American Physicians Service Group, Inc.

February 25, 2009

VIA EDGAR

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

Division of Corporation Finance

U.S. Securities and Exchange Commission

Washington, D.C.  20549

Re:

American Physicians Service Group, Inc.

Form 10-K for the Year Ended December 31, 2007

Filed March 13, 2008

Form 10-Q for the Quarterly Period Ended September 30, 2008

Filed November 3, 2008

File No. 001-31434

Dear Mr. Rosenberg:

On February 20, 2009, I spoke by telephone with Ibolya Ignat of the SEC Staff in which we were requested to respond to the following two additional comments as a follow-up to our Response letter to the Securities and Exchange Commission dated January 20, 2009.

1.

Please refer to your response to Comment No. 2, we do not believe that the proposed presentation of your 10-year development table complies with Industry Guide 6 because the financial information in the table does not appear to be based on financial information that is consistent with how your financial statements are prepared.  Please refer to the first sentence, of Item 2b of Industry Guide 6. Please provide us a revised table based on post-merger information that complies with Industry Guide 6. In addition, please include a separate ten-year development table presenting the development of the unpaid loss and loss adjustment expense of API prior to the date of the merger with the company.  

Response:  We have modified the 10-year development table by showing post-merger information that complies with Industry Guide 6.  In addition, in order to aid the reader of these financial statements we have included a separate ten-year development table reflecting the historical development of unpaid loss and loss adjustment expense of API prior the date of API’s merger with us. In response to your comment, we propose to revise our Critical Accounting Policies section of our Management’s Discussion and Analysis of Results of Operations to include the additional information set forth below, commencing with the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

1301 S. CAPITAL OF TEXAS HIGHWAY   SUITE C 300  AUSTIN, TX 78746   PHONE:  (512) 328-0888  FAX:  (512) 314-4398

Mr. Jim B. Rosenberg

February 25, 2009

Page 2

The following tables, known as the reserve development tables, show the development of the liability for unpaid loss and loss adjustment expenses. The top line of the table shows the original estimated liabilities at the balance sheet date, including losses incurred but not yet reported. The upper portion of the table shows the cumulative amounts subsequently paid as of successive year-ends with respect to the liability. The lower portion of the table shows the re-estimated amount of the previously recorded liability based on experience as of the end of each succeeding year. The estimates change as claims settle and more information becomes known about the ultimate frequency and severity of claims for individual years. A (deficiency) or redundancy exists when the re-estimated liability at each December 31 is greater (or less) than the prior liability estimate. The cumulative (deficiency) or redundancy depicted in the table, for any particular calendar year, represents the aggregate change in the initial estimates over all subsequent calendar years. The volatility of medical professional liability claim frequency and severity makes the prediction of the ultimate losses very difficult.  Likewise, the long period of time necessary for medical professional liability claims to develop and be paid further complicates the reserving process.

Mr. Jim B. Rosenberg

February 25, 2009

Page 3

On April 1, 2007, we acquired all of the issued and outstanding stock of API. The business combination was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to assets acquired and liabilities assumed based on fair values at the date of acquisition. As such, on April 1, 2007, we assumed all assets and liabilities of API including reserves for loss and loss adjustment expenses as well as any future reserve development subsequent to the date of the acquisition. The following table summarizes our reserve development as of December 31, 2007, the year in which we acquired API and each subsequent year thereafter:  

	2007		2008
Original Net Liability – end of year	$	81,164	$	78,126
Cumulative net paid as of;
One Year later		18,228		-
Two Years later
Three Years later
Four Years later
Five Years later
Six Years later
Seven Years later
Eight Years later
Nine Years later
Ten Years later
Re-estimated Net Liability as of:
End of year		81,164		78,126
One Year later		60,955
Two Years later
Three Years later
Four Years later
Five Years later
Six Years later
Seven Years later
Eight Years later
Nine Years later
Ten Years later
Net cumulative (deficiency) redundancy		20,209		-
Original Gross liability- end of year	$	101,606	$	92,141
Less: Reinsurance recoverables - end of year	$	(20,442)	$	(14,015)
Original Net liability - end of year	$	81,164	$	78,126
Gross re-estimated liability - latest	$	73,539	$	92,141
Re-estimated reinsurance recoverables-latest	$	(12,584)	$	(14,015)
Net re-estimated liabitity - latest	$	60,955	$	78,126
Gross cumulative (deficiency) redundancy	$	28,067	$	-

Mr. Jim B. Rosenberg

February 25, 2009

Page 4

For comparative purposes, we have included a reserve development table below on a “pro forma basis” which shows reserve development for periods prior to the acquisition of API on April 1, 2007.

