##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
   Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2009o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to    Commission File Number:
    000-32057
  American Physicians Capital,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Michigan(State or other jurisdiction
    of
    incorporation or organization)

38-3543910(IRS employer
    identification number)   1301
    North Hagadorn Road, East Lansing, Michigan 48823 (Address
    of principal executive offices, including zip
    code)
   Registrants telephone number, including area code:
 (517) 351-1150
  þ o
  Regulation S-T o o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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##### 



TABLE OF
    CONTENTS
  
  PART I. FINANCIAL INFORMATIONItem 1.

Financial StatementsCondensed Consolidated Balance Sheets


3Condensed Consolidated Statements of Income


4Condensed Consolidated Statements of
    Shareholders Equity


5Condensed Consolidated Statements of
    Comprehensive Income


6Condensed Consolidated Statements of Cash
    Flows


7Notes to Condensed Consolidated Financial
    Statements


8Item 2.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


15Item 3.

Quantitative and Qualitative Disclosures About
    Market Risk


27Item 4.

Controls and Procedures


28PART II. OTHER INFORMATIONItem 1A.

Risk Factors


30Item 2.

Unregistered Sales of Equity Securities and Use
    of Proceeds


30Item 4.

Submission of Matters to a Vote of Security
    Holders


30Item 6.

Exhibits


30Signatures


31Exhibit Index


32EX-31.1EX-31.2EX-32.1EX-99.1   2




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION  ITEM 1.
    FINANCIAL
    STATEMENTS  AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Condensed
    Consolidated Balance Sheets
  March 31,


December 31,2009


2008(Unaudited)(In thousands, except share data)ASSETSInvestments:Fixed-income securitiesAvailable-for-sale, at fair value

$
231,046


$
222,941Held-to-maturity, at amortized cost


458,928



481,750Other investments


18,963



24,320Total investments


708,937



729,011Cash and cash equivalents


118,729



101,637Premiums receivable


31,599



34,024Reinsurance recoverable


83,503



86,397Deferred federal income taxes


19,355



18,573Property and equipment, net of accumulated depreciation


8,499



8,678Other assets


25,893



27,503Total assets

$
996,515


$
1,005,823LIABILITIESUnpaid losses and loss adjustment expenses

$
645,197


$
644,396Unearned premiums


55,645



55,984Long-term debt


25,928



25,928Other liabilities


21,653



25,478Total liabilities


748,423



751,786Commitments & ContingenciesShareholders EquityCommon stock, no par value, 50,000,000 shares authorized:
    8,569,382 and 8,811,802 shares outstanding at
    March 31, 2009 and December 31, 2008, respectively






Additional
    paid-in-capital






Retained earnings


242,881



246,173Accumulated other comprehensive income:Net unrealized appreciation on investments, net of deferred
    federal income taxes


5,211



7,864Total shareholders equity


248,092



254,037Total liabilities and shareholders equity

$
996,515


$
1,005,823    3




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Income
  Three Months EndedMarch 31,2009


2008(Unaudited)(In thousands, except per share data)Net premiums written

$
28,720


$
32,175Change in net unearned premiums


586



(528
)Net premiums earned


29,306



31,647Investment income


8,190



9,957Net realized losses






(782
)Other income


223



189Total revenues and other income


37,719



41,011Losses and loss adjustment expenses


15,612



16,198Underwriting expenses


7,132



7,016Investment expenses


324



262Interest expense


385



688General and administrative expenses


263



267Total expenses


23,716



24,431Income before federal income taxes


14,003



16,580Federal income tax expense


3,916



5,206Net income

$
10,087


$
11,374Net income  per common shareBasic

$
1.15


$
1.15Diluted

$
1.13


$
1.13    4




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Shareholders
    Equity
   AccumulatedAdditional





