Good morning and welcome to the First Quarter 2010 American Physicians Service Group Earnings Conference Call. My name is Andréa [ph] and I’ll be your coordinator today. This call is being webcast in listen-only format through AMPH’s corporate website at www.amph.com and you can listen to a replay of this of this call which will also be available through the website. I like to reminder to you that during this call members of AMPH’s management may make forward-looking statements. These forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially. For example, statements regarding potential developments in the industries in which the Company operates, it's ability to expand in existing markets and enter into new markets, or grow through acquisitions and to achieve positive operating results are all forward-looking statements. For a detail discussion of the risk and uncertainties that could cause the Company’s actual results to differ materially from those described in forward-looking statements, please refer to the Company’s filings with the Securities and Exchange Commission. Now I'd like turn to the call over to Ken Shifrin, Chairman and CEO of AMPH.

Thank you and welcome everyone. Also joining me today are Tim LaFrey, our President and Marc Zimmermann, our Chief Financial Officer. Our insurance operations performed very well during this quarter. We continued to make meaningful strides in adding new policyholders while enjoying excellent retention of our existing business. We also continued to moderate pricing declines with an overall 2% rate reduction on renewing business, which amounted to the lowest quarterly rate decrease since this started the soft market in 2005. We remain in very strong capital position and so during the quarter we redeemed approximately $1 million of our preferred shares and paid the annual 3% dividend on those shares several months earlier than scheduled. Our book value per share continued its upward trend growing by 3% during the quarter, while our trailing 12 month return on equity was 15%. I will now turn to Marc Zimmermann our, CFO to highlight our operating performance.

Thanks Ken. Revenues for the quarter were 20 million compared to 19.2 million in the same period last year. Net earnings for the quarter were 4.5 million or $0.65 per diluted share compared to 4.7 million or $0.67 per diluted share in the same period last year. In our insurance services segment gross written premiums were 18.6 million or an increase of approximately 6% as compared to 17.5 millions for the same period in 2009. These results were driven by excellent policyholder retention of approximately 90% and our ability to continue to grow new business in each of our markets. During the quarter we produced new business of approximately 2.7 million. We were approximately 1.2 million of our new business in Oklahoma and Arkansas resulting in a 157 new policy holders. Overall we grew our policyholder count to 6,695 at the end of the quarter, an increase of 5% since the end of year and 8% since the first quarter of last year. Financial services revenues were 1.4 millions for the quarter approximately the same as the first quarter of last year. Financial services expenses were 1.7 million for the quarter compared to 1.6 million in the first quarter of 2009. While we've been able to improve the overall performance of our financial services business in prior quarters, we continue to see depressed trading activity in this segment. However, the ongoing core cost reduction measures we've implemented have significantly offset this revenue decline. It should be noted that trading activity increased significantly in April due in part to new commission based sales tiers allowing us to record one of our best revenue months since the beginning of 2008. Net investment income totaled 2.5 million for the quarter as compared to 2.6 million in the comparable quarter last year. The proceeds…

Thanks, Marc. We continue to use a very conservative approached to value our investments, nevertheless during the quarter we only experience to write down $41,000 in the portfolio. All of which related to the all day securities we have written down previously. We also experienced the loss of 48,000 on sales of securities during the quarter. This is the significant improvement from the $1.3 million loss for the first quarter of 2009. And represents the third consecutive quarter in which our valuation impairments have been nominal. As Marc, mentioned our net investment income for the quarter was 2.5 million. Turning to the remainder the balance sheet, we continue to grow our cash and investments, which totaled approximately 273 million at the end of the quarter, up 5% from 259 million at the end of 2009. Our shareholders equity totaled 164 million at March 31, for book value per share of $23.89, compare to $23.15 at the end of 2009 or 3% growth for the quarter. Our trailing 12-month return on equity was 15% as of March 31. We continue to be opportunistic in our approached to share repurchases, and during the quarter we purchased approximately 24,000 shares at an average price of $22 per share. We believe these repurchases made significantly below book value per share are of the most benefit to our shareholders. At the end of the April, we had approximately 2.4 million remaining for share repurchases. On the liability side, our reserves of approximately 89 million, remain at the upper end of the estimated range of loss exposure, and we continue to accrue our current excellent year at the high end of the loss estimate. As Ken mentioned, we paid the annual 3% dividend or our preferred stock during the quarter and redeemed another 1 million of those shares, reducing our remaining liability to 5.5 million at the end of the quarter. In conclusion we achieved the number of milestones in the quarter. Our policyholder account reached an all time high. And in spite of our consistent policyholder growth since 2004, at the end of the quarter, we had the lowest number of claims outstanding in at least the last 10 years, and our reserves for open claim are the highest in history of the company. The fundamentals of our core insurance business, continue to strengthen across the board and we believe this validate our conservative management philosophy. With that I would like to thank everyone for taking the time to listen-in today. And we will now turn the call back over to the operator to take questions. Question-and-Answer Session

Thank you. (Operator Instructions) Our first question comes from Mike Grasher of Piper Jaffray. Please go ahead.

