Document:

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                                                                   EXHIBIT 10.12

                               SUB-AGENT AGREEMENT
                               (M.I.S. AND O'NEAL)

         This Agreement is made between SCW AGENCY GROUP, INC. (hereafter SCW),
a Michigan corporation with home office at 2501 Coolidge Road, Suite 300, East
Lansing, Michigan and Florida office at 225 NE Mizner Blvd., Suite 680, Boca
Raton, Florida, and MANAGED INSURANCE SERVICES, INC. (hereafter Sub-Agent), a
Florida insurance agency with offices at 2760 N.E. 23rd Place, Pompano Beach,
Florida 33062.

                                    RECITALS

         A. SCW has been appointed by Mutual Insurance Corporation Of America
(hereafter MICOA) as an agent authorized to sell MICOA health care providers
professional liability insurance to Florida health care providers. Prior to
November 1, 1999, SCW's name was Stratton, Cheeseman & Walsh, Inc.

         B. Sub-Agent is an insurance agency which is duly licensed to sell
health care providers professional liability insurance in the State of Florida.

         C. SCW and Sub-Agent wish to enter into this Agreement, under which
Sub-Agent will assist SCW in selling MICOA health care providers professional
liability insurance in the territory identified in this Agreement.

         D. This Agreement must be approved by MICOA before it will become
effective.

         NOW THEREFORE, SCW and Sub-Agent agree as follows:

         1. Appointment as Agent. By its approval of this Agreement, MICOA
approves the appointment of Sub-Agent as an insurance agent authorized to sell
MICOA health care providers professional liability insurance in association with
SCW, as set forth in this Agreement.

         2. Territory. The territory covered by this Agreement is the State of
Florida. Sub-Agent will not be an exclusive agent within this territory.

         3. Working Relationship. The parties agree that Sub-Agent will work
with and through SCW, and SCW will pay Sub-Agent a portion of the commission SCW
receives on MICOA sales in the territory, as further provided below. Sub-Agent
will submit insurance applications directly to MICOA. Sub-Agent will not bill or
collect MICOA premiums, as those functions are performed by MICOA or by its
subsidiary, MICOA Management Company, Inc. (hereafter MMC).

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         4. Sub-Agent Responsibilities.

                  A. Sub-Agent will sell MICOA insurance in an ethical manner,
in compliance with all applicable laws and regulations, and in accordance with
MICOA procedures, directives, marketing programs, and instructions.

                  B. Sub-Agent will designate those individuals who will perform
services under this Agreement, and will obtain SCW's approval of such
individuals.

                  C. At the close of each business day, Sub-Agent will forward
all applications for MICOA coverage to MICOA for processing.

                  D. Sub-Agent will make its records pertaining to MICOA
business available for inspection at any reasonable time by a representative of
MICOA, MMC, or SCW.

                  E. Sub-Agent will not initiate advertising of any nature
concerning MICOA products without the prior approval of SCW and MICOA.

                  F. Sub-Agent will promptly report to MICOA all claims and
losses of which Sub-Agent has knowledge, and will properly notify MICOA when
Sub-Agent receives notice of the commencement of any related legal action.
Sub-Agent will refrain from admitting or denying liability on the part of MICOA
in connection with any claim or lawsuit.

                  G. All supplies, including standard forms and blank policies
furnished by MICOA and any copies or other reproductions of them, shall remain
the property of MICOA and shall be returned to MICOA or its representative upon
demand.

                  H. If Sub-Agent receives any payments on behalf of MICOA,
Sub-Agent will be deemed a trustee of MICOA in connection with such payments and
will promptly submit such money to MICOA.

                  I. Sub-Agent shall maintain errors and omissions insurance to
cover its own acts in performing under this Agreement, in an amount of not less
than $1,000,000, and shall provide proof of such coverage to SCW.

                  J. Sub-Agent agrees that it will not solicit or accept agent
of record letters for any business which is currently written by MICOA.

                  K. Sub-Agent will submit all new health providers professional
liability risks to MICOA first for its evaluation for underwriting, policy
issuance, and billing. Sub-Agent will also submit to MICOA first the renewal of
any risks already insured by MICOA. Upon declination by MICOA, Sub-Agent may
place the risk with other carriers. Sub-Agent may represent other insurance
companies, subject to the provisions of this paragraph.

