SCPIE Holdings Inc., one of the nation’s major providers of medical malpractice insurance, today reported results for the second quarter and six months ended June 30, 2000, reflecting an increase in premiums as a result of the company’s expanding reinsurance business tempered by expected continuing high losses in the company’s hospital insurance programs.
For the second quarter, operating income per share was $0.47 versus operating income per share of $0.66 in the same period last year. Net income for the quarter totaled $4.4 million, or $0.47 per diluted share.
This compares with net income in last year’s second quarter of $8.0 million, or $0.69 per diluted share. Net premiums written for the 2000 second quarter totaled $43.2 million and earned premiums equaled $43.6 million. A year ago, net premiums written in the second quarter were $39.9 million and earned premiums were $39.4 million.
Total revenues for the quarter were $52.1 million compared with year-earlier second quarter revenues of $49.9 million. Net investment income in the second quarter amounted to $8.4 million, and the company recorded realized investment gains of $0.02 million. In the corresponding year-earlier quarter, SCPIE reported net investment income of $10.0 million and realized investment gains of $0.5 million. For the six months ended June 30, 2000, operating income per share was $0.93, down from $1.31 per share in the first half of 1999.
First-half net income was $8.2 million, or $0.87 per diluted share, compared with $19.6 million, or $1.67 per diluted share, a year ago. Net premiums written for the 2000 first half totaled $84.5 million and earned premiums equaled $83.6 million. A year ago, net premiums written in the first half were $78.6 million and earned premiums were $80.4 million. Total revenues for the 2000 first half, including net investment income of $16.8 million and $0.9 million of realized investment losses, were $99.7 million. A year earlier, six-month revenues were $106.7 million, including net investment income of $19.4 million and realized investment gains of $6.6 million.
SCPIE’s GAAP loss ratio was 86.9% for the second quarter of 2000, compared with 81.7% in the 1999 second quarter. The expense ratio equaled 19.9%, up from 17.9% a year ago. Sequentially, the company’s expense ratio was down from 21.8% recorded in the first quarter of 2000. SCPIE’s 2000 second-quarter combined ratio was 106.7% compared with 99.7% a year earlier.
“As we indicated after the first quarter, a soft pricing environment, together with losses in our hospital liability programs, is continuing to restrain profitability for SCPIE,” said Donald J. Zuk, SCPIE President and Chief Executive Officer. “We have taken significant action to correct our hospital book, including non-renewing accounts and increasing premium for those hospitals we are willing to renew. In spite of these actions, we expect hospital losses to continue throughout the balance of this year.”
Zuk added: “We were pleased in the second quarter with the $7.2 million reinsurance premium booked. We believe this segment will contribute additional quality volume and diversification to our revenues in the second half of 2000 and beyond. Also, SCPIE registered the first premiums, amounting to $1.6 million, from our dental malpractice program with Brown & Brown, announced last year. Our doctor business remained flat during the quarter, although we are beginning to see some pricing stabilization, which indicates an opportunity for growth in the future.”
SCPIE Holdings Inc. is one of the nation’s largest providers of medical malpractice insurance, based on direct premiums written in 1999. SCPIE currently insures more than 14,500 physicians, dentists, other providers and oral and maxillofacial surgeons practicing alone or in medical groups, clinics or other healthcare organizations. The company also insures a variety of healthcare facilities, including hospitals, emergency departments, outpatient surgery and hemodialysis centers, and clinical and pathology laboratories.
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