<PAGE>   1
================================================================================



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 ---------------


                                    FORM 10-Q



                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTER ENDED SEPTEMBER  30, 1998            COMMISSION FILE NO. 1-12449


                               SCPIE HOLDINGS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


<TABLE>
     <S>                                                    <C>
                    DELAWARE                                      95-4457980
          (STATE OR OTHER JURISDICTION                         (I.R.S. EMPLOYER
       OF INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NO.)



          9441 WEST OLYMPIC BOULEVARD                               90212
           BEVERLY HILLS, CALIFORNIA                              (ZIP CODE)
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
</TABLE>



                                 (310) 551-5900
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


        Indicate by check mark whether the Registrant (1) has filed all reports
    required to be filed by Section 13 or 15(d) of the Securities Exchange Act
    of 1934 during the preceding 12 months (or for such shorter period that the
    Registrant was required to file such reports), and (2) has been subject to
    such filing requirements for the past 90 days.


                               Yes   X         No
                                   -----          -----

    At November 6, 1998 the Registrant had issued and outstanding an aggregate
of 12,434,791 shares of its Common Stock.



================================================================================


<PAGE>   2


                         PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                      SCPIE HOLDINGS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                             SEPTEMBER 30,     DECEMBER 31,
                                                                  1998             1997
                                                            ---------------    ---------
                                                             (UNAUDITED)
<S>                                                         <C>                <C>     
        ASSETS                                              
   Securities available-for-sale:                           
     Fixed maturity investments, at fair value              
        (amortized cost 1998 - $701,643;                    
        1997 - $692,811)...................................     $734,546        $708,860
     Equity investments, at fair value                      
       (cost 1998 - $31,185; 1997 - $17,052)...............       34,952          23,523
                                                                --------        --------
             Total securities available-for-sale...........      769,498         732,383
   Short-term investments..................................       40,305          53,281
                                                                --------        --------
             Total investments.............................      809,803         785,664
   Cash....................................................       12,982          13,252
   Accrued investment income...............................       10,401          12,202
   Reinsurance recoverables................................       23,309          21,531
   Deferred federal income taxes...........................       10,018          16,158
   Deferred policy acquisition costs.......................        8,845             520
   Property and equipment, net.............................       21,596          19,534
   Other assets............................................       27,001          19,588
                                                                --------        --------
             Total assets..................................     $923,955        $888,449
                                                                ========        ========
                                                            
        LIABILITIES                                         
   Reserves:                                                
     Losses and loss adjustment expenses...................     $483,457        $454,971
     Unearned premiums.....................................       23,236          22,072
                                                                --------        --------
             Total reserves................................      506,693         477,043
   Other liabilities.......................................       33,440          50,291
                                                                --------        --------
             Total liabilities.............................      540,133         527,334
                                                            
   Commitments and contingencies                            
                                                            
       STOCKHOLDERS' EQUITY                                 
   Preferred stock, par value $1.00, 5,000,000
     shares authorized, no shares issued or
       outstanding                                                     -               -                 
   Common stock, par value $.0001, 30,000,000               
     shares authorized, 12,792,091 shares issued,
       1998 - 11,929,391 shares outstanding                 
       1997 - 12,276,691 shares outstanding................            1               1
   Additional paid-in capital..............................       36,386          36,386
   Retained earnings.......................................      335,213         310,506
   Treasury stock, at cost                                  
       1998 - 362,700 shares and 1997 -                
         15,400 shares.....................................      (11,614)           (416)
   Accumulated other comprehensive income.................. 
                                                                  23,836          14,638
                                                                 -------         --------
             Total stockholders' equity....................      383,822         361,115
                                                                --------        --------
             Total liabilities and stockholders' equity....     $923,955        $888,449
                                                                ========        ========
</TABLE>


                             See accompanying notes.


