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Wiki	Wiki Summary
Net income	In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period.It is computed as the residual of all revenues and gains less all expenses and losses for the period, and has also been defined as the net increase in shareholders' equity that results from a company's operations. It is different from gross income, which only deducts the cost of goods sold from revenue.
Liability insurance	Liability insurance (also called third-party insurance) is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims and protects the insured if the purchaser is sued for claims that come within the coverage of the insurance policy.\nOriginally, individual companies that faced a common peril formed a group and created a self-help fund out of which to pay compensation should any member incur loss (in other words, a mutual insurance arrangement).
Underwriting contract	In investment banking, an underwriting contract is a contract between an underwriter and an issuer of securities.\nThe following types of underwriting contracts are most common:\nIn the firm commitment contract the underwriter guarantees the sale of the issued stock at the agreed-upon price.
Underwriting profit	Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted.
Vicarious liability	Vicarious liability is a form of a strict, secondary liability that arises under the common law doctrine of agency, respondeat superior, the responsibility of the superior for the acts of their subordinate or, in a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the activities of a violator. It can be distinguished from contributory liability, another form of secondary liability, which is rooted in the tort theory of enterprise liability because, unlike contributory infringement, knowledge is not an element of vicarious liability.
Necessary But Not Sufficient	In logic and mathematics, necessity and sufficiency are terms used to describe a conditional or implicational relationship between two statements. For example, in the conditional statement: "If P then Q", Q is necessary for P, because the truth of Q is guaranteed by the truth of P (equivalently, it is impossible to have P without Q).
Necessary evil	A necessary evil is an evil that someone believes must be done or accepted because it is necessary to achieve a better outcome—especially because possible alternative courses of action or inaction are expected to be worse. It is the "lesser evil" in the lesser of two evils principle, which maintains that given two bad choices, the one that is least bad is the better choice.
Income statement	An income statement or profit and loss account (also referred to as a profit and loss statement (P&L), statement of profit or loss, revenue statement, statement of financial performance, earnings statement, statement of earnings, operating statement, or statement of operations) is one of the financial statements of a company and shows the company's revenues and expenses during a particular period.It indicates how the revenues (also known as the “top line”) are transformed into the net income or net profit (the result after all revenues and expenses have been accounted for). The purpose of the income statement is to show managers and investors whether the company made money (profit) or lost money (loss) during the period being reported.
Operations research	Operations research (British English: operational research), often shortened to the initialism OR, is a discipline that deals with the development and application of advanced analytical methods to improve decision-making. It is sometimes considered to be a subfield of mathematical sciences.
Surgery	Surgery is a medical or dental specialty that uses operative manual and instrumental techniques on a person to investigate or treat a pathological condition such as a disease or injury, to help improve bodily function, appearance, or to repair unwanted ruptured areas.\nThe act of performing surgery may be called a surgical procedure, operation, or simply "surgery".
Adjustment (psychology)	In psychology, adjustment is that condition of a person who is able to adapt to changes in their physical, occupational, and social environment. In other words, adjustment refers to the behavioural process of balancing conflicting needs, or needs challenged by obstacles in the environment.
Regulation	Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context.
Regulatory state	The term regulatory state refers to the expansion in the use of rulemaking, monitoring and enforcement techniques and institutions by the state and to a parallel change in the way its positive or negative functions in society are being carried out. The expansion of the state nowadays is generally via regulation and less via taxing and spending.
Regulatory sign	A regulatory sign is used to indicate or reinforce traffic laws, regulations or requirements which apply either at all times or at specified times or places upon a street or highway, the disregard of which may constitute a violation, or a sign in general that regulates public behavior in places open to the public. The FHWA defines regulatory sign as "a sign that gives notice to road users of traffic laws or regulations".
Cis-regulatory element	Cis-regulatory elements (CREs) or Cis-regulatory modules (CRMs) are regions of non-coding DNA which regulate the transcription of neighboring genes. CREs are vital components of genetic regulatory networks, which in turn control morphogenesis, the development of anatomy, and other aspects of embryonic development, studied in evolutionary developmental biology.
Good Environmental Status	Good Environmental Status is a qualitative description of the state of the seas that the European Union's Marine Strategy Framework Directive requires its Member States to achieve or maintain by the year 2020. \nGood Environmental Status is described by 11 Descriptors:\n\nDescriptor 1.
Terrorist and Disruptive Activities (Prevention) Act	Terrorist and Disruptive Activities (Prevention) Act, commonly known as TADA, was an Indian anti-terrorism law which was in force between 1985 and 1995 (modified in 1987) under the background of the Punjab insurgency and was applied to whole of India. It was originally assented to by the President on 23 May 1985 and came into effect on 24 May 1985.