OtherShares


Paid-in


Retained


ComprehensiveOutstanding


Capital


Earnings


Income


Total(Unaudited)(In thousands, except share data)Balance, December 31, 2008


8,811,802


$



$
246,173


$
7,864


$
254,037Comprehensive income:Net income










10,087







10,087Other comprehensive loss, net of taxes














(2,653
)


(2,653
)Total comprehensive income, net of taxes


















7,434Options exercised


123,500



1,873











1,873Shares tendered/netted in connection with option exercise


(70,720
)


(3,176
)


(105
)






(3,281
)Cash dividends to shareholders, $0.11 per share










(959
)






(959
)Excess tax benefits from share-based awards






1,303











1,303Purchase and retirement of common stock


(295,200
)






(12,315
)






(12,315
)Balance, March 31, 2009


8,569,382


$



$
242,881


$
5,211


$
248,092    AccumulatedAdditional





OtherShares


Paid-in


Retained


ComprehensiveOutstanding


Capital


Earnings


Income


Total(Unaudited)(In thousands, except share data)Balance, December 31, 2007


10,127,740


$



$
257,502


$
6,055


$
263,557Comprehensive income:Net income










11,374







11,374Other comprehensive income, net of taxes














1,411



1,411Total comprehensive income, net of taxes


















12,785Options exercised


10,960



168











168Shares tendered/netted in connection with option exercise


(1,448
)


(63
)










(63
)Cash dividends to shareholders, $0.10 per share










(980
)






(980
)Excess tax benefits from share-based awards






101











101Fair value compensation of share-based awards






19











19Purchase and retirement of common stock


(404,000
)


(225
)


(17,120
)






(17,345
)Balance, March 31, 2008


9,733,252


$



$
250,776


$
7,466


$
258,242    5




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AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Comprehensive Income
  Three Months EndedMarch 31,2009


2008(Unaudited)(In thousands)Net income

$
10,087


$
11,374Other comprehensive (loss) income:Unrealized (depreciation) appreciation on available-for-sale
    investment securities arising during the period


(3,779
)


1,514Amortization of net unrealized appreciation on
    held-to-maturity
    investment securities related to their transfer from the
    available-for-sale category


(303
)


(202
)Adjustment for net realized losses on available-for-sale
    investment securities included in net income






858Other comprehensive (loss) income before tax


(4,082
)


2,170Deferred federal income tax (benefit) expense


(1,429
)


759Other comprehensive (loss) income


(2,653
)


1,411Comprehensive income

$
7,434


$
12,785    6




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AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Cash Flows
  Three Months Ended March 31,2009


2008(Unaudited)(In thousands)Cash flows from (for) operating activitiesNet income

$
10,087


$
11,374Adjustments to reconcile net income to net cash from operating
    activities:Depreciation and amortization


1,326



912Net realized losses






782Deferred federal income taxes


648



1,123Current federal income taxes


3,306



4,083Excess tax benefits from share-based awards


(1,303
)


(101
)Share-based compensation






19Changes in:Unpaid loss and loss adjustment expenses


801



(2,733
)Unearned premiums


(340
)


840Other assets and liabilities


(234
)


(3,491
)Net cash from operating activities


14,291



12,808Cash flows from (for) investing activitiesPurchasesAvailable-for-sale  fixed income


(5,959
)


(11,848
)Held-to-maturity  fixed income






(46,550
)Other investments


(1,314
)


Property and equipment


(50
)


(1,286
)Proceeds from sales and maturitiesAvailable-for-sale  fixed income


395



18,034Held-to-maturity  fixed income


22,085



65,231Other


108



Net cash from investing activities


15,265



23,581Cash flows from (for) financing activitiesCommon stock repurchased


(12,315
)


(17,345
)Excess tax benefits from share-based awards


1,303



101Taxes paid in connection with net option exercise


(1,448
)


Change in payable for shares repurchased


915



(2,803
)Cash dividends paid


(959
)


(980
)Proceeds from stock options exercised


40



105Net cash for financing activities


(12,464
)