                                       2
<PAGE>   3

                      SCPIE HOLDINGS INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                       SEPTEMBER  30,                SEPTEMBER  30,
                                                                   -----------------------       -----------------------
                                                                     1998           1997           1998           1997
                                                                   --------       --------       --------       --------
<S>                                                                <C>            <C>            <C>            <C>     
     Revenues:                                                   
       Premiums earned                                             $ 38,289       $ 32,972       $117,769       $102,083
       Net investment income                                          9,768         10,798         30,394         32,007
       Realized investment gains                                      3,269            989          7,330          4,176
       Other revenue                                                    158            154            428            443
                                                                   --------       --------       --------       --------
               Total revenues                                        51,484         44,913        155,921        138,709
     Expenses:                                                   
       Losses and loss adjustment expenses                           31,931         31,578         99,307         95,322
       Other operating expenses                                       6,767          4,024         20,707         12,607
                                                                   --------       --------       --------       --------
               Total expenses                                        38,698         35,602        120,014        107,929
                                                                   --------       --------       --------       --------
     Income before federal income taxes                              12,786          9,311         35,907         30,780
     Federal income taxes                                             3,374          1,991          9,078          7,335
                                                                   --------       --------       --------       --------
               Net income                                          $  9,412       $  7,320       $ 26,829       $ 23,445
                                                                   ========       ========       ========       ========
                                                                 
     Basic earnings per share of common stock                      $   0.79       $   0.60       $   2.21       $   1.95
     Diluted earnings per share of common stock                    $   0.78           N/A        $   2.21           N/A

     Cash dividend declared per share of common stock              $   0.06       $   0.05       $   0.18       $   0.15
</TABLE>
                                                    



            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                  ACCUMULATED
                                                             ADDITIONAL                              OTHER             TOTAL
                                    PREFERRED    COMMON        PAID-IN     RETAINED   TREASURY   COMPREHENSIVE     STOCKHOLDERS'
                                      STOCK       STOCK        CAPITAL     EARNINGS     STOCK       INCOME            EQUITY
                                   ----------    -------     ----------    --------   --------   -------------     -------------
<S>                                <C>           <C>         <C>           <C>        <C>        <C>               <C>
 BALANCE AT  JANUARY 1, 1998           $ -         $ 1        $ 36,386     $310,506     ($ 416)        $14,638         $ 361,115
  Comprehensive Income:           
    Net income                           -           -               -       26,829          -               -            26,829
     Unrealized                   
comprehensive                     
   income for unrealized          
   gains on securities            
   sold, net of          
   reclassification               
   adjustments for gains          
   included in net income                                                                                9,198             9,198
                                                                                                                       ---------
     Comprehensive income                                                                                                 36,027
                                                                                                                       ---------
  Purchase of treasury stock             -           -               -            -    (11,198)              -           (11,198)
  Cash dividend                          -           -               -       (2,122)         -               -            (2,122)
                                       ---         ---        --------     --------     ------         -------         ---------
 BALANCE AT SEPTEMBER 30,      
 1998                                  $ -         $ 1        $ 36,386     $335,213   $(11,614)        $23,836          $383,822
                                       ===         ===        =========    ========   ========         =======          ========
</TABLE>
                             
                             See accompanying notes.


                                       3
<PAGE>   4

                      SCPIE HOLDINGS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                                 SEPTEMBER 30,                 SEPTEMBER  30,
                                                                           -------------------------      -------------------------
                                                                             1998             1997          1998             1997
                                                                           --------        ---------      --------        ---------
<S>                                                                        <C>             <C>            <C>             <C>      
      OPERATING ACTIVITIES                                               
      Net income.........................................................  $  9,412        $   7,320      $ 26,829        $  23,445
      Adjustments to reconcile net income to net cash                    
      provided by operating activities:                                  
        Unpaid losses and loss adjustment expenses, and                  
          reinsurance recoverables.......................................    (1,691)            (474)       26,708            3,794
        Accrued investment income........................................     1,579            1,709         1,801             (258)
        Provision for deferred federal income taxes......................       (26)             297         1,187              163
        Policy acquisition costs.........................................       499             (210)       (8,325)             (63)
        Unearned premiums................................................    (1,982)          (2,249)        1,164           (2,795)
        Policyholders' dividends payable.................................         -           (2,143)            -           (6,922)
        Realized investments gains.......................................    (3,269)            (989)       (7,330)          (4,176)
        Provisions for amortization and depreciation.....................      (422)           1,668         2,014            3,120
        Accrued expenses and other liabilities...........................     4,500              (64)      (23,711)          (3,615)
        Changes in other assets..........................................      (636)           1,382        (7,413)          (3,352)
                                                                           --------        ---------      --------        ---------
                Net cash provided by operating activities................     7,964            6,247        12,924            9,341
                                                                         
