<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, 1997             COMMISSION FILE NO. 1-12449


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


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



  9441 WEST OLYMPIC BOULEVARD                                    90213
   BEVERLY HILLS, CALIFORNIA                                   (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
           OFFICES)


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


      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 October 31, 1997, the Registrant had issued and outstanding an
aggregate of 12,792,091 shares of its Common Stock.



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<PAGE>   2
                        PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                               SCPIE HOLDINGS INC.

                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,           DECEMBER 31,
                                                                     1997                   1996
                                                                -------------           -------------
<S>                                                             <C>                     <C>    
                                                                 (UNAUDITED)
     ASSETS
Securities available-for-sale:
  Fixed-maturity investments, at fair value
     (amortized cost 1997-- $682,154; 1996-- $660,820)          $     692,138           $     668,367
  Equity investments, at fair value
    (cost 1997-- $16,187; 1996-- $15,555)                              22,998                  19,977
                                                                -------------           -------------
          Total securities available-for-sale                         715,136                 688,344
Short-term investments                                                 57,920                  29,566
                                                                -------------           -------------
          Total investments                                           773,056                 717,910
Cash                                                                    5,352                   4,212
Accrued investment income                                              11,456                  11,198
Reinsurance recoverables                                               14,211                  19,266
Deferred federal income taxes                                          18,506                  20,221
Deferred policy acquisition costs                                         528                     591
Property and equipment, net                                            19,582                  19,084
Other assets                                                           16,153                  12,673
                                                                -------------           -------------
          Total assets                                          $     858,844           $     805,155
                                                                =============           =============

     LIABILITIES
Reserves:
  Losses and loss adjustment expenses                           $     458,308           $     459,567
  Unearned premiums                                                    22,502                  25,297
                                                                -------------           -------------
          Total reserves                                              480,810                 484,864
Policyholders' dividends payable                                          801                   7,723
Other liabilities                                                      27,594                  24,001
                                                                -------------           -------------
          Total liabilities                                           509,205                 516,588

Commitments and contingencies

    STOCKHOLDERS' EQUITY
Common stock, par value $0.0001, 30,000,000
shares authorized, 12,792,091 shares issued,                                1                      --
12,290,091 shares outstanding
Additional paid-in capital                                             36,386                      --
Retained earnings                                                     302,389                 280,788
Treasury stock, at cost (2,000 shares)                                    (54)                     --
Unrealized appreciation on securities
  available-for-sale, net of deferred taxes                            10,917                   7,779
                                                                -------------           -------------
          Total stockholders' equity                                  349,639                 288,567
                                                                -------------           -------------
          Total liabilities and stockholders' equity            $     858,844           $     805,155
                                                                =============           =============
</TABLE>


                             See accompanying notes.


                                       2
<PAGE>   3
                               SCPIE HOLDINGS INC.

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


<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                           SEPTEMBER 30,                      SEPTEMBER 30,
                                                    --------------------------          --------------------------
                                                      1997              1996              1997              1996
                                                    --------          --------          --------          --------
<S>                                                 <C>               <C>               <C>               <C>     
Revenues:
  Premiums earned                                   $ 32,972          $ 29,016          $102,083          $ 90,144
  Net investment income                               10,798            10,245            32,007            31,184
  Realized investment gains                              989                58             4,176            11,554
  Other revenue                                          154                55               443               179
                                                    --------          --------          --------          --------
          Total revenues                              44,913            39,374           138,709           133,061
Expenses:
  Losses and loss adjustment expenses                 31,578            28,307            95,322            86,554
  Other operating expenses                             4,024             3,400            12,607            10,164
                                                    --------          --------          --------          --------
          Total expenses                              35,602            31,707           107,929            96,718
                                                    --------          --------          --------          --------
Income before policyholders' dividends and
  federal income taxes                                 9,311             7,667            30,780            36,343
Policyholders' dividends                                  --                --                --             9,000
Federal income taxes                                   1,991             1,895             7,335             7,494
                                                    --------          --------          --------          --------
          Net income                                $  7,320          $  5,772          $ 23,445          $ 19,849
                                                    ========          ========          ========          ========

Net earnings per share of common stock              $   0.60          $   0.58          $   1.95          $   1.98
                                                    ========          ========          ========          ========

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


                  CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                    (DOLLARS IN THOUSANDS)
                                         (UNAUDITED)