(20,922
)Net increase in cash and cash equivalents


17,092



15,467Cash and cash equivalents, beginning of period


101,637



87,498Cash and cash equivalents, end of period

$
118,729


$
102,965    7




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes
    to Condensed Consolidated Financial Statements
  1.
    Significant
    Accounting Policies  Basis
    of Consolidation and Reporting
    Form 10-Q Rule 10-01 Regulation S-X Form 10-Q
  Form 10-K
  Reclassifications
    Use of
    Estimates
      Nature
    of Business
   8




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
  2.
    Effects
    of New Accounting Pronouncements  Fair Value Measurements No. 157-3, Determining Fair Value of a Financial Asset When the Market
    for that Asset is Not Active (FSP 157-3), No. 157-2, Effective Date of FASB Statement No. 157 (FSP 157-2), FSP 157-2
  No. 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly (FSP 157-4), FSP 157-3 No. 115-2 124-2 Recognition and Presentation of Other-Than-Temporary
    Impairments (FSP 115-2), No. 107-1 28-1 Interim Disclosures about Fair Value of Financial Instruments (FSP 107-1), Disclosures about Fair Value of Financial Instruments
  The Hierarchy of Generally Accepted Accounting
    Principles. Forms 10-Q 10-K
 9




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
  3.
    Income
    Per Share    Three Months EndedMarch 31,2009


2008(In thousands, except per share data)Numerator for basic and diluted income per common share:Net income

$
10,087


$
11,374Denominator:Denominator for basic income per common share 
    weighted average shares outstanding


8,739



9,916Effect of dilutive stock options and awards


151



194Denominator for diluted income per common share 
    adjusted weighted average shares outstanding


8,890



10,110Net income  basic

$
1.15


$
1.15Net income  diluted

$
1.13


$
1.13     4.
    Investments    March 31, 2009Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost/Cost


Gains


Losses


Fair Value(In thousands)Available-for-saleStates and political subdivisions

$
149,731


$
8,606


$



$
158,337Corporate securities


70,964



2,732



(1,061
)


72,635Mortgage-backed securities


95







(21
)


74Total fixed-income securities


220,790



11,338



(1,082
)


231,046Equity securities(1)


17,829



52



(3,838
)


14,043Total available-for-sale securities

$
238,619


$
11,390


$
(4,920
)

$
245,089   10




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
  December 31, 2008Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost/Cost


Gains


Losses


Fair Value(In thousands)Available-for-saleStates and political subdivisions

$
150,098


$
5,844


$
(20
)

$
155,922Corporate securities


65,381



2,898



(1,339
)


66,940Mortgage-backed securities


99







(20
)


79Total fixed-income securities


215,578



8,742



(1,379
)


222,941Equity securities(1)


16,515



2,885







19,400Total available-for-sale securities

$
232,093


$
11,627


$
(1,379
)

$
242,341     (1)
    
    Available-for-sale equity securities are included in Other
    investments on the accompanying Condensed Consolidated
    Balance Sheets.    March 31, 2009Gross


GrossUnrecognized


UnrecognizedCarrying


Holding


Holding


EstimatedValue


Gains


Losses


Fair Value(In thousands)Held-to-maturityU.S. government obligations

$
44,435


$
248


$



$
44,683States and political subdivisions


227,384



7,886



(5
)


235,265Corporate securities


37,663



565



(276
)


37,952Mortgage-backed securities


149,446



2,352



(35
)


151,763Total held-to-maturity fixed-income securities

$
458,928


$
11,051


$
(316
)

$
469,663   December 31, 2008Gross


GrossUnrecognized


UnrecognizedCarrying


Holding


Holding


EstimatedValue


Gains


Losses


Fair Value(In thousands)Held-to-maturityU.S. government obligations

$
64,458


$
676


$



$
65,134States and political subdivisions


228,685



4,567



(291
)


232,961Corporate securities


37,824



369



(409
)


37,784Mortgage-backed securities


150,783



1,435



(755
)