      INVESTING ACTIVITIES                                               
         Purchases-- fixed maturities....................................   (84,030)         (42,194)     (232,576)        (240,677)
         Sales-- fixed maturities........................................    90,723           38,616       202,848          199,901
         Maturities-- fixed maturities...................................     1,565           19,800        29,058           24,024
         Purchases--equities.............................................   (13,539)          (1,118)      (17,551)          (5,458)
         Sales--equities.................................................     3,002              916         5,371            7,874
         Change in short-term investments, net...........................     3,407          (25,781)       12,976          (28,354)
                                                                           --------        ----------     --------        ---------
                Net cash provided by (used in) investing activities......     1,128           (9,761)          126          (42,690)
                                                                           --------        ---------      --------        ---------
                                                                         
      FINANCING ACTIVITIES                                               
         Issuance of common stock, net of expenses.......................         -                -             -           36,387
         Purchase of treasury stock......................................    (6,801)             (54)      (11,198)             (54)
         Cash dividends..................................................      (661)            (614)       (2,122)          (1,844)
                                                                           --------        ---------      --------        ---------
                Net cash provided by (used in) financing activities......    (7,462)            (668)      (13,320)          34,489
                                                                           --------        ---------      --------        ---------
      Increase (decrease) in cash........................................    (1,630)          (4,182)         (270)           1,140
                                                                         
      Cash at beginning of period........................................    11,352            9,534        13,252            4,212
                                                                           --------        ---------      --------        ---------
      Cash at end of period..............................................  $ 12,982        $   5,352      $ 12,982        $   5,352
                                                                           ========        =========      ========        =========
</TABLE>                                                           

                             See accompanying notes.




                                       4
<PAGE>   5

                      SCPIE HOLDINGS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                               SEPTEMBER 30, 1998

1. BASIS OF PRESENTATION AND REORGANIZATION

Basis of Presentation

    The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month and nine-month period ended
September 30, 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1998. For further information, refer
to the consolidated financial statements and notes thereto included in SCPIE
Holdings Inc.'s annual report on Form 10-K for the year ended December 31, 1997.

    The accompanying September 30, 1998 and 1997 consolidated financial
statements include the accounts and operations, after intercompany eliminations,
of SCPIE Holdings Inc. (SCPIE Holdings) and its wholly-owned subsidiaries,
principally SCPIE Indemnity Company (SCPIE Indemnity), American Healthcare
Indemnity Company (AHI), American Healthcare Specialty Insurance Company (AHSIC)
and SCPIE Management Company (SMC), collectively, the Company.

    On January 29, 1997, the Southern California Physicians Insurance Exchange
(the Exchange) consummated its plan and agreement of merger whereby the Exchange
reorganized from a reciprocal insurer to a stock insurance company and became a
wholly owned subsidiary of SCPIE Holdings (the Reorganization). Pursuant to the
Reorganization, the Exchange merged with and into SCPIE Indemnity, a California
stock company and a wholly-owned subsidiary of SCPIE Holdings, the surviving
corporation of the Reorganization. The assets and liabilities of the Exchange
that were merged into SCPIE Indemnity were accounted for at historical cost in a
manner similar to that in a pooling of interests.

    The principal purpose of the Reorganization was to improve the Company's
access to the capital markets and to raise capital to permit the growth of
existing business and develop new business opportunities in the professional
liability insurance industry. The Reorganization also provided members of the
Exchange with shares of common stock in exchange for their membership interests
in the Exchange.

    Concurrent with the Reorganization, SCPIE Holdings completed an initial
public offering, which generated net proceeds to SCPIE Holdings of approximately
$36.4 million.

    Certain 1997 amounts have been reclassified to conform to the 1998
presentation.

