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•	Consolidated operating earnings up 21%;
•	Fifteen consecutive quarters of positive consolidated operating earnings;
•	Net premiums earned up 49% as the result of reduction of reinsurance and pricing improvements;
•	90% combined ratio; overall underwriting margin improved $2.5 million, or 74%;
•	Twenty-seven consecutive quarters of positive operating earnings from insurance management operations;
•	Increase in assets, shareholders’ equity and statutory surplus since year-end;
•	Book value per share and tangible book value per share increased since year-end;
•	Net investment income increased 25% on portfolio growth and improved yield;
•	15% return on average equity for the trailing twelve months.

•	Continued targeted market focus;
•	Policyholder retention in Florida remained strong at 95% year to date;
•	Solid insurance underwriting results;
•	Targeted loss ratio reduced as a result of continued favorable claims experience;
•	Over $81 million of cash flow generated by operations year to date.

 

 

         

     

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, financial position and overall market and regulatory environment 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)	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;
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 September 30, 2005, filed with the United States Securities and Exchange Commission (“SEC”) on November 7, 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.

 

 

FPIC Insurance Group, Inc.
Unaudited Selected Financial Data
(In Thousands, Except per Share Data)
(continued)
		As of
Selected Consolidated Statements of Financial Position Information		Sept 30, 2005			Dec 31, 2004
Total cash and investments		$	757,760			683,968
Total assets		$	1,285,557			1,271,306
Liability for losses and LAE		$	633,924			635,118
Liability for losses and LAE, net of reinsurance		$	341,271			301,699
Long-term debt		$	46,083			46,083
Total shareholders' equity		$	242,447			217,120
Total shareholders' equity, excluding FAS 115 (a,c)		$	245,432			214,510
Book value per common share		$	23.37			21.56
Book value per common share, excluding FAS 115 (a,c)		$	23.66			21.30
Tangible book value per common share (b,c)		$	21.52			19.63
Tangible book value per common share, excluding FAS 115 (a,b,c)		$	21.80			19.37
Common shares outstanding			10,372			10,070
Statutory surplus of insurance subsidiaries		$	178,312			160,242
(a)Excludes the after-tax effect of net unrealized (losses) gains relating to our fixed maturity securities.
(b) Excludes goodwill of $18,870 and $18,870 and intangible assets of $412 and $561 as of September 30, 2005 and December 31, 2004, respectively.
(c) For additional information regarding the use of non-GAAP financial measures, see the discussion provided earlier in this release captioned “Non-GAAP Financial Measures” and the “Reconciliation of Non-GAAP Measures to the Nearest Comparable GAAP Measures” found later in this release.

FPIC Insurance Group, Inc.
Unaudited Selected Financial Data
(Dollars in Thousands)
		Three Months Ended						Nine Months Ended
		Sept 30, 2005			Sept 30, 2004			Sept 30, 2005			Sept 30, 2004
Selected Consolidated Cash Flow Information
Net cash provided by operating activities		$	20,050			29,894			81,319			34,101
Net cash (used in) provided by investing activities		$	(77,796	)		6,947			(129,952	)		(18,915	)
Net cash provided by financing activities		$	462			340			3,447			2,588
Segment Reconciliation of Total Revenues
Insurance		$	64,234			44,030			180,572			124,769
Insurance management			11,312			13,300			33,437			36,110
Third party administration			-			-			-			-
Intersegment eliminations			(131	)		(912	)		(492	)		(2,926	)
Total revenues		$	75,415			56,418			213,517			157,953
Segment Reconciliation of Net Income
Insurance		$	6,675			3,545			17,816			12,180
Insurance management			1,915			3,641			5,899			8,133
Third party administration			-			343			2,000			682
Net income		$	8,590			7,529			25,715			20,995
Selected Insurance Segment Information
GAAP combined ratio:
Loss ratio			72.4	%		84.4	%		75.0	%		84.7	%
Underwriting expense ratio			17.4	%		6.9	%		15.8	%		6.5	%
Combined ratio			89.8	%		91.3	%		90.8	%		91.2	%
Direct and assumed premiums written		$	78,937			77,179			230,235			252,884
Net premiums written		$	69,369			65,118			201,762			142,049
Net paid losses and LAE on professional liability claims (1)		$	33,054			26,203			85,635			88,726
Total professional liability claims with indemnity payment			118			62			302			251
Total professional liability claims and incidents closed without indemnity payment			698			448			1,624			1,525
Professional Liability Claims and Incidents Reported During the Period:
Total professional liability claims reported			278			225			781			815
Total professional liability incidents reported			214			270			711			888
Total professional liability claims and incidents reported			492			495			1,492			1,703
									As of
									Sept 30, 2005			Sept 30, 2004
Total professional liability claims and incidents that remained open									4,724			5,418
Professional liability policyholders (excluding fronting arrangements) (2)									14,199			14,171
Professional liability policyholders under fronting arrangements(2)									-			126
(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. 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 September 30, 2004, 112 such policyholders previously reported under fronting arrangements have been reclassified to professional liability policyholders (excluding fronting arrangements).