151,463Total held-to-maturity fixed-income securities

$
481,750


$
7,047


$
(1,455
)

$
487,342  11




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
      5.
    Fair
    Value Measurements  Fair Value Measurements
  
    Level 1: Quoted prices (unadjusted) for identical assets or
    liabilities in active markets that the entity has the ability to
    access as of the measurement date.
    Level 2: Significant observable inputs other than
    Level 1 prices such as quoted prices for similar assets or
    liabilities in active markets; quoted prices for identical or
    similar assets or liabilities in markets that are not active; or
    other inputs that are observable or can be derived from or
    corroborated by observable market data by correlation or other
    means.
    Level 3: Significant unobservable inputs that reflect a
    reporting entitys own assumptions about the assumptions
    that market participants would use in pricing an asset or
    liability.    Valuation
    of Investments
    Investments
    Measured at Fair Value on a Recurring Basis
  Available-for-sale fixed-income securities
 12




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
    Available-for-sale equity securities
    March 31, 2009Total


Level 1


Level 2


Level 3(In thousands)Available-for-sale investments:Fixed-income securities

$
231,046


$



$
224,840


$
6,206Equity securities(1)


14,043



14,043







Total

$
245,089


$
14,043


$
224,840


$
6,206   December 31, 2008Total


Level 1


Level 2


Level 3(In thousands)Available-for-sale investments:Fixed-income securities

$
222,941


$



$
216,722


$
6,219Equity securities(1)


19,400



19,400







Total

$
242,341


$
19,400


$
216,722


$
6,219     (1)
    
    Included in other investments on the accompanying Condensed
    Consolidated Balance Sheets.      For the Three MonthsEnded March 31,2009


2008(In thousands)Available-for-sale fixed-income securitiesBalance at January 1,

$
6,219


$
6,911Principal paydowns


(16
)


Net unrealized appreciation included in other comprehensive
    income


3



153Balance at March 31,

$
6,206


$
7,064   Investment
    Measured at Fair Value on a Nonrecurring Basis
  Held-to-maturity fixed-income securities
 13




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##### Table of Contents



AMERICAN
    PHYSICIANS CAPITAL, INC. AND SUBSIDIARIES
  Notes to
    Condensed Consolidated Financial
    Statements  (Continued)
    Other
    Assets and Liabilities Measured at Fair Value on a Nonrecurring
    Basis
  and/or
 14




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K
    Form 10-K
  
    Increased competition could adversely affect our ability to sell
    our products at premium rates we deem adequate, which may result
    in a decrease in premium volume.
    Our reserves for unpaid losses and loss adjustment expenses are
    based on estimates that may prove to be inadequate to cover our
    losses.
    An interruption or change in current marketing and agency
    relationships could reduce the amount of premium we are able to
    write.
    If we are unable to obtain or collect on ceded reinsurance, our
    results of operations and financial condition may be adversely
    affected.
    Our geographic concentration in certain Midwestern states and
    New Mexico ties our performance to the business, economic,
    regulatory and legislative conditions in those states.
    A downgrade in the A.M. Best Company rating of our primary
    insurance subsidiary could reduce the amount of business we are
    able to write.
    Changes in interest rates could adversely impact our results of
    operation, cash flows and financial condition.
    Market illiquidity and volatility associated with the current
    financial crisis makes the fair values of our investments
    increasingly difficult to estimate, and may have other
    unforeseen consequences that we are currently unable to predict.
    The unpredictability of court decisions could have a material
    impact on our operations.
    Our business could be adversely affected by the loss of one or
    more key employees.
    The insurance industry is subject to regulatory oversight that
    may impact the manner in which we operate our business, our
    ability to obtain future premium rate increases, the type and
    amount of our investments, the levels of capital and surplus
    deemed adequate to protect policyholder interests, or the
    ability of our insurance subsidiaries to pay dividends to the
    holding company.
    Our status as an insurance holding company with no direct
    operations could adversely affect our ability to meet our debt
    obligations and fund future cash dividends and share repurchases. 15