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         5. SCW Responsibilities.

                  A. SCW will pay Sub-Agent the compensation provided in
paragraph 6 below on business produced and written by Sub-Agent in the territory
pursuant to this Agreement.

                  B. SCW will provide training, as necessary, in MICOA products
and procedures to the Sub-Agent's designated individuals.

                  C. SCW will provide consultation support to Sub-Agent, and
when requested will assist Sub-Agent with large accounts.

                  D. SCW will provide marketing support to Sub-Agent, which may
include physician lists and information concerning MICOA programs.

         6. Compensation.

                  A. SCW will pay Sub-Agent commissions in accordance with the
attached Commission Schedule on premium reported and paid to MICOA on business
produced by Sub-Agent during the term of this Agreement. Sub-Agent agrees to
refund to SCW unearned commission on policy cancellations or reductions at the
same rate at which such commissions were originally paid.

                  B. SCW will pay Sub-Agent within 30 days after the end of the
month in which MICOA has received its premium payment for the business written,
subject to any deduction for return commissions due from Sub-Agent.

                  C. MICOA or SCW may revise the commission rate specified in
any commission schedule by giving Sub-Agent not less than 60 days' notice,
provided that such revision shall not apply to installment or endorsement
premiums payable on policies already in force.

                  D. MICOA has reserved the right to determine which agent will
receive credit for the sale in the event any conflicts arise between insurance
agents.

                  E. The commissions payable to Sub-Agent under this Agreement
will be for business produced by Sub-Agent, and not for any other business
written directly by MICOA or written by SCW or other agents or sub-agents.

         7. Independent Contractor. Sub-Agent's performance under this Agreement
will be as an independent contractor. The compensation provided in this
Agreement shall be the sole compensation due Sub-Agent as a result of this
Agreement. Sub-Agent shall be responsible for its own expenses and liabilities
of doing business.

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         8. Ownership of Expirations.

                  A. In the event of termination of this Agreement, and provided
that Sub-Agent is not in default in any financial obligation due MICOA or SCW,
Sub-Agent's records and use and control of expirations shall remain Sub-Agent's
property. However, Sub-Agent agrees to offer to sell to MICOA Sub-Agent's
ownership interest in the expirations for the MICOA insurance produced by
Sub-Agent. The terms of such sale will be as negotiated and mutually agreed by
Sub-Agent and MICOA at such time.

                  B. If Sub-Agent is in default in any financial obligation due
MICOA or SCW, then the ownership of Sub-Agent's records and use and control of
expirations will rest with MICOA and SCW, and MICOA and SCW shall have the right
to make such use as they deem fit of Sub-Agent's records, the expirations, and
MICOA's own records. In the event of such default, MICOA and SCW shall have the
right without releasing Sub-Agent in any way, to communicate with insureds and
attempt to make collection directly of any premiums due or to become due.

         9. Termination.

                  A. This Agreement may be terminated by SCW or Sub-Agent with
or without cause upon 60 days' written notice, and may be terminated by MICOA
with or without cause upon 90 days' written notice.

                  B. This Agreement will terminate immediately and automatically
if any public authority cancels or declines to renew Sub-Agent's license as an
insurance agency.

                  C. This Agreement will terminate immediately and automatically
if the agency agreement between MICOA and SCW is terminated.

                  D. This Agreement may be terminated immediately by SCW or
MICOA if Sub-Agent is delinquent in either accounting or payment of monies due
to MICOA, or in the event of gross or willful misconduct, fraud or material
misrepresentation.

         10. Non-Solicitation Agreement

                  A. If this Agreement is terminated by SCW or MICOA under
paragraph 9.A. above, then for a two-year period following such termination SCW
will not directly or indirectly solicit, sell, or write health care providers
professional liability insurance for any MICOA insureds which were produced by
Sub-Agent and for which Sub-Agent has retained the expiration rights under
paragraph 8 above.

                  B. If this Agreement is terminated by Sub-Agent under
paragraph 9.A. above, then for a two-year period following such termination
Sub-Agent will not directly or indirectly solicit, sell, or write health care
providers professional liability insurance for any MICOA insureds

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except those insureds which were produced by Sub-Agent and for which Sub-Agent
has retained the expiration rights under paragraph 8 above.