2.    EARNINGS PER SHARE OF COMMON STOCK

     The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                      NINE MONTHS ENDED
                                                        SEPTEMBER 30,
                                                -------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)               1998              1997
                                                --------------    -------------
<S>                                                 <C>               <C>    
Numerator:
   Net income                                       $26,829           $23,445

Numerator for:
   Basic earnings per share of common stock         $26,829           $23,445
   Diluted earnings per share of common stock       $26,829           $23,445

Denominator:
   Denominator for basic earnings per share
   of common stock - weighted-average 
   shares outstanding                                12,132            12,048

   Effect of dilutive securities:
     Stock options                                       16               N/A
                                                    -------
     Denominator for diluted earnings per
      share of common stock adjusted -
       weighted-average shares outstanding           12,148               N/A

Basic earnings per share of common stock            $  2.21           $  1.95
                                                    =======           =======

Diluted earnings per share of common stock          $  2.21               N/A
                                                    =======
</TABLE>



                                       5
<PAGE>   6

3. NEW ACCOUNTING STANDARD

    As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130 (FASB 130) "Reporting Comprehensive Income." FASB 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption had no impact on the Company's net income
or stockholders' equity. FASB 130 requires unrealized gains or losses on the
Company's available-for-sale securities, which prior to adoption were reported
separately in stockholders' equity, to be included in other comprehensive
income.

    The components of comprehensive income net of related tax, for the
nine-month periods ended September 30, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                                 1998             1997
                                               -------          -------
                                                   (IN THOUSANDS)
<S>                                            <C>              <C>    
Net income                                     $26,829          $23,445
Other comprehensive income:
  Change in unrealized gains on securities       9,198            3,138
                                               -------          -------
Total                                          $36,027          $26,583
                                               =======          =======
</TABLE>


4. INVESTMENTS

    The Company's investments in available-for-sale securities at September 30,
1998 are summarized as follows:

<TABLE>
<CAPTION>
                                                          COST OR         GROSS           GROSS
                                                         AMORTIZED     UNREALIZED      UNREALIZED
                                                           COST           GAINS          LOSSES       FAIR VALUE
                                                         --------        -------         -------       --------
                                                                             (IN THOUSANDS)
<S>                                                      <C>             <C>             <C>           <C>     
 Fixed-maturity securities:                           
    Bonds:                                            
       U.S. Government and Agencies                      $307,517        $23,747         $    16       $331,248
       State, Municipalities and                      
         Political Subdivisions                           345,399          9,290             402        354,287
      Mortgage-backed securities,                     
         U.S. Government                                   43,634            388             104         43,918
      Corporate                                             5,093              -               -          5,093
                                                         --------        -------         -------       --------
 Total fixed-maturity securities                          701,643         33,425             522        734,546
 Equity securities                                         31,185          5,468           1,701         34,952
                                                         --------        -------         -------       --------
 Total                                                   $732,828        $38,893         $ 2,223       $769,498
                                                         ========        =======         =======       ========
</TABLE>
                                    


5. FEDERAL INCOME TAXES

    The components of the federal income tax provision in the accompanying
consolidated statements of income are summarized as follows:

<TABLE>
<CAPTION>
                                             NINE MONTHS ENDED
                                               SEPTEMBER 30,
                                         ----------------------
                                           1998           1997
                                         -------        -------
                                            (IN THOUSANDS)
<S>                                      <C>            <C>    
Current                                  $ 7,891        $ 7,172
Deferred                                   1,187            163
                                         -------        -------
Total                                    $ 9,078        $ 7,335
                                         =======        =======
</TABLE>

    A reconciliation of income tax computed at the federal statutory tax rate to
total income tax expense is as follows:

<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                                      SEPTEMBER 30,
                                                                 ----------------------
                                                                   1998           1997
                                                                 --------       -------
                                                                     (IN THOUSANDS)
<S>                                                              <C>            <C>    
      Federal income tax at 35%                                  $ 12,567       $10,773
      Increase (decrease) in taxes resulting from:
         Tax-exempt interest                                       (3,641)       (3,551)
         Dividends received deduction                                (121)          (99)
         Goodwill                                                     158           168
         Other                                                        115            44
                                                                 --------       -------
      Total                                                      $  9,078       $ 7,335
                                                                 ========       =======
</TABLE>
                                                      

                                       6

<PAGE>   7

    The Internal Revenue Service (IRS) has proposed adjustments to increase the
Company's tax liability for 1993 through 1995 as a result of its examinations.
The Company's management disagrees with the adjustments proposed by the IRS and
has decided to contest the deficiencies proposed by the IRS for these years. The
1993 taxable year has been assigned to the IRS Appeals Office (Appeals Office)
and it is expected that the 1994 and 1995 taxable years will also be assigned to
the Appeals Office shortly.

    The Company's management will take all necessary steps to contest the IRS'
position. The Company's management believes that resolution of this matter will
not have a material adverse effect on the Company's financial position or
results of operation.
However, the ultimate outcome cannot be predicted at this time.