<TABLE>
<CAPTION>
                                                          ADDITIONAL                                 UNREALIZED       TOTAL
                                              COMMON       PAID-IN       RETAINED      TREASURY     APPRECIATION   STOCKHOLDERS'
                                              STOCK        CAPITAL       EARNINGS        STOCK     OF INVESTMENTS     EQUITY
                                            ---------     ---------     ---------      ---------   --------------  -------------
<S>                                         <C>           <C>           <C>            <C>         <C>             <C>      
BALANCE AT JANUARY 1, 1997                  $      --     $      --     $ 280,788      $      --      $   7,779     $ 288,567
   Net income                                      --            --        23,445             --             --        23,445
   Issuance of common stock                         1        36,386            --             --             --        36,387
   Purchase of treasury stocks, at cost            --            --            --            (54)            --           (54)
   Cash dividend                                   --            --        (1,844)            --             --        (1,844)
   Net unrealized appreciation                     --            --            --             --          3,138         3,138
                                            ---------     ---------     ---------      ---------      ---------     ---------
BALANCE AT SEPTEMBER 30, 1997               $       1     $  36,386     $ 302,389      $     (54)     $  10,917     $ 349,639
                                            =========     =========     =========      =========      =========     =========
</TABLE>


                             See accompanying notes.


                                       3
<PAGE>   4
                               SCPIE HOLDINGS INC.

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


<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED            NINE MONTHS ENDED
                                                                        SEPTEMBER 30,                 SEPTEMBER 30,
                                                                  ------------------------      ------------------------
                                                                     1997           1996           1997           1996
                                                                  ---------      ---------      ---------      ---------
<S>                                                               <C>            <C>            <C>            <C>      
OPERATING ACTIVITIES
Net income                                                        $   7,320      $   5,772      $  23,445      $  19,849
Adjustments to reconcile net income to net cash
provided by operating activities:
  Unpaid losses and loss adjustment expenses, and                      (474)        (1,235)         3,794          4,454
    reinsurance recoverables
  Accrued investment income                                           1,709          1,089           (258)           (46)
  Provision for deferred federal income taxes                           297           (265)           163           (711)
  Unearned premiums                                                  (2,249)           529         (2,795)         3,242
  Policyholders' dividends payable                                   (2,143)        (2,365)        (6,922)         1,940
  Realized investments gains                                           (989)           (58)        (4,176)       (11,554)
  Provisions for amortization and depreciation                        1,668          1,365          3,120          2,298
  Changes in other liabilities                                          (64)            81         (3,615)          (889)
  Changes in other assets                                             1,172          1,595         (3,415)         7,375
                                                                  ---------      ---------      ---------      ---------
          Net cash provided by operating activities                   6,247          6,508          9,341         25,958

INVESTING ACTIVITIES
   Purchases--fixed maturities                                      (42,194)       (78,721)      (240,677)      (377,026)
   Sales--fixed maturities                                           38,616         72,510        199,901        284,484
   Maturities--fixed maturities                                      19,800          4,735         24,024         14,211
   Purchases--equities                                               (1,118)        (3,070)        (5,458)        (3,639)
   Sales--equities                                                      916          1,546          7,874         48,967
   Changes in short-term investments                                (25,781)        (1,912)       (28,354)        12,136
                                                                  ---------      ---------      ---------      ---------
          Net cash used in investing activities                      (9,761)        (4,912)       (42,690)       (20,867)
                                                                  ---------      ---------      ---------      ---------

FINANCING ACTIVITIES
   Issuance of common stock, net of expenses                             --             --         36,387             --
   Purchase of treasury stock                                           (54)            --            (54)            --
   Cash dividends                                                      (614)            --         (1,844)            --
                                                                  ---------      ---------      ---------      ---------
          Net cash provided by (used in) financing activities          (668)            --         34,489             --
                                                                  ---------      ---------      ---------      ---------

Increase (decrease) in cash                                          (4,182)         1,596          1,140          5,091

Cash at beginning of period                                           9,534          6,548          4,212          3,053
                                                                  ---------      ---------      ---------      ---------
Cash at end of period                                             $   5,352      $   8,144      $   5,352      $   8,144
                                                                  =========      =========      =========      =========
</TABLE>


                             See accompanying notes.


                                       4
<PAGE>   5
                               SCPIE HOLDINGS INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                               SEPTEMBER 30, 1997

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 nine-month period ended September 30,
1997 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. For further information, refer to the financial
statements and footnotes thereto included in SCPIE Holdings Inc.'s annual report
on Form 10-K for the year ended December 31, 1996.

      The accompanying September 30, 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 September 30, 1997,
SCPIE Indemnity paid a dividend of the outstanding stock of SMC and its
subsidiaries to SCPIE Holdings.

      Financial statements for 1996 represent the consolidated financial
statements of the Southern California Physicians Insurance Exchange (the
Exchange) and its wholly owned subsidiaries, SCPIE Holdings, SCPIE Indemnity,
AHI, AHSIC and SMC. All material intercompany transactions have been eliminated.