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##### Table of Contents




    Legislative or judicial changes in the tort system may have
    adverse or unintended consequences that could materially and
    adversely affect our results of operations and financial
    condition.
    Applicable law and various provisions in our articles and bylaws
    may prevent and discourage unsolicited attempts to acquire
    APCapital that you may believe are in your best interests or
    that might result in a substantial profit to you.    Overview
    of APCapital
      Form 10-K.
  Description
    of Ratios and Other Metrics Analyzed
    Underwriting Gain or Loss:
  Loss Ratio:
 16




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##### Table of Contents



Underwriting Expense Ratio:
  Combined Ratio:
  Investment Yield:
          Critical
    Accounting Policies
   17




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##### Table of Contents



Form 10-K.
  Results
    of Operations  Three Months Ended March 31, 2009
    Compared to the Three Months Ended March 31, 2008
    Change2009


2008


Dollar


Percentage(2)(Dollars in thousands)Direct premiums written

$
30,121


$
33,671


$
(3,550
)


(10.5
)%Net premiums written

$
28,720


$
32,175


$
(3,455
)


(10.7
)%Net premiums earned

$
29,306


$
31,647


$
(2,341
)


(7.4
)%Losses and loss adjustment expensesCurrent year losses


23,836



24,618



(782
)


3.2
%Prior year losses


(8,224
)


(8,420
)


196



(2.3
)%Total


15,612



16,198



(586
)


3.6
%Underwriting expenses


7,132



7,016



116



(1.7
)%Total underwriting gain


6,562



8,433



(1,871
)


(22.2
)%Other revenue (expense) itemsInvestment income


8,190



9,957



(1,767
)


(17.7
)%Net realized losses






(782
)


782



100.0
%Other income


223



189



34



18.0
%Other expenses(1)


(972
)


(1,217
)


245



20.1
%Total other revenue and expense items


7,441



8,147



(706
)


(8.7
)%Income before federal income taxes


14,003



16,580



(2,577
)


(15.5
)%Federal income tax expense


3,916



5,206



(1,290
)


24.8
%Net income

$
10,087


$
11,374


$
(1,287
)


(11.3
)%Loss Ratio:Accident year


81.3
%


77.8
%






3.5
%Prior years


(28.0
)%


(26.6
)%






(1.4
)%Calendar year


53.3
%


51.2
%






2.1
%Underwriting expense ratio


24.3
%


22.2
%






2.1
%Combined ratio


77.6
%


73.4
%






4.2
%Pre-tax investment yield


3.98
%


4.71
%






(0.7
)%Net-of-tax
    investment yield


3.11
%


3.43
%






(0.3
)%  18




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##### Table of Contents



(1)
    
    Other expenses includes investment expenses, interest expense,
    general and administrative expenses and other expenses as
    reported in the unaudited Condensed Consolidated Statements of
    Income included elsewhere in this report.(2)
    
    The percentage change represents the items change relative to
    its impact on net income. A positive percentage change indicates
    a change in that line item representing an increase to net
    income, while a negative percentage change represents a decrease
    to net income.  Overview
    Premiums
    Written and Earned
    Change2009


2008


Dollar


Percentage(Dollars in thousands)Direct premiums writtenMichigan

$
8,669


$
9,840


$
(1,171
)


(11.9
)%Illinois


8,347



8,554



(207
)


(2.4
)%Ohio


5,873



7,447



(1,574
)


(21.1
)%New Mexico


4,809



5,072



(263
)


(5.2
)%Kentucky


1,863



2,137



(274
)


(12.8
)%Other


560



621



(61
)


(9.8
)%Total

$
30,121


$
33,671


$
(3,550
)


(10.5
)%Net premiums written

$
28,720


$
32,175


$
(3,455
)