6. COMMITMENTS AND CONTINGENCIES

    The Company is a defendant in a California action brought by the bankruptcy
estate of an uninsured physician. The bankruptcy estate alleged that the Company
had an undisclosed conflict of interest when it provided the physician with a
free courtesy defense by an attorney who had represented the interests of the
Company's insureds in other cases. In 1995, a jury made a damage award against
the Company of $4.2 million in compensatory damages, and punitive damages which
were reduced to $14.0 million by the trial judge. The Company appealed these
awards to the California district court of appeal. On May 8, 1998, the appellate
court reversed the judgment against the Company in its entirety. The bankruptcy
estate may attempt to obtain a new trial in the California Superior Court in
which the judgment was originally entered. The Company believes that the
bankruptcy estate is not entitled to any additional trial under applicable
California appellate court decisions and will aggressively oppose any such
attempt. The Company believes that the action is entirely without merit and will
continue to aggressively pursue its rights.

    Since 1981, the Company has purchased annuities from life insurance
companies to fund obligations under structured settlement agreements with
certain medical malpractice claimants. Annuities having an aggregate purchase
price of approximately $12.3 million were purchased from Executive Life
Insurance Company (ELIC) which was placed in conservatorship during 1991 by the
California Insurance Commissioner. Substantially all of the assets of ELIC have
been transferred to another insurer, which has assumed the restructured
annuities and is obligated to pay varying percentages of the original annuity
benefits as they become due. The Company has determined that it is contractually
obligated for the shortfall amounts under certain of these annuities. At
December 31, 1997, a reserve of $4.0 million (net of expected reinsurance
recoveries of $3.0 million) has been recorded to cover these expected shortfall
payments. The Company believes that the amount of its obligations in excess of
the existing reserves, if any, is not material to its financial position or
results of operations.

    The Company is named as defendant in various legal actions primarily arising
from claims made under insurance policies and contracts. These actions are
considered by the Company in estimating the loss and loss adjustment expense
reserves. The Company's management believes that the resolution of these actions
will not have a material adverse effect on the Company's financial position or
results of operations.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

    For purposes of this Quarterly Report on Form 10-Q, the terms "SCPIE" and
the "Company" refer, at all times prior to January 29, 1997, to Southern
California Physicians Insurance Exchange (the "Exchange") and its subsidiaries,
collectively, and at all times on or after such date, to SCPIE Holdings Inc. and
its subsidiaries, collectively; and the term "SCPIE Holdings" refers at all
times to SCPIE Holdings Inc., excluding its subsidiaries.

GENERAL

    Certain statements in this report on Form 10-Q that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results of the Company to be materially different from historical
results or from any results expressed or implied by such forward-looking
statements. Such risks, uncertainties and other factors include, but are not
limited to, the Company's concentration of business in a single line in a single
state; the Company's entry into new markets; competition and other industry
factors, including uncertainties inherent in the estimate of loss and loss
adjustment expense (LAE) reserves, reinsurance, importance of ratings,
regulatory matters, and changes in healthcare; the availability of bank
financing; and certain structural matters, including the Company's holding
company structure and anti-takeover measures. These risks and uncertainties are
discussed in more detail under "Business--Risk Factors," and "Management's
Discussion and Analysis --General" in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997

    Premiums Earned. Premiums earned increased approximately $5.3 million, or
16.1%, to $38.3 million for the three months ended September 30, 1998 from $33.0
million for the same period in 1997. The increase was principally due to a $6.8
million increase in medical malpractice premiums from physicians and medical
groups to approximately $34.2 million for the three months ended September 30,
1998 compared to $27.4 million for the same period in 1997. This increase was a
result of the Company's acquisition of the medical malpractice book of business
of Fremont Indemnity Company (Fremont Indemnity) on January 1, 1998 and initial
premiums attributable to an agency relationship with Poe & Brown, Inc. which
commenced on January 1, 1998. Hospital medical malpractice premiums were
approximately $2.5 million for the three months ended September 30, 1998
compared to $4.0 million for the same period in 1997. This decrease in 1998
hospital medical malpractice premiums was due principally to the loss of one
large integrated hospital account in Florida in late 1997. Assumed reinsurance
premiums were approximately $1.3 million for both the three months ended
September 30, 1998 and 1997.

