i)	The effect on our insurance subsidiaries of changing market conditions that result from fluctuating cyclical patterns of the medical professional liability insurance business;
ii)	The competitive environment in which we operate, including reliance on agents to place insurance, physicians electing to self-insure or to practice without insurance coverage, related trends and associated pricing pressures and developments;
iii)	Business risks that result from our size, products, and geographic concentration;
iv)	The rates we charge for our products and services being subject to or mandated by legal requirements and regulatory approval, which could affect our business or reinsurance arrangements;
v)	The actual amount of new and renewal business;
vi)	The uncertainties of the loss reserving process, including the occurrence of insured or reinsured events with a frequency or severity exceeding our estimates;
vii)	Business and financial risks associated with the unpredictability of court decisions;
viii)	Legal developments, including claims for extra-contractual obligations or in excess of policy limits, in connection with the administration of insurance claims;
ix)	Developments in reinsurance markets that could affect our reinsurance programs or our ability to collect reinsurance recoverables;
x)	Developments in financial and securities markets that could affect our investment portfolio;
xi)	The impact of rising interest rates on the market value of our investments and our interest costs associated with our long-term debt;
xii)	The loss of the services of any key members of senior management;
xiii)	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;
xiv)	Assessments imposed by state financial guarantee associations or other insurance regulatory bodies;
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)	General economic conditions, either nationally or in our market areas, that are worse than expected;
xvii)	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;
xviii)	Other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2005, including Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, filed with the SEC on March 16, 2006; and
xix)	Other factors discussed elsewhere within FPIC’s Form 10-Q for the quarter ended September 30, 2006, filed with the SEC on November 8, 2006.

		Three Months Ended						Nine Months Ended
		September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Revenues
Net premiums earned		$	57,275			57,981			172,094			162,058
Net investment income			8,120			6,223			23,394			18,141
Net realized investment (losses) gains			(58	)		(139	)		112			(179	)
Other income			131			181			382			487
Total revenues			65,468			64,246			195,982			180,507
Expenses
Net losses and loss adjustment expenses			40,149			42,014			120,581			121,540
Other underwriting expenses			10,558			10,074			35,057			25,680
Interest expense			1,088			898			3,192			2,494
Other expenses			1,272			1,675			4,435			5,327
Total expenses			53,067			54,661			163,265			155,041
Income from continuing operations before income taxes			12,401			9,585			32,717			25,466
Less: Income taxes			3,813			2,767			9,609			7,325
Income from continuing operations			8,588			6,818			23,108			18,141
Discontinued Operations
Income from discontinued operations (net of income taxes)			2,289			1,772			6,601			5,841
Gain on disposal of discontinued operations (net of income taxes)			12,449			—			12,449			1,733
Discontinued operations			14,738			1,772			19,050			7,574
Net income		$	23,326			8,590			42,158			25,715
Basic earnings per common share:
Income from continuing operations		$	0.83			0.67			2.24			1.78
Discontinued operations			1.43			0.17			1.85			0.74
Basic earnings per common share		$	2.26			0.84			4.09			2.52
Basic weighted average common shares outstanding			10,321			10,278			10,304			10,194
Diluted earnings per common share:
Income from continuing operations		$	0.80			0.63			2.15			1.69
Discontinued operations			1.38			0.17			1.77			0.71
Diluted earnings per common share		$	2.18			0.80			3.92			2.40
Diluted weighted average common shares outstanding			10,711			10,783			10,747			10,704

		As of
		September 30, 2006			December 31, 2005
Total cash and investments		$	826,757			764,079
Total assets		$	1,329,514			1,308,541
Liability for losses and LAE		$	664,150			663,466
Liability for losses and LAE, net of reinsurance		$	403,076			359,619
Long-term debt		$	46,083			46,083
Accumulated other comprehensive loss, net		$	(4,480	)		(4,231	)
Total shareholders' equity		$	291,439			249,590
Book value per common share (c)		$	27.93			24.14
Tangible book value per common share (a,b,d)		$	26.89			22.32
Common shares outstanding			10,434			10,339
Consolidated statutory surplus of insurance subsidiaries		$	213,540			193,584

		Three Months Ended						Nine Months Ended
		September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Cash flows from continuing operations
Net cash provided by operating activities		$	26,819			16,456			61,023			71,194
Net cash (used in) provided by investing activities		$	(34,454	)		(76,919	)		5,010			(128,119	)
Net cash provided by (used in) financing activities		$	868			462			(1,463	)		3,447
Cash flows from discontinued operations
Net cash provided by discontinued operations		$	4,524			2,718			6,173			9,099

 

		Three Months Ended						Nine Months Ended
		September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Net income		$	23,326			8,590			42,158			25,715
Adjustments to reconcile net income to operating earnings:
Less: Net realized investment (losses) gains, net of income taxes			(36	)		(85	)		69			(110	)
Less: Discontinued operations, net of income taxes			14,738			1,772			19,050			7,574
Total adjustments			14,702			1,687			19,119			7,464
Operating earnings		$	8,624			6,903			23,039			18,251
Diluted earnings per share:
Net income		$	2.18			0.80			3.92			2.40
Adjustments to reconcile net income to operating earnings			(1.37	)		(0.16	)		(1.78	)		(0.69	)
Operating earnings		$	0.81			0.64			2.14			1.71
Diluted weighted average common shares outstanding			10,711			10,783			10,747			10,704