California-based SCPIE Holdings Inc., a provider of healthcare liability insurance, reported improved results for its first quarter ended March 31, 2005.
For the 2005 first quarter, SCPIE reported net income of $1.7 million, or $0.18 per share, compared with net income of $827,000, or $0.09 per share, in the first quarter of 2004, which included $2.3 million in realized investment gains. The company’s favorable results are attributable to improvement in the company’s core operations.
For the 2005 first quarter, earned premiums for core direct healthcare operations totaled $32.0 million, compared with $31.6 million a year earlier. Net written premiums for the quarter decreased slightly to $91.4 million from $92.5 million in the 2004 first quarter. This decrease reflects a reduction in the number of insureds somewhat offset by a 6.5% rate increase in California.
Additionally in the quarter, core direct healthcare liability posted an underwriting profit of $121,000, contrasted to an underwriting loss in the comparable year-earlier quarter of $2.1 million. The combined ratio for the company’s core business in the first quarter of 2005 totaled 99.6% with a loss ratio of 76.9%. This contrasts to the 2004 first quarter combined ratio of 106.6% with a loss ratio of 86.7%. The expense ratio for the core segment is higher primarily due to increased brokered business and the payment of commissions.
SCPIE’s retention rate for its core direct healthcare liability business over the past 12 months was 94.4%.
“We are off to a promising start in 2005, and our first-quarter core results clearly indicate that our underwriting, risk management and policyholder services disciplines are contributing to the positive performance of the company,” said Donald Zuk, SCPIE president and CEO. “We are pleased the core business continues to do well.”
SCPIE’s run-off of its non-core healthcare liability operations in states other than California and Delaware continues. Outstanding reserves for the non-core healthcare liability operations declined to $87.1 million from $97.3 million at Dec. 31, 2004. Open claims dropped to 378, compared to 431 at year-end 2004. In the assumed reinsurance operations, net outstanding reserves totaled $80.6 million, a decrease from $87.8 million at Dec. 31, 2004.
The impact of non-core healthcare operations was minimal and reflects the fact that no adjustment of prior reserves was necessary.
In the assumed reinsurance area, upward development on a few programs created a loss of $2.4 million.
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