Motion compensation	Motion compensation is an algorithmic technique used to predict a frame in a video, given the previous and/or future frames by accounting for motion of the camera and/or objects in the video. It is employed in the encoding of video data for video compression, for example in the generation of MPEG-2 files.
Renal compensation	Renal compensation is a mechanism by which the kidneys can regulate the plasma pH. It is slower than respiratory compensation, but has a greater ability to restore normal values.
Frequency compensation	In electronics engineering, frequency compensation is a technique used in amplifiers, and especially in amplifiers employing negative feedback. It usually has two primary goals: To avoid the unintentional creation of positive feedback, which will cause the amplifier to oscillate, and to control overshoot and ringing in the amplifier's step response.
Unintended consequences	In the social sciences, unintended consequences (sometimes unanticipated consequences or unforeseen consequences) are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by American sociologist Robert K. Merton and expanded by economist Thomas Sowell and psychologist Stuart Vyse.Unintended consequences can be grouped into three types:\n\nUnexpected benefit: A positive unexpected benefit (also referred to as luck, serendipity or a windfall).
Financial law	Financial law is the law and regulation of the insurance, derivatives, commercial banking, capital markets and investment management sectors. Understanding Financial law is crucial to appreciating the creation and formation of banking and financial regulation, as well as the legal framework for finance generally.
Adverse effect	An adverse effect is an undesired harmful effect resulting from a medication or other intervention, such as surgery. An adverse effect may be termed a "side effect", when judged to be secondary to a main or therapeutic effect.
Adverse possession	Adverse possession, sometimes colloquially described as "squatter's rights", is a legal principle in the Anglo-American common law under which a person who does not have legal title to a piece of property—usually land (real property)—may acquire legal ownership based on continuous possession or occupation of the property without the permission (licence) of its legal owner. The possession by a person is not adverse if they are in possession as a tenant or licensee of the legal owner.
Adverse party	An adverse party is an opposing party in a lawsuit under an adversary system of law. In general, an adverse party is a party against whom judgment is sought or "a party interested in sustaining a judgment or decree." For example, the adverse party for a defendant is the plaintiff.
Berkshire Hathaway	Berkshire Hathaway Inc. () is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States.
Twenty-one Conditions	The Twenty-one Conditions, officially the Conditions of Admission to the Communist International, refer to the conditions, most of which were suggested by Vladimir Lenin, to the adhesion of the socialist parties to the Third International (Comintern) created in 1919. The conditions were formally adopted by the Second Congress of the Comintern in 1920.
Causality conditions	In the study of Lorentzian manifold spacetimes there exists a hierarchy of causality conditions which are important in proving mathematical theorems about the global structure of such manifolds. These conditions were collected during the late 1970s.The weaker the causality condition on a spacetime, the more unphysical the spacetime is.
Farmers Insurance Group	Farmers Insurance Group (informally Farmers) is an American insurer group of vehicles, homes and small businesses and also provides other insurance and financial services products. Farmers Insurance has more than 48,000 exclusive and independent agents and approximately 21,000 employees.
Mutual insurance	A mutual insurance company is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are either retained within the company or rebated to policyholders in the form of dividend distributions or reduced future premiums.
MetLife	MetLife, Inc. is the holding corporation for the Metropolitan Life Insurance Company (MLIC), better known as MetLife, and its affiliates.
Fidelity Investments	Fidelity Investments Inc., commonly referred to as Fidelity, earlier as Fidelity Management & Research or FMR, is an American multinational financial services corporation based in Boston, Massachusetts. The company was established in 1946 and is one of the largest asset managers in the world with $4.5 trillion in assets under management, now as of December 2021 their assets under administration amounts to $11.8 trillion.
American National Insurance Company	American National Insurance Company (ANICO) is a major American insurance corporation based in Galveston, Texas. The company and its subsidiaries operate in all 50 U.S. states and Puerto Rico.
Solar geoengineering	Solar geoengineering, or solar radiation modification (SRM) is a proposed type of climate engineering in which sunlight (solar radiation) would be reflected back to space to limit or reverse human-caused climate change. It is a possible quick emergency measure to limit overheating while greenhouse gases already in the atmosphere decay or are removed, not a substitute for reducing greenhouse gas emissions.
Waste hierarchy	Waste hierarchy is a tool used in the evaluation of processes that protect the environment alongside resource and energy consumption from most favourable to least favourable actions. The hierarchy establishes preferred program priorities based on sustainability.

