticipated results include, but are not limited to, the following:

i)	Risk factors, including the effect on reserves and underwriting results, associated with changing market conditions that result from fluctuating cyclical patterns of the property and casualty insurance business;
ii)	The uncertainties of the loss reserving process;
iii)	The occurrence of insured or reinsured events with a frequency or severity exceeding our estimates;
iv)	The impact of surplus constraints on growth;
v)	The competitive environment in which we operate, including reliance on agents to place insurance, physicians electing to practice without insurance coverage, related trends and associated pricing pressures and developments;
vi)	The actual amount of new and renewal business;
vii)	Business risks that result from our size and geographic concentration;
viii)	Developments in reinsurance markets that could affect our reinsurance programs;
ix)	The ability to collect reinsurance recoverables;

x)	The dependence of our insurance management segment upon a major customer, Physicians’ Reciprocal Insurers (“PRI”), for its revenue, and consequently, the effects of PRI’s premium rate adequacy, claims experience, policyholder retention, and overall financial position on its ability to maintain or grow its premium base;
xi)	Developments in financial and securities markets that could affect our investment portfolio and financing plans;
xii)	Risk factors associated with the impact of rising interest rates on the market value of our investments;
xiii)	Risk factors associated with the impact of rising interest rates on our interest costs associated with our long-term debt;
xiv)	Rates being subject to or mandated by legal requirements and regulatory approval, which could affect our business or reinsurance arrangements;
xv)	Uncertainties relating to government and regulatory policies (such as subjecting us to insurance regulation or taxation in additional jurisdictions or amending, revoking or enacting any laws, regulations or treaties affecting our current operations);
xvi)	Legal developments, including claims for extra-contractual obligations or in excess of policy limits in connection with the administration of insurance claims;
xvii)	Business and financial risks associated with the unpredictability of court decisions;
xviii)	The loss of the services of any of our executive officers;

xix)	Risks of impairment of assets, generally, including the risk of impairment or inability to continue to recognize deferred acquisition costs, deferred tax assets, goodwill and other deferred or intangible assets;
xx)	General economic conditions, either nationally or in our market areas, that are worse than expected;
xxi)	Changes in our financial ratings resulting from one or more of these uncertainties or other factors and the potential impact on our agents’ ability to place insurance business on our behalf; and
xxii)	Other risk factors discussed elsewhere within FPIC’s Form 10-Q for the quarter ended June 30, 2005, filed with the United States Securities and Exchange Commission (“SEC”) on August 8, 2005; and within FPIC’s Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 15, 2005.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

FPIC Insurance Group, Inc.
Unaudited Selected Financial Data
(In Thousands, Except per Share Data)



	Three Months Ended					Six Months Ended
Consolidated Statements of Income	June 30, 2005			June 30, 2004		June 30, 2005			June 30, 2004

Revenues
Net premiums earned	$	53,882			31,668		104,076			66,680
Insurance management fees		10,294			9,027		20,568			17,492
Net investment income		6,316			4,571		12,021			10,185
Commission income		449			1,854		1,114			3,342
Net realized investment (losses) gains		(175	)		667		(39	)		3,473
Other income		172			164		362			362
Total revenues		70,938			47,951		138,102			101,534

Expenses
Net losses and loss adjustment expenses ("LAE")		40,955			27,258		79,526			56,632
Other underwriting expenses		6,974			1,356		15,606			4,218
Insurance management expenses		7,737			7,485		15,136			14,772
Interest expense on debt		841			605		1,596			1,196
Other expenses		1,825			1,934		3,707			3,636
Total expenses		58,332			38,638		115,571			80,454

Income from continuing operations before income taxes and minority interest		12,606			9,313		22,531			21,080
Less: Income tax expense		4,283			3,125		7,580			7,842

Income from continuing operations before minority interest		8,323			6,188		14,951			13,238
Less: Minority interest		(74	)		139		(72	)		277
Income from continuing operations		8,397			6,049		15,023			12,961

Discontinued operations
Income from discontinued operations (net of income tax expense)		180			408		369			506
Gain on disposal of discontinued operations (net of income tax expense)		1,733			—		1,733			—
Discontinued operations		1,913			408		2,102			506

Net income	$	10,310			6,457		17,125			13,467

Basic earnings per common share:
Income from continuing operations	$	0.82			0.61		1.48			1.31
Discontinued operations		0.19			0.04		0.21			0.05
Basic earnings per common share	$	1.01			0.65		1.69			1.36

Diluted earnings per common share:
Income from continuing operations	$	0.79			0.58		1.41			1.25
Discontinued operations		0.18			0.04		0.20			0.05
Diluted earnings per common share	$	0.97			0.62		1.61			1.30