                  C. If either Sub-Agent or SCW does a broad solicitation which
incidentally includes some insureds covered by this Non-Solicitation Agreement,
but such solicitation is not targeted at such insureds, then this incidental
solicitation shall not be considered a violation of this Non-Solicitation
Agreement so long as insurance is not sold to such insureds either directly or
indirectly during the two-year period.

                  D. This Non-Solicitation Agreement does not affect any
separate agreement or obligation which either party may have to MICOA or MICOA
Management Company, Inc., including but not limited to the Employment Agreement
between Daniel R. O'Neal and MICOA Management Company, Inc.

         11. Assignment. Neither party may assign its rights or obligations
under this Agreement.

         12. Florida Law. This Agreement shall be interpreted and enforced under
the laws of the State of Florida.

         13. Binding Upon Principal. Daniel R. O'Neal agrees that the provisions
of this Agreement will also be binding upon him in his individual capacity.

         14. Entire Agreement. This Agreement constitutes the entire agreement
between SCW and Sub-Agent and supersedes any prior negotiations. Any amendment
to this Agreement must be in writing and signed by both SCW and Sub-Agent. This
Agreement does not supersede any agreements between Sub-Agent or Daniel R.
O'Neal and MICOA or Stratton-Cheeseman Management Company or their successors.

         15. Effective Date. This Agreement shall not become effective until it
has been approved by MICOA. The effective date of this Agreement shall be the
date indicated next to the signature for the last entity whose approval is
needed.

                                     SCW AGENCY GROUP, INC.

DATED: April 11, 2000                By: /s/ Terrence L. Walsh
       ----------------------           ----------------------------------------
                                            Its CEO
                                               ---------------------------------

                                     Business Address:
                                     2501 Coolidge Road, Ste. 300, P.O. Box 4040
                                     East Lansing, Michigan 48826-4040
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                                      MANAGED INSURANCE SERVICES, INC.

DATED: April 17, 2000                 By: /s/ Daniel R. O'Neal
       --------------                    ---------------------------------------

                                      Its President
                                         ---------------------------------------

                                      Business Address:

                                      2760 Northeast 23rd Place
                                      ------------------------------------------
                                      Pompano, FL 33062
                                      ------------------------------------------

                                      ------------------------------------------

                             and      By: /s/ Daniel R. O'Neal
                                         ---------------------------------------
                                           Daniel R. O'Neal, Individually

APPROVAL of this Agreement is hereby given on behalf of Mutual Insurance
Corporation Of America. Mutual Insurance Corporation Of America hereby
authorizes Managed Insurance Services, Inc. to act as its agent in accordance
with the terms of this Agreement.

DATED: May 4, 2000                      By: /s/ Stephen L. Byrnes
       ----------------------              -------------------------------------

                                             Its CMO
                                                --------------------------------
                                        Business Address:
                                        1301 N. Hagadorn Road
                                        P.O. Box 1471
                                        East Lansing, MI 48826-1471

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                               COMMISSION SCHEDULE

         SCW Agency Group, Inc. (SCW) will pay Managed Insurance Services, Inc.
(Sub-Agent) the following commission on MICOA health care providers professional
liability insurance business produced by Sub-Agent pursuant to the Sub-Agent
Agreement between the parties:

                  New business      9% of the annual premium
                  Renewal business  9% of the annual premium

The above commission rates shall apply to insurance policies issued during the
term of the Sub-Agent Agreement with effective or anniversary dates after May 1,
2000.

                                       7<PAGE>   1
                                                                   EXHIBIT 10.13

                           [ABN AMRO INC. LETTERHEAD]

Mr. William B. Cheeseman
Chief Executive Officer
American Physicians Capital, Inc.
1301 North Hagadorn Road
East Lansing, Michigan 48823

Dear Bill:

         ABN AMRO Incorporated ("AAI" or the "Managing Underwriter") is pleased
to set forth the terms of this engagement letter agreement (the "Agreement")
relating to our retention in connection with the proposed conversion of Mutual
Insurance Corporation of America ("MICOA") and the proposed offering of shares
of common stock (the "Shares") in American Physicians Capital, Inc. (the
"Company") in: (i) a subscription offering to policyholders, officers and
directors of the Company (the "Subscription Offering"); (ii) a best efforts
offering to other people with whom the Company has a relationship (the "Best
Efforts Offering"); and (iii) a firm commitment underwritten offering to all
other persons (the "Underwritten Offering," and, collectively with the Best
Efforts Offering and Subscription Offering, the "Offerings").