      On March 21, 1996, the Board of Governors of the Exchange adopted a Plan
and Agreement of Merger (the Merger Agreement) for the Exchange to reorganize
from a reciprocal insurer to a stock insurance company and become a wholly owned
subsidiary of SCPIE Holdings (the Reorganization). On January 29, 1997, the
Exchange consummated the Reorganization. Pursuant to the Reorganization, the
Exchange merged with and into SCPIE Indemnity, a newly organized California
stock insurer that was the surviving corporation of the Reorganization. The
assets and liabilities of the Exchange were merged into SCPIE Indemnity and
accounted for at historical cost in a manner similar to that in a pooling of
interests. SCPIE Indemnity is licensed to write property and casualty insurance
lines in the state of California, but did not conduct business prior to the
Reorganization.

      The principal purpose of the Reorganization was to improve SCPIE'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.

2.    EARNINGS PER SHARE

      Earnings per share for the three and nine month periods ended September
30, 1997 is computed using the weighted average number of common shares
outstanding during the period of 12,291,047 and 12,048,257, respectively.
Earnings per share for the three and nine month periods ended September 30, 1996
gives effect to the Reorganization and the allocation of 10,000,000 common
shares to eligible members of the Exchange.

3.    NEW ACCOUNTING STANDARDS

      In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (FASB 128) "Earnings Per Share" which is effective for periods
ending after December 15, 1997. Under FASB 128, primary earnings per share will
be replaced by basic earnings per share. Fully diluted shares would not change
significantly but would be renamed diluted earnings per share. All previously
recorded earnings per share amounts will be required to be restated to conform
to the new standard. The Company does not expect that the adoption of this
accounting standard will have any impact on its 1997 earnings per share amounts.


                                       5
<PAGE>   6
4.    INVESTMENTS

      The Company's investments in available-for-sale securities at September
30, 1997 are summarized as follows:

<TABLE>
<CAPTION>
                                             COST OR            GROSS            GROSS
                                            AMORTIZED        UNREALIZED        UNREALIZED
                                              COST              GAINS            LOSSES          FAIR VALUE
                                            --------         ----------        ----------        ----------
<S>                                         <C>              <C>               <C>               <C>     
                                                                    (IN THOUSANDS)
Fixed-maturity investments:
      U.S. Government and Agencies          $275,149          $  5,590          $    567          $280,172
      State, Municipalities and
        Political Subdivisions               331,213             5,715             1,168           335,760
     Mortgage-backed securities               70,692               732               318            71,106
     Corporate                                 5,100                --                --             5,100
                                            --------          --------          --------          --------
Total fixed-maturity                         682,154            12,037             2,053           692,138
investments
Equity investments                            16,187             7,010               199            22,998
                                            --------          --------          --------          --------
Total investments                           $698,341          $ 19,047          $  2,252          $715,136
                                            ========          ========          ========          ========
</TABLE>

5.      FEDERAL INCOME TAXES

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

                     NINE MONTHS ENDED
                        SEPTEMBER 30,
                  ------------------------
                    1997             1996
                  -------          -------
                       (IN THOUSANDS)
[S]               [C]              [C]
Current           $ 7,172          $ 8,205
Deferred              163             (711)
                  -------          -------
Total             $ 7,335          $ 7,494
                  =======          =======

        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,
                                                        1997               1996
                                                      --------           --------
<S>                                                   <C>                <C>     
                                                            (IN THOUSANDS)
Federal income tax at 35%                             $ 10,773           $  9,570
Increase (decrease) in taxes resulting from:
   Tax-exempt interest                                  (3,551)            (2,135)
   Dividends received deduction                            (99)              (106)
   Goodwill                                                168                 98
   Other                                                    44                 67
                                                      --------           --------
Total                                                 $  7,335           $  7,494
                                                      ========           ========
</TABLE>

6.      COMMITMENTS AND CONTINGENCIES

        The Company is a defendant in an 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. The punitive damages rendered by the jury
were reduced to $14,000,000 by the trial judge. The Company believes that the
action is entirely without merit and plans to aggressively pursue its rights on
appeal. However, the ultimate resolution of this matter cannot be determined at
this time and could result in a loss to the Company.

        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 $12,294,000 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, 1996, a
reserve of $4,000,000 (net of expected reinsurance recoveries of $3,036,000) 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.


                                       6
<PAGE>   7
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. The offering of the
common stock of SCPIE Holdings is referred to herein as the "Offering" and was
consummated on January 30, 1997.