(10.7
)%Ratio of net premiums written to direct


95.3
%


95.6
%






(0.3
)%      19




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##### Table of Contents



Loss
    and Loss Adjustment Expenses
        Form 10-K.
  Underwriting
    Expenses
   20




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##### Table of Contents



Investment
    Income
    Net
    Realized Losses
  other-than-temporary
  Other
    Expenses
    Income
    Taxes
    Liquidity
    and Capital Resources
      Parent
    Company
  Form 10-K.
 21




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##### Table of Contents



Form 10-Q,
    Consolidated
      2009


2008(Dollars in thousands)Cash from (for):Premiums received

$
30,844


$
33,375Investment income collected


9,106



9,619Loss and loss adjustment expenses paid


(12,136
)


(15,833
)Commissions and other acquisition costs


(3,245
)


(3,222
)Net reinsurance impact


2,445



1,027Income taxes paid


(1,266
)


(101
)Salaries and other employee costs


(8,859
)


(8,937
)Other


(2,598
)


(3,120
)Net cash flows from operations

$
14,291


$
12,808  22




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##### Table of Contents



Financial
    Condition
    Statutory
    Capital and Surplus
    Reserves
    for Unpaid Losses and Loss Adjustment Expenses
      March 31,


December 31,2009


2008


Change


% Change(In thousands, except claim and per claim data)Net case reserves

$
255,804


$
236,093


$
19,711



8.3
%Number of open claims


1,429



1,418



11



0.8
%Average net case reserve per open claim

$
179,009


$
166,497


$
12,512



7.5
%Net IBNR reserves

$
284,036


$
303,856


$
(19,820
)


(6.5
)%Total net reserves

$
539,840


$
539,949


$
(109
)


0.0
%  23




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##### Table of Contents



24




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##### Table of Contents



Three MonthsEnded


Year EndedMarch 31, 2009


December 31, 2008(In thousands)Beginning balance, gross

$
644,396


$
664,117Less, reinsurance recoverables


(81,546
)


(104,648
)Net reserves, beginning balance


562,850



559,469Incurred related toCurrent year


23,836



97,490Prior years


(8,224
)


(32,179
)15,612



65,311Paid related toCurrent year


(339
)


(3,012
)Prior years


(14,642
)


(58,918
)(14,981
)


(61,930
)Net reserves, ending balance


563,481



562,850Plus, reinsurance recoverables


81,716



81,546Ending balance, gross

$
645,197


$
644,396Development as a % of beginning net reserves


(1.5
)%


(5.8
)%     Investments
    March 31, 2009


December 31, 2008Carrying


% of


Carrying


% ofValue(1)


Portfolio


Value(1)


PortfolioU.S. government obligations

$
44,435



6.4
%

$
64,458



9.1
%Tax-exempt municipal securities


384,651



55.7
%


383,547



54.4
%Corporate securities


111,368



16.1
%


105,824



15.0
%Mortgage-backed securities


149,520



21.7
%


150,862



21.4
%Total fixed-income securities

$
689,974



100.0
%

$
704,691



100.0
%     (1)
    
    Carrying value for available-for-sale securities is fair value,
    whereas held-to-maturity securities are carried at amortized
    cost.   25




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##### Table of Contents



March 31, 2009


December 31, 2008Carrying


% of


Carrying


% ofRating

Value(1)


Total


Value(1)


TotalAAA

$
348,979



50.6
%

$
377,392



53.6
%AA


248,558



36.0
%


234,543



33.3
%A


63,431



9.2
%


63,723



9.0
%BBB


22,800



3.3
%


22,812



3.2
%683,768



99.1
%


698,470



99.1
%Private Placement


6,206



0.9
%


6,221



0.9
%Total

$
689,974



100.0
%

$
704,691



100.0
%Average Rating


AA+







AA+     (1)
    
    Carrying value is fair value for available-for-sale securities
    and amortized cost for held-to-maturity securities.      Other
    Significant Balance Sheet Items
       26