    Net Investment Income. Net investment income decreased approximately $1.0
million, or 9.5%, to $9.8 million for the three months ended September 30, 1998
from $10.8 million for the same period in 1997. Average invested assets
increased to $778.9 million during the three months ended September 30, 1998


                                       7
<PAGE>   8

compared to $751.1 million for the same period in 1997. The average pre-tax
yield on the investment portfolio declined to 5.0% from 5.8% for the same period
in 1997 due to a greater percentage of the portfolio held in 1998 in lower
yielding tax-exempt securities.

    Realized Investment Gains and Other Revenue. Realized investment gains were
approximately $3.3 million for the three months ended September 30, 1998
compared to realized gains of $1.0 million for the same period in 1997.

    Losses and LAE. Losses and LAE increased $0.3 million, or 1.1%, to $31.9
million for the three months ended September 30, 1998 from $31.6 million for the
same period in 1997. As a percentage of premiums earned, losses and LAE
decreased to 83.4% for the three months ended September 30, 1998 from 95.8% for
the same period in 1997. For the three months ended September 30, 1998, the
Company reduced loss and LAE reserves incurred in prior policy years
approximately $15.6 million as compared to a reserve reduction of $9.0 million
for the same period in 1997 for claims incurred in prior policy years.

    Other Operating Expenses. Other operating expenses increased $2.8 million,
or 68.2%, to $6.8 million for the three months ended September 30, 1998 from
$4.0 million for the same period in 1997. The ratio of other operating expenses
to premiums earned is referred to as the expense ratio, which was 17.7% for the
three months ended September 30, 1998 and 12.2% for the same period in 1997.
This increase in the expense ratio is due primarily to the amortization of
non-recurring costs related to the Fremont Indemnity acquisition, along with
higher expenses associated with the higher premium volume and general personnel
increases.

    Federal Income Taxes. Federal income tax expense increased $1.4 million, to
$3.4 million for the three months ended September 30, 1998 from $2.0 million for
the same period in 1997. The effective tax rate increased to 26.4% for the three
months ended September 30, 1998 compared to 21.4% for the three months ended
September 30, 1997 due to higher realized gains during the 1998 quarter.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997

    Premiums Earned. Premiums earned increased approximately $15.7 million, or
15.4%, to $117.8 million for the nine months ended September 30, 1998 from
$102.1 million for the same period in 1997. The increase was principally due to
a $21.4 million increase in medical malpractice insurance premiums from
physicians and medical groups that were approximately $106.4 million for the
nine months ended September 30, 1998 compared to $85.0 million for the same
period in 1997. Hospital medical malpractice premiums were approximately $7.7
million for the nine months ended September 30, 1998 compared to $12.1 million
for the same period in 1997. This decrease was due to the loss of one large
Florida integrated hospital account in late 1997. Assumed reinsurance premiums
were approximately $3.3 million for the nine months ended September 30, 1998
compared to $4.3 million for the same period in 1997.

    Net Investment Income. Net investment income decreased approximately $1.6
million, or 5.0%, to $30.4 million for the nine months ended September 30, 1998
from $32.0 million and for the same period in 1997. Average invested assets
increased to $773.3 million during the nine months ended September 30, 1998
compared to $736.7 million for the same period in 1997. The average pre-tax
yield on the investment portfolio declined to 5.2% for the nine months ended
September 30, 1998 compared to 5.8% for the same period in 1997 due to a greater
percentage of the portfolio held in 1998 in lower yielding tax-exempt
securities.

    Realized Investment Gains and Other Revenue. Realized investment gains were
approximately $7.3 million for the nine months ended September 30, 1998 compared
to $4.2 million for the same period in 1997.

    Losses and LAE. Losses and LAE increased $4.0 million, or 4.2%, to $99.3
million for the nine months ended September 30, 1998 from $95.3 million for the
same period in 1997. As a percentage of premiums earned, losses and LAE
decreased to 84.3% for the nine months ended September 30, 1998 from 93.4% for
the same period in 1997. For the nine months ended September 30, 1998, the
Company reduced loss and LAE reserves incurred in prior policy years
approximately $48.9 million as compared to a reserve reduction of approximately
$36.0 million in loss and LAE reserves for the nine months ended September 30,
1997 for claims incurred in prior policy years.