Thank you. Good morning everyone.

Good morning

First question I had was just around the new-- you’ve got a great deal of new business coming in, you’re at all time high in terms of the policyholders. Any discussion about taking the accident year loss ratio, higher than what we are seeing here in the first quarter.

Hey Mike this is Marc. Yeah, we look at that very, very closely every quarter, and it’s really the balancing acts, where you’re looking at the growth and exposures. And your exposure methods in relation to what are actually been paying on an incurred and paid basis. So, we evaluate that, look at that and then come up with what we believe is still a very, very conservative accident year, given the growth in policyholders offset by what we’ve been paying.

Okay. And so there is -- how much I guess forward-looking, thinking about just as the change, perhaps potential change in the claim activity in the potential line. The average paid claim -- your average paid claim is down again, this quarter. But just curious about how much forward-looking there might be involved in the process.

Yeah. I think to echo what I just said, we continued to be very conservative. We look, it’s really as a point in time when you look, and we look at frequency for the quarter, it’s down significantly. And so you know, well we’d like to take into account things have necessarily occurred. We’re just continue to take a conservative review and feel that at 71% for the quarter is a good place to come out at beginning the year.

Okay. That’s helpful. And then can you update us on the FINRA notification that you received back in April.

Yeah, this is Tim. We -- I don’t know that we can update you much, because we don’t know much more. Let me give you a little bit of flavor around that, and obviously you know like any litigation matter, we don’t want to -- we don’t want to compromise our defense. But the allegations involve a finite set of transactions that occurred almost entirely in the year 2005. In which [inaudible] is taking the position that the pricing on those, the mark-ups on those if you will exceeded the sort of a reasonable guidelines for added appropriate pricing that were in effect at the time. It is more art than science when you deal and distress securities you know --

Understood.

There were some exceptions there in the rules, particularly then I think there is more clarity now, but about that those guidelines and they were just guidelines for pricing had exceptions associated with the difficulty of finding the securities, the risk you took in securing them, that’s sort of thing. And so we’re preparing our defense for each trade around, our rationals for approving the pricing at the time.

Okay. And I guess may be this goes beyond where you can comment on but in terms of risk management around an issue like this do you have that in place or had it than in place at the time?

It was at the time. The allegation against the company is apparently that the approval process is which we had in place to manage the pricing from the brokers’ standpoint. The president of the company had to approve any transaction outside these pricing parameters that was inadequate because we approved the transactions. There is no question that, that those were reviewed and approved and so the individual our former employee that is named as -- is the person that was running the operation at the time and approved those, since that time, the generous put out more clarity around it’s pricing guidelines and we have and hear to their to the rules that they evolved overtime. Currently, the Co-CEO of that division is the compliance officer. And so that’s one of the changes we’ve made to hidden the focus on compliance in that division.

Okay, that’s helpful. And then a final question just around housekeeping item here is stat [ph] surplus, Marc, did you happen to write that?

Yes, $108.5 million.

Okay, thanks, I’ve missed it.

Do you have another question, sir?

No, I am good. Thank you.

Thank you. Our next question is from Michael Nannizzi of Oppenheimer.

Hey guys. Just a -- if I could just follow-up on my question is about this tenure actions. So do you know it at this -- so the person that you terminated that didn’t happened you with this action, he was the one that was or that person was running the department at the time?

We didn’t terminate him. He went into the [inaudible].

He went, okay, all right.

He went in to rack [ph].

I got it. Okay.

But no, he was the president of the broker-dealer.

Got it. Okay.

For nice 12 years or something like that. He was the career [inaudible] point grant in [ph] and had never deployed to combat. So he got the bug believe it or not, he decided to go back in, so he could go over there and he’s still in the army.

Got it, got it, and then you had mentioned in your April activity. I mean, is – should we just kind of interpret that as your commitment to this business or how should we interpret the increase in volume, can you talk a little bit more about that?

We're cautiously optimistic because most of the folks in that – we've been adding in that department are commissions only, and we're getting some volumes from the recent hires. And so, I don’t think you should – I don’t – we're not going to assume that we're out of the woods by any stretch of the imagination to you know, in terms of that, but we thought since we had such a significant uptick in activity, particularly from these new hires in the month of April that it was worth – that it was worth mentioning.