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##### Table of Contents



Contractual
    Obligations and Off-Balance Sheet Arrangements
  Form 10-K Form 10-Q,
  Effects
    of New Accounting Pronouncements
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  General
        Qualitative
    Information About Market Risk
         27




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##### Table of Contents



Quantitative
    Information About Market Risk
  Interest
    Rate Risk
    March 31, 2009


December 31, 2008Portfolio


Change in


Modified


Portfolio


Change in


ModifiedChange in Rates

Value


Value


Duration


Value


Value


Duration(Dollars in thousands)


(Dollars in thousands)+2%

$
217,972


$
(13,074
)


2.94


$
209,579


$
(13,362
)


3.22+1%


224,564



(6,482
)


2.95



216,320



(6,621
)


3.160


231,046







3.21



222,941







3.43-1%


239,152



8,106



3.26



231,609



8,668



3.50-2%


247,033



15,987



3.32



239,957



17,016



3.57   Equity
    Price Risk
    Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
   28




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##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
   29




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##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1A.
    Risk
    Factors  Form 10-K
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.    Maximum Dollar Value ofTotal Number


Shares that May Yet BeTotal





of Shares


Repurchased Under the Plans orNumber of


Average


Repurchased as


ProgramsShares


Price Paid


Part of Publicly


Discretionary


Rule 10b5-1Repurchased


per Share


Announced Plans


Plan(a)


Plan(b)For the month ended January 31, 2009


54,000


$
42.10



54,000


$
21,409,312


$
24,538,131For the month ended February 28, 2009


65,300


$
43.18



65,300


$
20,292,414


$
22,835,442For the month ended March 31, 2009


175,900


$
41.06



175,900


$
17,148,519


$
18,757,048For the three months ended March 31, 2009


295,200


$
41.72



295,200


$
17,148,519


$
18,757,048     (a)
    
    On February 7, 2008, the Board of Directors authorized the
    repurchase of additional common shares with a cost of up to
    $25 million at managements discretion. The timing of
    the repurchases and the number of shares to be bought at any
    time depend on market conditions and the Companys capital
    resources and requirements. The discretionary plan has no
    expiration date and may be terminated or discontinued at any
    time or from time to time.(b)
    
    On December 4 and 11, 2008, the Board authorized the repurchase
    of an additional $10 million and $20 million,
    respectively, of the Companys common shares pursuant to
    the
    Rule 10b5-1
    plan in 2008, as well as the rollover of any unused
    authorization into 2009. Such unused
    Rule 10b5-1
    authorizations totalled $26,811,583 at December 31, 2009.
    The
    Rule 10b5-1
    plan share repurchases will continue to be made pursuant to a
    formula in the plan, and the plan will expire when all of the
    allocated dollars in the plan have been used. The Company may
    terminate the
    Rule 10b5-1
    plan at any time.  Item 4.
    Submission
    of Matters to a Vote of Security Holders    Number of VotesNominee

For


Against


WithheldBilly B. Baumann, M.D.


7,693,995







239,314R. Kevin Clinton


7,694,001







239,308Larry W. Thomas


7,691,127







242,182   Number of Votes


BrokerFor


Against


Abstain


Non-VotesProposal to ratify appointment of BDO Seidman, LLP as the
    Companys independent registered public accountants


7,920,408



10,548



2,351



2   Item 6.
    Exhibits  Exhibits.
   30




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##### Table of Contents



SIGNATURES      By:
    /s/  R.
    Kevin Clinton     By:
    /s/  Frank
    H. Freund   
   31




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##### Table of Contents



EXHIBIT INDEX  Exhibit No.

Exhibit Description31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934.31
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    under the Securities Exchange Act of 1934.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350 and
    Rule 13a-14(b)
    under the Securities Exchange Act of 1934.99
.1

Fixed-Income Security Detail of American Physicians Capital,
    Inc. and Subsidiaries Investment Portfolio as of
    March 31, 2009.  32