    Other Operating Expenses. Other operating expenses increased $8.1 million,
or 64.3%, to $20.7 million for the nine months ended September 30, 1998 from
$12.6 million for the same period in 1997. The expense ratio was 17.6% for the
nine months ended September 30, 1998 and 12.4% for the same period in 1997. This
increase in the expense ratio is due primarily to the amortization of
non-recurring costs related to the Fremont Indemnity acquisition. Additionally,
other operating expenses include certain one-time charges related to the Fremont
Indemnity acquisition and higher expenses associated with the higher premium
volume and general personnel increases.

    Federal Income Taxes. Federal income taxes increased $1.8 million, or 23.8%,
to $9.1 million for the nine months ended September 30, 1998 from $7.3 million
for the same period in 1997. The effective tax rate increased to 25.3% for the
nine months ended September 30, 1998 from 23.8% for the same period in 1997.



                                       8
<PAGE>   9

LIQUIDITY AND CAPITAL RESOURCES

    The primary sources of the Company's liquidity are insurance premiums, net
investment income, recoveries from reinsurers and proceeds from the maturity or
sale of invested assets. Funds are used to pay claims, LAE, operating expenses,
reinsurance premiums and taxes. SCPIE has also paid significant dividends, in
the form of premium credits, to its policyholders in each year since 1980. In
1996, SCPIE declared a final dividend to policyholders of the Exchange of $9.0
million, which was paid principally in the form of premium credits during 1997.
Except for this final dividend, after the Reorganization, the Company has ceased
paying such premium credit dividends to its policyholders.

    Because of uncertainty related to the timing of the payment of claims, cash
from operations for a property and casualty insurance company can vary
substantially from period to period. During the first nine months of 1998, the
cash provided by operating activities for the Company was $12.9 million compared
to $16.3 million during the corresponding 1997 period prior to the payment of
policyholders' dividends.

    The Company invests its positive cash flow from operations in both fixed
maturity securities and equity securities. A change in SCPIE's investment
philosophy in 1993 resulted in an increase in the purchase of equity securities
and a reduction in the purchase of fixed maturity securities. The Company's
current policy is to limit its investment in equity securities and real estate
to no more than 8.0% of the total market value of its investments. Accordingly,
SCPIE's portfolio of unaffiliated equity securities was $35.0 million, or 4.3%
of invested assets, at September 30, 1998. The Company plans to continue this
focus on fixed maturity securities investments for the indefinite future. The
Company has made limited investments in real estate, which is used entirely in
the Company's operating activities.

    The Company maintains a portion of its investment portfolio in high quality,
short-term securities to meet short-term operating liquidity requirements,
including the payment of losses and LAE. Short-term investments totaled $40.3
million, or 5.0% of invested assets, at September 30, 1998. The Company believes
that all of its short-term and fixed maturity securities are readily marketable.

    SCPIE Holdings is an insurance holding company whose assets principally
consist of all of the capital stock of its insurance subsidiaries. SCPIE
Holdings' principal sources of funds will be dividends from its subsidiaries and
proceeds from the issuance of debt and equity securities. The insurance company
subsidiaries are restricted by state regulation in the amount of dividends they
can pay in relation to earnings or surplus, without the consent of the
applicable state regulatory authority, principally the California Department of
Insurance. SCPIE Holdings' principal insurance subsidiary may pay dividends to
SCPIE Holdings in any year, without regulatory approval, to the extent such
dividends do not exceed the greater of (i) 10% of its statutory surplus at the
end of the preceding year or (ii) its net income for the preceding year.
Applicable regulations further require that an insurer's statutory surplus
following a dividend or other distribution be reasonable in relation to its
outstanding liabilities and adequate to meet its financial needs, and permit the
payment of dividends only out of statutory earned (unassigned) surplus unless
the payment out of other funds is approved by the Insurance Commissioner. The
amount of dividends the insurance subsidiaries are able to pay to SCPIE Holdings
during 1998 without prior regulatory approval is approximately $27.5 million.
Dividends of $25.0 million were paid during the first nine months of 1998.

    Based on historical trends, market conditions and its business plans, the
Company believes that its sources of funds will be sufficient to meet its
liquidity needs over the next 18 months and beyond. However, because economic,
market and regulatory conditions may change, there can be no assurance that the
Company's sources of funds will be sufficient to meet these liquidity needs. The
short- and long-term liquidity requirements of the Company may vary because of
the uncertainties regarding the settlement dates for unpaid claims.