	PRO FORMA
	1998		1999		2000		2001		2002		2003		2004		2005		2006		As of March 31, 2007
Original Net Liability – end of year	$	42,177	$	35,471	$	37,593	$	33,747	$	35,030	$	42,231	$	56,349	$	65,933	$	81,089	$	86,036
Cumulative net paid as of;
One Year later		24,898		21,805		27,998		23,360		31,665		34,965		30,634		20,074		20,993		-
Two Years later		36,796		40,156		41,575		40,278		48,023		55,034		43,409		29,939		33,157
Three Years later		43,786		44,562		47,614		45,952		54,926		62,226		49,173		34,878
Four Years later		44,904		46,015		50,520		48,503		57,390		66,613		51,622
Five Years later		45,626		47,670		51,090		49,417		58,957		70,387
Six Years later		46,786		47,905		51,674		50,090		60,942
Seven Years later		46,903		48,520		52,020		51,694
Eight Years later		47,487		48,655		53,454
Nine Years later		47,585		48,752
Ten Years later		47,682
Re-estimated Net Liability as of:
End of year		42,177		35,471		37,593		33,747		35,030		42,231		56,349		65,933		81,089		-
One Year later		42,837		37,248		39,708		42,155		46,955		68,083		73,957		63,061		65,939
Two Years later		43,677		41,837		48,411		45,826		61,294		79,041		69,525		50,291		52,834
Three Years later		44,636		47,540		50,926		54,212		64,379		81,888		61,154		45,330
Four Years later		46,880		48,214		55,846		55,618		66,557		77,432		58,456
Five Years later		47,420		51,101		56,163		54,762		63,760		76,522
Six Years later		49,604		51,064		55,236		53,115		64,483
Seven Years later		49,626		50,551		54,220		53,768
Eight Years later		48,873		49,706		54,839
Nine Years later		48,563		49,720
Ten Years later		48,558
Net cumulative (deficiency) redundancy		(6,381)		(14,249)		(17,246)		(20,021)		(29,453)		(34,291)		(2,107)		20,603		28,255		-
Original Gross liability- end of year	$	66,434	$	54,132	$	64,335	$	61,701	$	54,186	$	61,313	$	69,445	$	95,628	$	110,089	$	116,226
Less: Reinsurance recoverables - end of year		(24,257)		(18,661)		(26,742)		(27,954)		(19,156)		(19,082)		(13,096)		(29,695)		(29,000)		(30,190)
Original Net liability - end of year	$	42,177	$	35,471	$	37,593	$	33,747	$	35,030	$	42,231	$	56,349	$	65,933	$	81,089	$	86,036
Gross re-estimated liability - latest	$	62,791	$	61,091	$	68,144	$	62,032	$	71,960	$	84,837	$	65,486	$	50,162	$	62,511
Re-estimated reinsurance recoverables-latest		(14,233)		(11,371)		(13,305)		(8,264)		(7,477)		(8,315)		(7,030)		(4,832)		(9,677)
Net re-estimated liability - latest	$	48,558	$	49,720	$	54,839	$	53,768	$	64,483	$	76,522	$	58,456	$	45,330	$	52,834
Gross cumulative (deficiency) redundancy	$	3,643	$	(6,959)	$	(3,809)	$	(331)	$	(17,774)	$	(23,524)	$	3,959	$	45,466	$	47,578

Mr. Jim B. Rosenberg

February 25, 2009

Page 5

2.

We believe that for the reconciliation of net reserve amount to the gross reserve amount in the ten-year development table to be compliant with Industry Guide 6, it is necessary to include a line item that arrives at the cumulative (deficiency)/redundancy on a gross basis.  (i.e. the difference between the gross reserve and gross re-estimated reserve).  Please revise your presentation to include this line item on a gross basis instead of the current net presentation.  

Response:  We have modified the ten-year table to include the line items on a gross basis as requested.  Please see our Response to Comment No. 1 above.

In accordance with the request contained in your original comment letter, American Physicians Service Group, Inc. (“APS”) acknowledges that:

o

APS is responsible for the adequacy and accuracy of the disclosures in the Form 10-K filed by APS for year ended December 31, 2007 and the Form 10-Q for the period ended September  30, 2008 (the “Filings”);

o

SEC Staff comments or changes to disclosure in response to SEC Staff comments do not foreclose the Securities and Exchange Commission (the “Commission”) from taking action with respect to the Filing; and

o

APS may not assert SEC Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions concerning this letter or our responses to your comments, please do not hesitate to contact me at (512) 314-4497 or mzimmermann@amph.com.  Thank you.

Sincerely,

/s/ Marc Zimmermann

Marc Zimmermann

Chief Financial Officer

C:

Ibolya Ignat, Staff Accoutant

Division of Corporate Finance

Mr. Kenneth S. Shifrin

Chairman and Chief Executive Officer

American Physicians Service Group, Inc.

1301 S. Capital of Texas Highway, Suite C-300

Austin, TX  78746-6550