A.M. Best Lowers Rating of SCPIE Companies.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 7, 2002

A.M. Best Co. has lowered the financial strength rating to B+ (Very Good) from B++ (Very Good) for SCPIE Companies (Los Angeles, CA) (NYSE: SKP) and removed it from under review. The rating outlook is negative.

This rating action reflects SCPIE's failure to successfully complete capital enhancing initiatives in a timely manner. It also follows the net loss incurred in the second quarter of 2002, which included a strengthening of loss reserves by $14.8 million on its direct healthcare liability segment outside of California and on its assumed reinsurance business. This rating action does, however, take into consideration measures being implemented by management to restore profitability over the mid term. These initiatives include regaining greater control of underwriting practices through the termination of unprofitable agreements, eliminating certain unprofitable lines of business and refocusing on its core California medical malpractice market and raising premium rates. However, given the ongoing concerns regarding further adverse reserve development, A.M. Best views the rating outlook as negative.

On February 21, 2002, A.M. Best downgraded the rating of SCPIE Companies to B++ (Very Good) from A (Excellent) due to its weakened capital position in combination with significant premium growth and placed the rating under review with negative implications pending the completion of capital enhancing initiatives. This action followed the announcement by SCPIE that it would produce a substantial fourth-quarter and full year-end 2001 net loss from the strengthening of loss reserves by $50 million and $80 million, respectively. A.M. Best indicated that it would monitor the group's progress in the near term and expected capital enhancing initiatives to be completed in a timely fashion.

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.