GENERAL

        On January 29, 1997, SCPIE consummated its reorganization from a
reciprocal insurance company to a stock insurance company by merging with and
into SCPIE Indemnity Company (the "Reorganization"). In connection with the
Reorganization, 9,994,652 shares of the Company's common stock were issued to
members of the Exchange in exchange for their membership interests in SCPIE, and
500,000 shares of common stock were issued to SCPIE Indemnity Company.

        On January 30, 1997, the Company engaged in an initial public offering
of 2,300,000 shares of its Common Stock, $.0001 par value, pursuant to a
Registration Statement on Form S-1 declared effective by the Securities and
Exchange Commission ("SEC") on January 29, 1997. The principal purpose of the
Offering 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 net proceeds
of the Offering are being used to capitalize the Company's insurance company
subsidiaries to facilitate geographic expansion, and for general corporate
purposes.

        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 recent reliance on a single broker for hospital business
and termination of this relationship as of October 1, 1997; competition and
other industry factors, including uncertainties inherent in the estimate of loss
and loss adjustment expense reserves, reinsurance, importance of ratings,
regulatory matters, and changes in health care; 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 registration statement on
Form 10-K for the fiscal year 1996, filed with the SEC on March 28, 1997.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996

        Premiums Earned. Premiums earned increased approximately $4.0 million,
or 13.6%, to $33.0 million for the three months ended September 30, 1997 from
$29.0 million for the same period in 1996. The increase was principally due to a
$3.8 million increase in hospital medical malpractice insurance premiums.
Medical malpractice premiums from physicians and medical groups were
approximately $27.4 million for the three months ended September 30, 1997
compared to $27.6 million for the same period in 1996. An average 5.0% increase
in premium rates in effect during the 1997 period was offset by a 5.3% decrease
in the average number of policies in force during the 1997 period as compared to
the 1996 period. Hospital medical malpractice premiums were approximately $4.1
million for the three months ended September 30, 1997 compared to $0.3 million
for the same period in 1996. Assumed reinsurance premiums were approximately
$1.3 million for the three months ended September 30, 1997 compared to $0.9
million for the same period in 1996.

        Net Investment Income. Net investment income increased approximately
$0.6 million, or 5.4%, to $10.8 million for the three months ended September 30,
1997 from $10.2 million for the same period in 1996. Average assets increased to
$751.1 million during the three months ended September 30, 1997 compared to
$692.1 million for the same period in 1996.

        Realized Investment Gains. Realized investment gains were approximately
$1.0 million for the three months ended September 30, 1997 compared to $58,000
for the same period in 1996.

        Losses and LAE. Losses and LAE increased $3.3 million, or 11.6%, to
$31.6 million for the three months ended September 30, 1997 from $28.3 million
for the same period in 1996. As a percentage of premiums earned, losses and LAE
decreased to 95.8% for the three months ended September 30, 1997 from 97.6% for
the same period in 1996. For the three months ended September 30, 1997, the
Company reduced loss and LAE reserves for claims incurred in prior policy years
approximately $9.0 million as compared to a reserve reduction of $10.7 million
for the same period in 1996 for claims incurred in prior policy years.

        Other Operating Expenses. Other operating expenses increased $0.6
million, or 18.4%, to $4.0 million for the three months ended September 30, 1997
from $3.4 million for the same period in 1996. The ratio of other operating
expenses to premiums earned is referred to as the expense ratio, which was 12.2%
for the three months ended September 30, 1997 and 11.7% for the same period in
1996.
                                       7
<PAGE>   8
        Federal Income Taxes. Federal income tax expense increased $0.1 million,
to $2.0 million for the three months ended September 30, 1997 from $1.9 million
for the same period in 1996. The effective tax rate is 21.4% for the three
months ended September 30, 1997 compared to 24.7% for the same period in 1996.
The decrease in the effective tax rate is due to higher tax-exempt interest
income received.

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996

        Premiums Earned. Premiums earned increased approximately $12.0 million,
or 13.2%, to $102.1 million for the nine months ended September 30, 1997 from
$90.1 million for the same period in 1996. The increase was principally due to a
$11.0 million increase in hospital medical malpractice insurance premiums.
Medical malpractice premiums from physicians and medical groups were
approximately $85.0 million for the nine months ended September 30, 1997
compared to $85.9 million for the same period in 1996. An average 5.0% increase
in premium rates in effect during the 1997 period was offset by a 4.1% decrease
in the average number of policies in force during the 1997 period as compared to
the 1996 period. Hospital medical malpractice premiums were approximately $12.1
million for the nine months ended September 30, 1997 compared to $1.1 million
for the same period in 1996. Assumed reinsurance premiums were approximately
$4.3 million for the nine months ended September 30, 1997 compared to $2.5
million for the same period in 1996.