    On July 24, 1998, the Company entered a lease covering approximately 95,000
square feet of office space for new Company headquarters. The lease is for a
term of 10 years and the Company expects to occupy this space in early March
1999. The Company estimates that expenditures of approximately $6.0 million in
capital improvements, equipment and relocation costs will be incurred in
connection with this relocation. The Company does not expect any other material
capital expenditures during the next three months.

    During May 1998, the Board of Directors extended the term of the stock
repurchase program in the open market until the 1999 Annual Meeting of
Stockholders. The Company has repurchased 384,400 shares through October 31,
1998 at a total cost of $12.3 million.

IMPACT OF YEAR 2000

    The Company has determined that significant portions of its software require
modifications so that its computer systems will function properly with respect
to dates in the Year 2000 and thereafter. The following discussion summarizes
the Company's state of readiness, costs to address the Year 2000 issues, the
risks of the Company's Year 2000 issues and the Company's contingency plans.

    The Company is 98% complete in implementing its Year 2000 remediation plan
for information technology (IT) systems and anticipates the entire project to be
complete by December 31, 1998. For non-IT systems (i.e., telecommunications
systems, elevators, and other devices which utilize microprocessors and
third-party providers of information), the Company has contacted all of its
major vendors and suppliers to determine level of compliance.

    The total Year 2000 project cost is estimated to be approximately $1.8
million which is being expensed as incurred. All costs incurred to date
represent the direct cost of the Company's information systems department
personnel. Costs incurred through September 30, 1998 approximated $1.6 million,
of which $0.7 million were incurred in 1998.

    Given the highly computerized nature of the Company's operations, the Year
2000 problem, if unresolved, would pose a serious risk to the Company's ability
to efficiently and effectively service its policyholders. Although no
remediation plan can identify all potential exposures, management believes that
the


                                       9
<PAGE>   10

steps taken to address the Year 2000 issue will prevent or promptly detect and
allow for correction any significant instances of noncompliance that are
reasonably within the Company's control.

    If unforeseen events result in the Company's critical systems
malfunctioning, contingency plans similar to that employed in the event of
business interruption would be enacted. These plans have been developed and will
be tested no later than March 31, 1999.

EFFECT OF INFLATION

    The primary effect of inflation on the Company is considered in pricing and
estimating reserves for unpaid losses and LAE for claims in which there is a
long period between reporting and settlement, such as medical malpractice
claims. The actual effect of inflation on the Company's results cannot be
accurately known until claims are ultimately settled. Based on actual results to
date, the Company believes that loss and LAE reserve levels and the Company's
ratemaking process adequately incorporate the effects of inflation.


                          PART II -- OTHER INFORMATION

ITEM 3. LEGAL PROCEEDINGS

    The Company is a defendant in a California action brought by the bankruptcy
estate of an uninsured physician. The bankruptcy estate alleged that the Company
had an undisclosed conflict of interest when it provided the physician with a
free courtesy defense by an attorney who had represented the interests of the
Company's insureds in other cases. In 1995, a jury made a damage award against
the Company of $4.2 million in compensatory damages, and punitive damages which
were reduced to $14.0 million by the trial judge. The Company appealed these
awards to the California district court of appeal. On May 8, 1998, the appellate
court reversed the judgment against the Company in its entirety. The bankruptcy
estate may attempt to obtain a new trial in the California Superior Court in
which the judgment was originally entered. The Company believes that the
bankruptcy estate is not entitled to any additional trial under applicable
California appellate court decisions and will aggressively oppose any such
attempt. The Company believes that the action is entirely without merit and will
continue to aggressively pursue its rights.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a) The following exhibits are included herewith.

10 The 1997 Equity Participation Plan of SCPIE Holdings Inc. (incorporated by
reference from Exhibit A to the Company's Proxy Statement filed with the
Commission on March 30, 1998.)

 27 Financial Data Schedule

(b) Not applicable.

                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   SCPIE HOLDINGS INC.


Date:  November 13, 1998           By:          /s/ PATRICK T. LO 
                                      ------------------------------------------
                                                    Patrick T. Lo
                                      Vice President and Chief Financial Officer