Physicians Insurance
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Physicians Insurance's Financial Position at March 31, 2011

The company has continued to produce excellent financial results in 2011. Surplus grew to $184 million at March 31, 2011, up from $180 million at the beginning of the year. The net premiums written-to-surplus ratio is a very strong and conservative .39 to 1.00. The number of physicians insured continued to increase.

Our investment portfolio has continued to perform well. We take a fairly conservative approach to our investments and stress high quality. This is in keeping with the company's mission to provide excellent insurance coverage consistent with sound financial and insurance practices. 

Our investment portfolio totaled $375 million at March 31, 2011, with 10% invested in equities and 90% in bonds. The equity investments are all in nine mutual funds, and the company owns no individual stocks. Approximately 70% of these equity investments are in index funds that track the S&P 500. The remaining 30% are primarily in small cap and international funds. Not surprisingly, the total results of these equity investments track fairly closely with changes in the overall stock market.

Our well-diversified bond portfolio is composed primarily of three components: tax-exempt municipal bonds (29% of the total), mortgage pass-throughs (22%), and corporate bonds ( 27%). The remaining 22% is composed primarily of U.S. Treasury bonds, bonds of U.S. government agencies, and commercial mortgage-backed securities. The mortgage pass-throughs are pools of mortgages through Fannie Mae and similar organizations; all are high-quality mortgages and in effect guaranteed by Fannie Mae and Freddie Mac, and none are sub-prime. All of Physicians Insurance's bond holdings are rated investment grade by the rating agencies.
At the end of March, the market value of the company's $338 million bond portfolio in total was approximately $10 million higher than amortized cost (carrying value). 

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David Kinard
Marketing and Communications
206-343-6618 or

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