A.M. Best has downgraded malpractice insurer SCPIE Cos. from a financial strength rating of B+ (very good) to B (fair), citing depletion in the company's capitalization.
"A.M. Best remains concerned with the adequacy of loss reserves and marginal overall capitalization," the rating agency says in a release from Friday.
Los Angeles-based SCPIE, which insures 8,800 physicians in California and Delaware, reported a net loss of $11.4 million in the third quarter, mainly from its investments in a Lloyd's Syndicate company, GoshawK Holdings plc, SCPIE says in a release.
Spokesperson Howard Bender says the company expects to have a better fourth quarter thanks to a 9.9% rate increase, beginning Oct. 1, that was granted by California authorities.
Bender says the rate increase was delayed for months and much less than the 15.6% requested by company, and that SCPIE is now asking for an 8.9% increase in 2004. He estimates the company lost $3 million in the first nine months of 2003 due to the delayed rate increase.
Sondra Jacoby, executive for the Santa Barbara County Medical Society, says the downgrading would not change the medical society's longstanding endorsement of the company, which began a quarter century ago.
"We have watched SCPIE very carefully for their stability," she says. "We still feel very confident in the company. The service they provide is really excellent. If we felt different, we'd be looking around for another insurers, and we are not."