Got it. Okay. Okay. And then, if I could a ask question about reform. I just – I realized this topic came on, kind of came up. But as you think about the potential for new people to come on to your – to healthcare and then to be visiting your doctors. How do you think about – how do – first of all, two questions. How do you think about how that would change the risk profile of your insured doctors, one. And two, if they did and suddenly your doctors were seeing more patients, are you able to change your rates to account for higher exposure before the lost trend manifests?

Well, let me start with the first question. We – I think the consensus in the Healthcare community is that the – and it's not unanimous by any stretch of imagination, but is that – these reforms are going to result in a reduction in the quality of care, which you know could – which is going to increase the risk profile. I think until we – and I think until we can actually you know, see the change in severity you know, it’s going to be difficult coming out the stock markets to increase rates in front of that trend. I can tell you that, I think Texas in particular is going to be a beneficiary of position migration around [ph] years. I guess one of the fastest growing physician markets and its still a very under utilized, from a position standpoint a very understaffed state. But I think that these reforms, the impact they're going to have on physician incomes and combined with our favorable thought environment down here is going to increase the flow of doctors into our state which we see that as a benefit to us.

Right. But I guess what I'd say is, if you have a doctor that's seeing a 100 of patients and that are seeing 150 and you through your monitoring become aware that you need to wait until they have – they experience higher loses to adjust your pricing or can you knowing the exposures is different can you be proactive in changing price?

We can be proactive to an extent, we can't change, you know our policies our one policies, so the longest that we have between a repricing is one year.

Okay.

And so we you know, we – that's one of the fortunate things about having this is when your policies, we can react relatively quickly to changes in the pricing landscape and the risk landscape. So but that's something that we're, you know, I think everybody in this business is really looking at right now.

Got it. Okay. And then, Marc can you talk about the cash of the holding company just, I don’t know if you disclosed that already and what the remaining dividend capacity for the year is out the sub?

Okay. Cash of the holding company – cash and investments of the holding company is around 43 million and it includes about 33 to 34 million of 6 maturities that a short duration, about 6 to 7 million of equities and about 3 to 4 million of cash.

Okay.

About 43 million of the holding company. Out of the sub we have the maximum dividend we can take in 2010 is about 10.3 million and you know we anticipate and we'd hope to make that dividend up to the parent through out the year.

Got it. Okay. And then one last one if I could, just on claims, I mean, clearly claims have been declining even as you are riding more business. How do you think about capacity for handling claims and is there – if you are able to continue to grow top line and keep claims counts low is there an opportunity to see some expense ratio improvement as you are – as you optimize that infrastructure?

Well, you know, I think when you look it – we look it our headcount closely and you know, obviously we have some tenured very strong claims people. So we don’t want to lose those economies to scope.

Right.

So your balance, you know, expansion efforts and growth opportunities with making sure your headcount is consistent. And so you know I think at this point we would see that pretty much holding you know relatively flat?

Right. Okay

I think as you have more capacity in that in your infrastructure right now than what you’re able with them what you’re currently handling?

Absolutely. We have the opportunity that claims per claims adjuster. Those opportunities we see -- have our claims adjuster handle more claims, without adding headcount.

Got it, okay. Great. All right, thank you very much.

Thank you. Our next question comes from Paul Newsome with Sandler O'Neill.

Good morning, guys. Just a quick one on the [inaudible]. Is there any restrictions on buybacks or either transactions that you can do really across your businesses that would -- that this transaction is put in place. I am just trying to ask is sort of broader questions as we can just to make sure that we know, so how the actual completely will effect your business?

Well, there is no restriction on anything that we do operationally. So, it doesn’t add any restrictions fore say. The process is that we have an answer day to respond to the staff and to rebuke [ph] their allegations and we’re working on -- we are working on that now. After that, then there is apparently a negotiation. The period which our attorneys and the attorneys Funeral [ph] will evaluate whether they proceed with the formal investigation. This remember is a early warning notice that they are considering that. And so a lot of these issues get resolved in apparently the vast majority of them get resolved in this process. And as far as the process is concern that’s really all there is, to it. There is not any injunctive actions or restrictions on what we do, so by share repurchases, I mean, that sort of thing.

Great. No restrictions on your actual training practices or something like that?

No.

Okay. That was it. Thanks for call.

At this time we will conclude the question-and-answer session. Gentlemen, do you have any closing remarks today?

No, I just want to thank everybody for dialing in again today, and if you have any follow-up questions, as I know lot of you do just feel free call either Marc or me.

This concludes today's conference. Thank you for attending. You may now disconnect.