Basic weighted average common shares outstanding		10,192			9,979		10,151			9,929

Diluted weighted average common shares outstanding		10,672			10,394		10,663			10,360

FPIC Insurance Group, Inc.
Unaudited Selected Financial Data
(In Thousands, Except per Share Data)
(continued)

	As of
Selected Consolidated Statements of Financial Position Information	June 30, 2005		Dec 31, 2004
Total cash and investments	$	808,443		683,968
Total assets	$	1,346,563		1,271,306
Liability for losses and LAE	$	641,038		635,118
Liability for losses and LAE, net of reinsurance	$	336,871		301,699
Long term debt	$	46,083		46,083
Total shareholders' equity	$	237,114		217,120
Total shareholders' equity, excluding FAS 115 ^(a)	$	235,816		214,510
Book value per common share	$	22.94		21.56
Book value per common share, excluding FAS 115 ^(a)	$	22.81		21.30
Tangible book value per common share ^(b)	$	21.07		19.63
Tangible book value per common share, excluding FAS 115 ^(a,b)	$	20.94		19.37
Common shares outstanding		10,338		10,070
Statutory surplus of insurance subsidiaries	$	171,941		160,242

^(a) Excludes the after-tax effect of unrealized gains/losses relating to our fixed maturity securities. These amounts are non-GAAP measures commonly used by analysts to gauge stockholders' equity and book values excluding the effects of unrealized gains/losses on fixed maturity securities generated by fluctuations in the investment markets.

^(b) Excludes goodwill of $18,870 and $18,870 and intangible assets of $450 and $561 as of June 30, 2005 and December 31, 2004, respectively. Tangible book value is a non-GAAP measure used by analysts and investors to gauge book values excluding the effects of goodwill and other intangible assets.

FPIC Insurance Group, Inc.
Unaudited Selected Financial Data
(Dollars in Thousands)

	Three Months Ended						Six Months Ended
	June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Selected Consolidated Cash Flow Information
Net cash provided by operating activities	$	34,042			6,915			61,269			4,207
Net cash used in investing activities	$	(40,993	)		(26,335	)		(52,156	)		(25,862	)
Net cash provided by financing activities	$	1,711			407			2,985			2,248

Segment Reconciliation of Total Revenues
Insurance	$	60,148			37,095			116,338			80,739
Insurance management		11,040			11,790			22,125			22,809
Third party administration		—			—			—			—
Intersegment eliminations		(250	)		(934	)		(361	)		(2,014	)
Total revenues	$	70,938			47,951			138,102			101,534

Segment Reconciliation of Net Income
Insurance	$	6,596			3,735			11,142			8,637
Insurance management		1,844			2,399			3,983			4,492
Third party administration		1,870			323			2,000			338
Net income	$	10,310			6,457			17,125			13,467

Selected Insurance Segment Information
GAAP combined ratio:
Loss ratio		76.0	%		86.1	%		76.4	%		84.9	%
Underwriting expense ratio		12.9	%		4.3	%		15.0	%		6.3	%
Combined ratio		88.9	%		90.4	%		91.4	%		91.2	%

Direct and assumed premiums written	$	67,160			77,102			151,297			175,705
Net premiums written	$	58,280			33,327			132,392			76,930
Net paid losses and LAE on professional liability claims ⁽¹⁾	$	30,820			30,584			52,582			62,523
Total professional liability claims with indemnity payment		106			88			184			189
Total professional liability claims and incidents closed without indemnity payment		452			585			926			1,077

Total professional liability claims reported		253			318			503			590
Total professional liability incidents reported		232			347			497			618
Total professional liability claims and incidents reported		485			665			1,000			1,208

							As of
							June 30, 2005				June 30, 2004
Total professional liability claims and incidents that remained open								5,091			5,441
Professional liability policyholders (excluding fronting arrangements) ⁽²⁾								14,016			13,433
Professional liability policyholders under fronting arrangements⁽²⁾								—			137

⁽¹⁾ For the purpose of period over period comparison, net paid losses do not take into account $10,180 received in connection with the American Professional Assurance, Ltd. (APAL) ceded reinsurance commutation during the second quarter of 2005, which would be a reduction to reported net paid losses.
⁽²⁾ Professional liability policyholders (excluding fronting arrangements) includes policyholders whose individual insurance is 90% reinsured under facultative reinsurance agreements. For the period ended June 30, 2004, 92 such policyholders previously reported under fronting arrangements have been reclassified to professional liability policyholders (excluding fronting arrangements).

Contact

FPIC Insurance Group, Inc.

Jacksonville, Florida

Roberta Goes Cown, Senior Vice President and Corporate Counsel

904-354-2482, Extension 3605

For all your investor needs, FPIC is on the Internet at

http://www.fpic.com

Got a Tough Question? E-mail us at ir@fpic.com

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