1.      DESCRIPTION OF ENGAGEMENT.

        (a) Conversion. The Company and AAI hereby agree that AAI will act as
            Lead Advisor to the Company on its proposed conversion. In this
            regard and subject to the terms of this letter, AAI will, or will
            stand ready to, provide advice in connection with the Plan of
            Conversion, including:

            (i)   the structuring of the conversion and the Offerings;

            (ii)  making itself available to assist management of the Company
                  with appropriate presentations regarding the conversion to the
                  Company's Board of Directors;

            (iii) conducting a thorough financial review of the Company,
                  including an evaluation of its financial condition and
                  prospects;

            (iv)  assisting in the preparation of the Plan of Conversion and
                  related documentation;

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[ABN AMRO INC. LOGO]

            (v)   assisting in the preparation of the Registration Statement
                  with respect to the Offerings to be filed with the Securities
                  and Exchange Commission;

            (vi)  providing advice in connection with the execution of the
                  Offerings, including updating management on market conditions
                  and pricing considerations; and

            (vii) reviewing the report issued by the independent appraiser
                  establishing the pro forma market valuation of the converted
                  company and the valuation range.

        (b) Offerings. The Company hereby agrees that should it proceed with the
            Offerings, it shall retain AAI (through its ABN AMRO Rothschild
            division) to serve, and AAI, subject to the terms of this Agreement
            (including without limitation Paragraph 12 hereof), agrees to act,
            as sole bookrunner and lead manager of the Underwritten Offering and
            as placement agent of the Subscription Offering and the Best Efforts
            Offering.

            In the capacity of lead manager and subject to the terms of this
            Agreement, AAI proposes to organize and manage a group of
            underwriters who will purchase from the Company the Shares to be
            sold in the Underwritten Offering. The Managing Underwriter will be
            responsible for selecting the members of the underwriting syndicate,
            and determining the role of each syndicate member, including,
            without limitation, underwriting commitment, selling retention and
            the allocation of syndicate expenses, sales commissions and
            underwriting and management fees. AAI will not include any firm in
            the underwriting syndicate without the approval of the Company,
            which approval will not be unreasonably withheld.

            The terms of this Agreement shall extend from the date of this
            letter for a period of twelve months thereafter, and may be extended
            on a month-to-month basis by mutual written consent of the parties
            hereto, hereinafter as it may be extended referred to as the "Term."

2.  UNDERWRITTEN OFFERING. It is presently contemplated that the Underwritten
    Offering will consist of all unsold Shares remaining to be sold by the
    Company, after the termination of the Subscription Offering and the Best
    Efforts Offering, excluding the over-allotment. The underwriters will be
    granted an option by the Company to purchase up to fifteen percent (15%) of
    the total amount of Shares in the Underwritten Offering solely for the
    purpose of covering over-allotments.

3.  ABN AMRO BANK N.V. ROLE. In connection with providing the structuring and
    advisory services hereunder, the Company acknowledges that AAI may involve
    employees of ABN AMRO Bank N.V. (the "Bank") who have relevant industry
    experience. The Bank shall have the full benefit of provisions 6 and 7
    hereof as

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[ABN AMRO INC. LOGO]

    specifically provided therein as if the Bank were a party to this Agreement.
    Neither the Bank nor any of its affiliates are obligated to lend money or
    otherwise extend debt or equity financing in connection with this Agreement.
    Any financing undertaken by the Bank or its affiliates shall be made subject
    to the request of the Company and to internal approval of the Bank and shall
    be made in writing under a separate letter.

4.  COMPENSATION. In consideration of the structuring and advisory services
    provided by AAI in connection to the Offerings, as well as other aspects of
    the proposed plan of conversion, the Company hereby agrees to pay a fee (the
    "Financial Advisory Fee") in the amount of $950,000 at closing of the
    Offerings. The Financial Advisory Fee will be reduced by the amount of any
    management fees retained by AAI as part of the underwriting discount (it
    being understood that the management fee component of the underwriting
    discount will be customary for a transaction of this type) agreed at the
    time of the Underwritten Offering and reflected in the underwriting
    agreement in connection therewith, although not to a number less than zero.

