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Date: 3/12/2004
Industry: Insurance (Prop. and Casualty)    

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                                                                   EXHIBIT 10.33


                               December 23, 2003





William B. Cheeseman

[home address]



Dear Bill:


         As we have discussed, you and we have agreed that you are hereby

retiring from your employment with American Physicians Capital, Inc. and its

subsidiaries (collectively, the "Company") in all capacities and your position

as a director on each subsidiary board of directors on which you serve,

effective December 31, 2003, and that you will retire from the American

Physicians Capital board of directors not later than the date of the American

Physicians Capital, Inc. 2004 annual meeting of shareholders. This letter

agreement sets forth the entire understanding between us with respect to these



         1. You will be covered as an employee of the Company by your current

fringe benefits in accordance with their respective current terms and

provisions, as they may be amended from time to time as they relate to current

employees. These benefits will continue until December 31, 2003.


         2. Your severance from the Company will be considered a termination by

mutual written agreement under Section 5(E) of your Employment Agreement, dated

October 27, 1999 (the "Employment Agreement"). As such, your termination is

without "cause" as defined under Section 5(C) and Section 8(C) of the Employment

Agreement. The parties' obligations under Sections 6 through 21 of the

Employment Agreement, however, shall survive the termination of your employment.

Disputes arising under this letter agreement shall be resolved in accordance

with the provisions of Section 10 of the Employment Agreement.


         3. The parties agree that your termination under this letter agreement

should be considered a termination by mutual agreement. Pursuant to Section

1.3.6 of the Stock Purchase Agreement, dated August 31, 1999, by and among

Mutual Insurance Corporation of America, William B. Cheeseman and William J.

Gaugier (the "Stock Purchase Agreement"), the parties agree to accelerate all

annual payments calculated pursuant to the terms of the Stock Purchase

Agreement, and that this amount will be paid in full on January 2, 2004. You

agree that this payment shall constitute payment in full for all amounts due

under the Stock Purchase Agreement, and the parties agree that no provisions of

the Stock Purchase Agreement shall survive this Letter Agreement.


         4. On or before January 2, 2004, the Company will pay to you an amount

equal to $1,250,000 (two times your annual base salary for 2002) in

consideration of your covenant not to compete, as provided in and required by

Section 7 of the Employment Agreement (the "Non-Compete Payment").


         5. You hereby confirm your obligations under Section 7 of the

Employment Agreement. Effective on the Contract Date (as defined in paragraph 8

of this letter agreement), the Company acknowledges that the provisions of

Section 4.8 of the Stock Purchase Agreement are no longer applicable, and that

your employment with SCW Agency Group, Inc. ("SCW") (including without

limitation your service as a director, officer, or employee of SCW) will not be

considered a violation of Section 7 of the Employment Agreement as long as SCW

does not engage in a business or activity that




competes with the Company's professional liability insurance business, except as

may be permitted by mutual agreement, or SCW's agreements with American

Physicians Assurance Corporation, and provided that SCW does not interfere or

attempt to interfere with any employment relationship between the Company and

any person employed now or in the future. Prior to the Contract Date, the

parties agree that you may be involved in negotiations and discussions regarding

the contractual relationship between SCW and the Company without violating

Section 7 of the Employment Agreement or Section 4.8 of the Stock Purchase



         6. On or before December 31, 2003, you and the Company will enter into

a one year consulting agreement on mutually acceptable terms, which will

include, without limitation, (a) payment by the Company to you of $10,000 per

month during the term of the consulting agreement and (b) your provision of

consulting services at the request of the Company. A copy of the Consulting

Agreement is attached hereto. The Company may terminate this consulting

agreement in accordance with the terms of paragraph 8.


         7. You currently have 360,000 options to purchase American Physicians

Capital stock, of which 143,400 have not yet vested, and an additional 32,200

shares of restricted stock, of which 17,600 shares are still restricted, all of

which have been granted to you pursuant to the Company's Stock Compensation Plan

(the "Plan"). The Compensation Committee of the American Physicians Capital

Board of Directors, pursuant to the authority granted to them by the Board of

Directors under the Plan, has resolved to vest your restricted stock effective

upon the termination of your employment. The Compensation Committee has also

resolved to interpret the Plan (including the option agreements with you granted

under the Plan) so that "employment" or "employment (or services)" as used in

Article V of the Plan and in the vesting provisions of any gran

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