A.M. Best Upgrades Ratings of SCPIE Holdings Inc.
November 03 2006 - 10:29AM
Business Wire
A.M. Best Co. has upgraded the financial strength rating (FSR) to
B+ (Very Good) from B (Fair) of SCPIE Indemnity Company, lead
company for the SCPIE Companies, (SCPIE) and its subsidiaries,
American Healthcare Indemnity Company and American Healthcare
Specialty Insurance Company. Concurrently, A.M. Best has upgraded
the issuer credit ratings (ICR) to �bbb-� from �bb� for the group
and upgraded the ICR to �bb-� from �b� for SCPIE Holdings Inc.
[NYSE: SKP]. The outlook for the ratings is stable. The operations
are headquartered in Los Angeles, CA. These rating actions reflect
the alleviated concerns related to SCPIE�s non-core reserves,
restored and sustained profitability, its improved balance sheet
and restoration of risk-adjusted capitalization that is supportive
of its secure ratings. These actions follow SCPIE�s third quarter
earnings announcement, which A.M. Best believes further
corroborates the accretive benefits garnered from the realignment
of its operations and business strategy in late 2002. In addition,
A.M. Best views SCPIE�s near-term earnings prospects as favorable,
as the group continues to shed its non-core reserves while reaping
the benefits of improved pricing, lower claim frequency trends and
its return to its core business strategy. SCPIE continues to
benefit from the favorable legislative environment and its market
position in its dominant state of California. Earnings returned to
profitability in 2005 and, in 2006 they are expected to
outpaceprevious year profits. During this most recent period,
management has also been extremely successful in reducing
underwriting and reserve leverage, which has elevated SCPIE�s
capital adequacy to a level that is more reflective of its current
ratings. These positive attributes are partially offset by the
level of operating losses reported in prior years, continued
(albeit lessened) adverse development on assumed reinsurance
reserves and the inherent challenges of being a leading medical
malpractice insurer with regard to price competition, tort reform,
loss cost trends and regulatory challenges. Despite these
attenuating factors, the current ratings and outlook take into
consideration the group�s near-term earnings prospects in 2007, its
pro forma capitalization, as well as further stabilization in loss
reserve development. The ICR upgrade to �bb-� from �b� of SCPIE
Holdings Inc. reflects the improvement in the group�s consolidated
operating earnings, the absence of any holding company debt and the
appropriate notching requirements established by A.M. Best. For
Best�s Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings. For current
Best�s Ratings, independent data and analysis on more than 3,000
individual property/casualty companies and A.M. Best groups, please
visit www.ambest.com/pc. A.M. Best Co., established in 1899, is the
world�s oldest and most authoritative insurance rating and
information source. For more information, visit A.M. Best�s Web
site at www.ambest.com. A.M. Best Co. has upgraded the financial
strength rating (FSR) to B+ (Very Good) from B (Fair) of SCPIE
Indemnity Company, lead company for the SCPIE Companies, (SCPIE)
and its subsidiaries, American Healthcare Indemnity Company and
American Healthcare Specialty Insurance Company. Concurrently, A.M.
Best has upgraded the issuer credit ratings (ICR) to "bbb-" from
"bb" for the group and upgraded the ICR to "bb-" from "b" for SCPIE
Holdings Inc. (NYSE: SKP). The outlook for the ratings is stable.
The operations are headquartered in Los Angeles, CA. These rating
actions reflect the alleviated concerns related to SCPIE's non-core
reserves, restored and sustained profitability, its improved
balance sheet and restoration of risk-adjusted capitalization that
is supportive of its secure ratings. These actions follow SCPIE's
third quarter earnings announcement, which A.M. Best believes
further corroborates the accretive benefits garnered from the
realignment of its operations and business strategy in late 2002.
In addition, A.M. Best views SCPIE's near-term earnings prospects
as favorable, as the group continues to shed its non-core reserves
while reaping the benefits of improved pricing, lower claim
frequency trends and its return to its core business strategy.
SCPIE continues to benefit from the favorable legislative
environment and its market position in its dominant state of
California. Earnings returned to profitability in 2005 and, in 2006
they are expected to outpaceprevious year profits. During this most
recent period, management has also been extremely successful in
reducing underwriting and reserve leverage, which has elevated
SCPIE's capital adequacy to a level that is more reflective of its
current ratings. These positive attributes are partially offset by
the level of operating losses reported in prior years, continued
(albeit lessened) adverse development on assumed reinsurance
reserves and the inherent challenges of being a leading medical
malpractice insurer with regard to price competition, tort reform,
loss cost trends and regulatory challenges. Despite these
attenuating factors, the current ratings and outlook take into
consideration the group's near-term earnings prospects in 2007, its
pro forma capitalization, as well as further stabilization in loss
reserve development. The ICR upgrade to "bb-" from "b" of SCPIE
Holdings Inc. reflects the improvement in the group's consolidated
operating earnings, the absence of any holding company debt and the
appropriate notching requirements established by A.M. Best. For
Best's Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings. For current
Best's Ratings, independent data and analysis on more than 3,000
individual property/casualty companies and A.M. Best groups, please
visit www.ambest.com/pc. A.M. Best Co., established in 1899, is the
world's oldest and most authoritative insurance rating and
information source. For more information, visit A.M. Best's Web
site at www.ambest.com.
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