    The Financial Advisory Fee shall be payable in immediately available funds
    on the closing date of the Offerings regardless of whether such closing
    occurs during the Term. Except as expressly provided in the last sentence of
    Paragraph 11(a) hereof, the Company's obligation to pay the Financial
    Advisory Fee shall be contingent solely upon the closing of the Offerings.
    The Financial Advisory Fee shall not include any fees earned by AAI or
    others for furnishing services other than as provided herein.

5.  EXPENSES. In addition to the Financial Advisory Fee described in paragraph 4
    above, the Company agrees to promptly reimburse AAI, upon request, for all
    reasonable out-of-pocket expenses incurred in performing the structuring and
    advisory services hereunder, regardless of whether any of the Offerings are
    consummated.

6.  INDEMNIFICATION. The Company agrees to: (1) indemnify and hold harmless AAI,
    its directors, officers, affiliates, agents, employees, and any
    individual(s) who may be deemed to control AAI (collectively, "Indemnified
    Persons") against all losses, claims, damages, penalties, judgments,
    liabilities and expenses of every kind whatsoever (including, without
    limitation, all expenses of litigation or preparation therefor, including
    reasonable attorney's fees, whether or not an Indemnified Person is a party
    thereto) (collectively, "Liabilities") which any of the Indemnified Persons
    may pay, be subject to or incur arising out of or relating to any
    transactions or activities contemplated by this Agreement or the engagement
    of AAI pursuant to, and the performance by AAI or its affiliates of the
    services contemplated by, this Agreement; (2) reimburse any Indemnified
    Person for all expenses (including, without limitation, fees and
    disbursements of counsel) as they are incurred by AAI or any such other
    Indemnified Person in connection with

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[ABN AMRO INC. LOGO]

    the investigation of, preparation for or defense of any pending or
    threatened claim or any action or proceeding arising therefrom, whether or
    not such Indemnified Person is a party; and (3) expressly and irrevocably
    waives any and all rights and objections which it may have against any
    Indemnified Persons in respect of any Liabilities arising out of or relating
    to this Agreement or the Offerings, except to the extent that such
    Liabilities arise primarily from AAI's gross negligence or willful
    misconduct; provided, however, that the indemnification pursuant to this
    Paragraph 6 shall remain absolute with respect to any loss, claim, damage or
    liability arising out of any untrue statement of a material fact contained
    in any offering documentation or the omission therefrom of a material fact
    necessary in order to make the statements therein not misleading, in the
    light of the circumstances under which they were made.

    The Company further agrees not to settle any claim, litigation or proceeding
    (whether or not any Indemnified Person is a party thereto) relating to this
    Agreement or the Offerings unless: (1) such settlement releases all the
    Indemnified Persons from any and all Liabilities related to this Agreement
    or the Offerings; and (2) the entire settlement amount and all costs of
    settlement are borne by the Company.

    For the purposes of this Indemnification provision, the Company irrevocably
    submits to the non-exclusive jurisdiction of any court in which a claim
    relating to this Agreement or the Offerings is properly brought against an
    Indemnified Person and irrevocably waives any objection as to venue or
    forum.

    An Indemnified Person shall have the right to employ their own counsel in
    any suit, action or proceeding arising from this Agreement or the Offerings
    if the Indemnified Person reasonably concludes, based on a written opinion
    of counsel, that a conflict of interest exists between the Company and the
    Indemnified Person which would materially impact the effective
    representation of the Indemnified Person. In the event that the Indemnified
    Person concludes that a conflict of interest exists, the Indemnified Person
    shall have the right to: (1) assume and direct the defense of such suit,
    action, or proceeding on their own behalf (provided, however, that in such
    case the Company and MICOA shall be permitted to participate in such
    defense); and (2) to select counsel which will represent them in any such
    action, suit or proceeding, and the Company shall indemnify the Indemnified
    Person for the reasonable legal fees and expenses of such counsel and other
    expenses reasonably incurred by the Indemnified Person

7.  PERSONS ENTITLED TO RELIANCE. The Company recognizes that AAI has been
    retained only by the undersigned, and that its engagement of AAI is not
    deemed to be on behalf of and is not intended to confer rights upon any
    shareholder, affiliate, owner or partner of the Company or any other person
    not a party hereto as against AAI or any of AAI's affiliates, the respective
    directors, officers, agents and employees of AAI's affiliates or each other
    person, if any, controlling AAI or any

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[ABN AMRO INC. LOGO]

    of AAI's affiliates. Unless otherwise expressly stated in an opinion letter
    issued by AAI or otherwise expressly agreed to by AAI, no one other than the
    Company is authorized to rely upon the engagement of AAI or any statements
    or conduct by AAI.

