SKP Merrill Lynch

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.