Risk Factors
AMERICAN PHYSICIANS CAPITAL INC Item 1A Risk Factors
An investment in our common stock involves numerous risks and uncertainties
You should carefully consider the following information about these risks
Any of the risks described below could result in a significant or material adverse effect on our future results of operations, cash flows or financial condition
The most significant of these risks and uncertainties are as follows: 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, a decrease in our profitability, or both
The medical professional liability insurance business tends to cycle through what are often referred to as “hard” and “soft” markets
A hard market is generally characterized as a period of rapidly raising premium rates, tightened underwriting standards, narrowed coverage and the withdrawal of insurers from certain markets
Soft markets are usually characterized by relatively flat or slow-rising premium rates, less stringent underwriting standards, expanded coverage and strong competition among insurers
Since approximately 2001, the trend in medical professional liability has been towards a harder market
This change in trend and the accompanying competitive pressures could adversely impact our ability to obtain rate increases we deem necessary to adequately cover insured risks, which could ultimately result in a decrease in premium volume as physicians currently insured with us elect to place their coverage elsewhere or an increase in related underwriting and loss and loss adjustment expenses
Each of these outcomes could have a material adverse effect on our future results of operations
Our reserves for unpaid losses and loss adjustment expenses are based on estimates that may prove to be inadequate to cover our losses
The process of estimating the reserves for unpaid losses and loss adjustment expenses involves significant judgment and is complex and imprecise due to the number of variables and assumptions inherent in the 9 _________________________________________________________________ estimation process
These variables include the effects on ultimate loss payments of internal factors such as changes in claims handling practices and changes in the mix of our products, as well as external factors such as changes in loss frequence and severity trends, economic inflation, judicial trends and legislative and regulatory changes
In addition, medical professional liability claims may take several years to resolve due to typical delays in reporting claims to us, the often lengthy discovery process, and the time necessary to defend the claim
Also, claims with similar characteristics may result in very different ultimate losses depending on the state or region where the claim occurred
All of these factors contribute to the variability in estimating ultimate loss payments, especially since the effects of many of these variables cannot be directly quantified, and may require us to make significant adjustments in our reserves from time to time
Any such adjustments could materially and adversely affect our results of operations for the period with respect to which the adjustment is made
Due to the current volatility of losses in the medical professional liability and workers’ compensation markets, adjustments have occurred in each of the last several years
Our exit from various markets and lines of business may prove more costly than originally anticipated
Our exit from various lines of business, such as the workers’ compensation, health and personal and commercial lines of business, and from various geographic markets could result in future charges to income due to unforeseen costs or the need for unanticipated reserve enhancements
Additional reserve enhancements may be necessary due to the volatility of loss reserves on these run-off lines
Run-off lines typically have increased volatility as paid claim trends often emerge differently than those that have been historically indicated, thus increasing the uncertainty inherent in reserve estimates, especially on longer-tailed lines such as workers’ compensation
In addition, most states where we have historically written workers’ compensation insurance have second injury funds and state mandated workers’ compensation pools for high-risk employers and industries
Because of the nature of the participation in these funds and pools, they typically bear higher loss costs than traditional workers’ compensation insurance
This higher risk factor, combined with the long-tailed nature of workers’ compensation claims, means that losses related to accident years in which we participated in the pools may not yet have emerged and additional assumed losses may materialize, which could affect the profitability of our operations
Tort reform legislation may have adverse or unintended consequences that could materially and adversely affect our results of operations and financial condition
Proposed new laws which would limit jury awards for non-economic damages relating to medical malpractice claims have been a point of debate at the national level for the past several years
While the passage of national tort reform would appear to be a positive development for our business, many states in which we operate have already enacted some version of tort reform at the state level, which in some cases is more favorable than that currently being contemplated at the national level
If national tort reform is enacted that supersedes more favorable state tort reforms, our loss costs may increase in certain markets
In addition, recently passed tort reform legislation in Illinois has made more burdensome certain reporting requirements regarding rate filings
As a consequence, an increase in claims frequency or severity may adversely affect our results of operations as it may be more difficult to obtain approval from regulators for rate increases the Company deems necessary
If we are unable to obtain or collect on ceded reinsurance, our results of operations and financial condition may be adversely affected
We use reinsurance arrangements to limit and manage the amount of risk we retain and stabilize our underwriting results
The amount and cost of reinsurance available to us is subject, in large part, to prevailing market conditions beyond our control
Our ability to provide insurance at competitive premium rates and coverage limits on a continuing basis depends in large part upon our ability to secure adequate reinsurance in amounts and at rates that are commercially reasonable
Furthermore, we are subject to credit risk with respect to our reinsurers because reinsurance does not relieve us of liability to our insureds for the risks ceded to 10 _________________________________________________________________ reinsurers
A significant reinsurer’s inability or refusal to reimburse us under the terms of our reinsurance agreements would result in a charge to income that could materially and adversely affect our results of operations and financial condition for the period in which the charge is incurred