8.  CONDITIONS PRECEDENT. The proposed participation of AAI in the Offerings and
    its proposed undertakings set forth herein are subject to Paragraph 12
    hereof, and in no event shall such participation occur without the
    satisfaction or waiver of the following conditions:

    (a) The Company shall have taken all necessary action to authorize the
        issuance of the Shares.

    (b) Completion by AAI and its counsel in a manner satisfactory to AAI in its
        sole discretion of the due diligence review of the Company and receipt
        by the Company of all necessary or advisable consents, licenses and
        approvals for the Company and AAI to meet their obligations hereunder.

    (c) The Company and AAI shall have negotiated, executed and delivered any
        and all documents necessary to conduct the Offerings, including, without
        limitation, an Underwriting Agreement, a Placement Agent Agreement and
        such other documents as are standard for a public offering, all of
        which documents shall contain representations, warranties, covenants,
        indemnities and such other terms and conditions as are standard for an
        offering of equity securities.

    (d) Any necessary governmental and regulatory approvals, consents and
        filings shall have been obtained or made.

    (e) From the date of the most recently available audited financial
        statements until the closing of the Offerings, there shall have been no
        material adverse change in the condition, financial or otherwise, or in
        the earnings (without regard to the effects of the one-time settlement
        with the IRS in 1999), operations, business affairs or business
        prospects of the Company as reflected in such financial statements.

    (f) All legal documentation, instruments and other matters in connection
        with the Offerings shall be reasonably satisfactory to AAI.

    (g) At any time prior to the closing of the purchase and sale of the Shares,
        the financial, political, economic or regulatory conditions in the
        United States or the international capital markets shall not have
        undergone any change or any development involving a prospective change
        (including the suspension of trading in securities on the major U.S.
        stock exchanges, or the establishment of minimum prices by any such
        exchange, or the establishment of any new restrictions or transactions
        in securities by either such exchange) which would be such as to make
        it, in AAI's sole judgement, impracticable to market the Shares or to
        enforce contracts for the sale of the Shares.

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[ABN AMRO INC. LOGO]

9.  COOPERATION. In connection with AAI's activities pursuant to this Agreement,
    the Company will cooperate with AAI and will, to the extent possible,
    furnish AAI with all information and data concerning the Offerings and the
    Company which AAI deems appropriate and will, to the extent possible,
    provide AAI with access to the Company's respective officers, directors,
    employees, financial advisors, independent accountants and legal counsel.
    The Company represents and warrants that all information made available to
    AAI by the Company or contained in any filing by the Company with any court
    or governmental regulatory agency, commission or instrumentality with
    respect to the Offerings will, at all times during the period of the
    engagement of AAI hereunder, be complete and correct in all material
    respects and will not contain any untrue statement of a material fact or
    omit to state a material fact necessary in order to make the statements
    therein not misleading in the light of the circumstances under which such
    statements are made. The Company further represents and warrants that any
    projections provided by it to AAI will have been prepared in good faith and
    will be based upon assumptions which, in light of the circumstances under
    which they are made, are reasonable. The Company acknowledges and agrees
    that, in rendering its services hereunder, AAI will be using and relying on
    information provided by the Company or information available from public
    sources and other sources deemed reliable by AAI without independent
    verification thereof by AAI or independent appraisal by AAI. AAI does not
    assume responsibility for the accuracy or completeness of any of this
    information regarding the Company.

10. OTHER OFFERINGS. The Company shall not undertake or announce any private or
    public offering of securities from the date hereof until the closing date of
    the Offerings, other than the Offerings, without AAI's prior written
    consent.

