East Lansing, Mich.-based medical liability insurer American Physicians Capital Inc. announced a net loss of $77.1 million, or $9.03 per share for the third quarter of 2003 as a result of reserve increases and accounting valuation allowances.
For the nine months ended Sept. 30, 2003, the company reported a net loss of $76.9 million or $8.97 per share. This compares to a net loss of $1.9 million, or 21 cents per share for the 2002 third quarter, and a net loss of $17.3 million or $1.80 per share for the nine months ended Sept. 30, 2002. The significant loss in the third quarter of 2003 was the result of a $43 million increase to professional liability reserves $28 million, net of tax and a $49.9 million charge to establish a deferred tax asset valuation allowance.
Net premiums earned in medical liability were $41 million in the third quarter of 2003, a 2.4 percent increase over the third quarter of 2002. For the first nine months of 2003, net premiums earned were $118.9 million, an increase of 10 percent from the same period in 2002. The majority of this premium increase is from the company’s rate actions, as the insured physician count at Sept. 30, 2003 has decreased 16.2 percent from Sept. 30, 2002. The decrease in physician count is due to the company’s exit from the Florida market, the discontinuance of the Ohio occurrence-based policies, and the elimination of poor risks in other markets.
The third quarter 2003 reported loss ratio was 204.2 percent, consisting of 99.5 percent on the current accident year and 104.7 percent of prior year development. These ratios compare to 111.4 percent on the 2002 accident year and 3.7 percent of prior year development for a total loss ratio of 115.1% reported in the third quarter of 2002.
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