We cannot assure you that we will continue to be able to obtain affordable reinsurance from creditworthy reinsurers
The insurance industry is subject to regulatory oversight that may impact the manner in which we operate our business
Our insurance business is subject to extensive regulation by the applicable state agencies in the jurisdictions in which we operate, and especially by the Office of Financial and Insurance Services for the State of Michigan, or OFIS, as our insurance companies are domiciled in that state
These state agencies have broad regulatory powers designed to protect policyholders, not shareholders or other investors
These powers include, but are not limited to, the ability to: • place limitations on the types and amounts of our investments, • review and approve or deny premium rate increases, • set standards of solvency to be met and maintained, • review reserve levels, • review change in control transactions, • limit the ability to pay dividends, • prescribe the form and content of, and to examine, our statutory-basis financial statements, and • place limitations on our ability to transact business with and between our affiliated insurance companies
Failure to comply with these regulations could result in consequences resulting from a regulatory examination to a regulatory takeover
If we fail to comply with insurance industry regulations, or if those regulations become more burdensome to us, we may not be able to operate profitably or may be more limited in the amount of dividends our insurance subsidiaries can make to APCapital
Our geographic concentration in certain Midwestern states and New Mexico ties our performance to the business, economic, regulatory and legislative conditions in those states
Approximately 93dtta4prca of our total medical professional liability direct premiums written in 2005 was written in the states of Illinois, Michigan, Ohio, Kentucky and New Mexico
Because of this concentration, unfavorable business, economic or regulatory conditions in these states could adversely impact the amount of premiums we are able to write, the costs associated with loss settlement and other expenses
An interruption or change in current marketing and agency relationships could reduce the amount of premium we are able to write
We currently carry the endorsement of the Michigan State Medical Society and other such organizations, which we believe provides us with a competitive advantage
If the endorsement of these organizations were to lapse, we could see a reduction in our premium volumes in markets where such organizations carry influence
In addition, approximately 68prca of our medical professional liability direct premiums written are produced by 10 agencies
One agency in particular, the SCW Agency Group, Inc, produced approximately 35prca of our medical professional direct premiums written during 2005
An interruption or change in the relationship with any of these agencies could adversely and materially impact the amount of premiums we are able to write
11 _________________________________________________________________ A downgrade in the financial strength rating of our insurance subsidiaries could reduce the amount of business we are able to write
Rating agencies, such as AM Best Company, rate insurance companies based on financial strength as an indication of a company’s ability to meet policyholder obligations
Our primary insurance subsidiary, American Physicians, has an AM Best rating of B+ (Very Good)
An insurance company’s rating, and in particular its AM Best rating, can be a potential source of competitive advantage or disadvantage in the marketplace
Accordingly, a downgrade in our AM Best rating could adversely affect our position in the marketplace and could result in a reduction in 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
A significant portion of our assets are invested in interest bearing fixed-income securities
In recent years, we have earned our investment income primarily from interest income on these investments
A decrease in prevailing interest rates could reduce the return on our investment portfolio, if we must reinvest the proceeds of securities that mature at rates below those of the securities that mature
The reduced investment income could also reduce our cash flows
Conversely, an increase in interest rates would reduce the carrying value of our available-for-sale fixed-income securities as the market value of these securities is typically inversely related to interest rates, which could result in a charge to income if determined to be other than temporary
An increase in short-term interest rates would also increase the interest payments associated with our long-term debt as those obligations pay a variable rate of interest that is in part based on the three-month London Inter-Bank Offered Rate
Any of these consequences may have a material adverse effect on our revenues, cash flows and assets, including the amount of net unrealized appreciation on investments shown on our balance sheet date
Our status as an insurance holding company with no direct operations could adversely affect our ability to meet our debt obligations and fund future share repurchases
As such, it has no ongoing operations and its primary assets are the stock of its insurance subsidiaries
The availability of cash needed by APCapital to meet its obligations on its outstanding debt, repurchase outstanding shares of its common stock and pay its operating expenses is largely dependent upon dividends that it receives from its insurance subsidiaries
The payment of dividends by our insurance subsidiaries is regulated by state insurance laws, which restrict the amount of dividends that can be made without prior approval by the State of Michigan Insurance Commissioner
Applicable law and various provisions in our articles and bylaws will 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
APCapital is subject to provisions of Michigan corporate and insurance laws that have the effect of impeding a change of control by requiring prior approval of a change of control transaction by the OFIS and the board of directors
In addition, APCapital’s articles of incorporation and bylaws include provisions which: (1) allow for the issuance of “blank check” preferred stock without further shareholder approval; (2) set high vote requirements for certain amendments to the articles of incorporation and bylaws; (3) establish a staggered board; (4) limit the ability of shareholders to call special meetings; and (5) require unanimity for shareholder action taken without a meeting
These provisions may discourage a takeover attempt that you consider to be in your best interests or in which you would receive a substantial premium over the then-current market price
In addition, approval by the OFIS of a change of control transaction may be withheld even if the transaction would be in the shareholders’ best interest if it determines that the transaction would be detrimental to policyholders
As a result you may not have an opportunity to participate in such a transaction