11. TERMINATION. (a) Termination of Engagement. This Agreement shall become
    effective upon the Company's acceptance of this letter by signing where
    indicated below. This Agreement may be terminated during the Term by either
    AAI or the Company giving prior written notice of termination to the other.
    Neither termination of this Agreement nor consummation of the Offerings
    contemplated herein shall affect: (i) any compensation earned by AAI up to
    and including the date of termination or consummation; (ii) the
    reimbursement of expenses incurred by AAI up to the date of termination or
    consummation; and (iii) Paragraphs 4-7, inclusive, of this Agreement. (b)
    Termination of Offerings. If the Offerings are terminated by the Company for
    any reason after work thereon has been started or if the Managing
    Underwriter determines to terminate the Underwritten Offering because of the
    failure of any of the conditions or covenants of the Company set forth in
    this letter, the Company will pay to AAI a fee equal to $350,000. The
    Company will also pay the fees and normal out-of-pocket expenses incurred by
    AAI as well as those of its counsel.

12. FINANCIAL ADVISORY. Except for Paragraphs 1, 4, 5, 6 and 7, this letter is
    not
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[ABN AMRO INC. LOGO]

    intended to constitute a binding agreement and no other liability or
    obligation is created by this letter of intent. This letter cannot be
    construed in any way as a binding commitment by AAI or any of its affiliates
    to purchase the Shares, and AAI may, in its sole judgment and discretion,
    determine at any time not to proceed with the Underwritten Offering. Except
    for Paragraphs 1, 4, 5, 6 and 7, all legal obligations between the parties
    relating to the offer and sale of the Shares shall be only those set forth
    in the underwriting agreement or agency agreement, as applicable, and shall
    arise only when a mutually satisfactory underwriting agreement and agency
    agreement between the Company and AAI is executed and delivered immediately
    prior to the time of the such Offerings.

13. MISCELLANEOUS.

    (a) The Company may not assign this Agreement. AAI may not assign this
        agreement unless such assignment is to a successor or affiliate that is
        owned, directly or indirectly, by ABN AMRO Holding N.V.

    (b) The Company agrees that, upon consummation of the Offerings, AAI has the
        right to publish a tombstone advertisement in financial publications at
        its own expense describing its services hereunder.

    (c) This Agreement constitutes the entire agreement, and supersedes all
        prior agreements, understandings, negotiations, representations and
        discussions, whether oral or written, of the parties with respect to the
        subject matter hereof. No supplement, modification or waiver of this
        Agreement will be binding unless in writing and executed by the parties.
        No waiver of any of the provisions of this Agreement will be deemed to
        constitute a waiver of any other provision hereof nor will such waiver
        constitute a continuing waiver unless expressly provided.

        This Agreement may be executed in any number of counterparts and by the
        parties in separate counterparts, each of which when executed shall be
        deemed to be an original and all of which taken together shall
        constitute one and the same agreement.

    (d) This Agreement shall be governed by and construed in accordance with the
        laws of the State of New York applicable to agreements made and to be
        performed in such State. The parities irrevocably submit to the
        jurisdiction of any competent court in the place of its domicile and any
        United States Federal or New York State court sitting in the Borough of
        Manhattan, City and State of New York in any action or proceeding
        arising out of or relating to this Agreement and irrevocably waive any
        immunity from the jurisdiction thereof and any claim or defense in such
        action or proceeding based on a claim or improper venue, forum non
        conveniens or any similar basis to which they might otherwise be
        entitled.

    Please confirm that the foregoing is in accordance with your understanding
    of this

                                                                               7

<PAGE>   8

[ABN AMRO INC. LOGO]

    Agreement by signing and returning to us a copy of this letter. Please note
    that nothing in this letter constitutes a commitment to underwrite, provide
    or arrange for the placement of any Shares and that any such commitment will
    be evidenced exclusively by a definitive underwriting and/or agency
    agreement, which will contain customary representations, conditions and
    indemnification provisions satisfactory to us.

                                   * * * * * *

                                                                               8

<PAGE>   9

[ABN AMRO INC. LOGO]

                                              Very truly yours,

                                              ABN AMRO INCORPORATED

                                              By:
                                                 -------------------------------
                                                 Erik van Nispen
                                                 Managing Director

ACCEPTED AND AGREED AS OF THE DATE HEREOF:

AMERICAN PHYSICIANS CAPITAL, INC.

By:
    ---------------------------------
       William B. Cheeseman
       Chief Executive Officer

Performance of all obligations of American Physicians Capital, Inc.
is hereby guaranteed by the undersigned:

MUTUAL INSURANCE CORPORATION OF AMERICA

By:
    ---------------------------------
       William B. Cheeseman
       Chief Executive Officer

                                                                               9

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