        Net Investment Income. Net investment income increased approximately
$0.8 million, or 2.6%, to $32.0 million for the nine months ended September 30,
1997 from $31.2 million and for the same period in 1996. Average invested assets
increased to $736.8 million during the nine months ended September 30, 1997
compared to $682.2 million for the same period in 1996. The average pre-tax
yield on the investment portfolio declined to 5.6% for the nine months ended
September 30, 1997 compared to 6.1% for the same period in 1996 due to a greater
percentage of the portfolio held in 1997 in lower yielding tax-exempt
securities.

        Realized Investment Gains. Realized investment gains were approximately
$4.2 million for the nine months ended September 30, 1997 compared to $11.6
million for the same period in 1996. Approximately $10.0 million of the gains
from 1996 resulted from the sale of equity securities in connection with the
Company's decision in the first quarter to increase the focus of its investment
portfolio on fixed maturity securities. The remainder was attributable to sales
made in the fixed maturity portion of the investment portfolio to take advantage
of more favorable yields or to reposition the maturity of the portfolio.

        Losses and LAE. Losses and LAE increased $8.7 million, or 10.1%, to
$95.3 million for the nine months ended September 30, 1997 from $86.6 million
for the same period in 1996. As a percentage of premiums earned, losses and LAE
decreased to 93.4% for the nine months ended September 30, 1997 from 96.0% for
the same period in 1996. For the nine months ended September 30, 1997, the
Company reduced loss and LAE reserves for claims incurred in prior policy years
approximately $35.9 million as compared to a reserve reduction of approximately
$38.6 million in loss and LAE reserves for the nine months ended September 30,
1996 for claims incurred in prior policy years.

        Other Operating Expenses. Other operating expenses increased $2.4
million, or 24.0%, to $12.6 million for the nine months ended September 30, 1997
from $10.2 million for the same period in 1996. This increase was principally
attributable to increases in policy acquisition expenses of $1.0 million, legal
and consulting expenses of $1.0 million and insurance department licenses and
fees of $0.2 million. The expense ratio was 12.4% for the nine months ended
September 30, 1997 and 11.3% for the same period in 1996.

        Policyholders' Dividends. During 1996, the Board of Governors declared a
final dividend of $9.0 million to members of the Exchange. Such dividend has
been paid principally in the form of premium credits during 1997. This dividend
is reflected as an expense for the nine months ended September 30, 1996.

        Federal Income Taxes. Federal income taxes decreased $0.2 million, or
2.1%, to $7.3 million for the nine months ended September 30, 1997 from $7.5
million for the same period in 1996. The effective tax rate decreased to 23.8%
for the nine months ended September 30, 1997 from 27.4% for the same period in
1996, due primarily to an increase in tax-exempt interest and lower realized
investment gains for the nine months ended September 30, 1997.

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 members in each year since
1980. SCPIE paid $9.9 million, $9.5 million and $11.2 million of such dividends
during the years ended December 31, 1996, 1995 and 1994, respectively, and $6.9
million during the first nine months of 1997. The Board of Governors declared a
final dividend in 1996 to members of the Exchange of $9.0 million, which will be
paid principally in the form of premium credits during 1997. Except for this
final dividend, after the Reorganization, the Company will cease paying such
premium credit dividends to its policyholders.

        The Company has consistently experienced positive cash flow from
operations. 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. Cash provided by operating activities
for the Company, before the payment of dividends to policyholders, was $39.8
million in 1996, an increase of $18.8 million compared to 1995. The higher
amount of cash flow from operations in 1996 was due to a refund of federal
income tax and interest of $25.9 million in settlement of a tax dispute for the
1985 through 1988 tax years. During the first nine months of 1997, the cash
provided by operating activities for the Company was $9.3 million.

        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


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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 reduced from $61.1
million at December 31, 1995 to $23.0 million at September 30, 1997. 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 almost entirely in the Company's operating activities, with the
remainder leased to third parties.

        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 $57.9 million, or 7.5% of invested assets, at September 30, 1997. 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 consist of
all of the capital stock of its insurance subsidiaries and approximately $36.4
million of net proceeds from its January 1997 common stock offering, after
payment of expenses of the Reorganization. Of the proceeds, SCPIE has
contributed $25.0 million to one of its insurance company subsidiaries and has
contributed another $8.0 million to another insurance company subsidiary. Its
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 1997 without prior regulatory approval is approximately $32.7 million.
Dividends of $20.0 million were paid during the first nine months of 1997.

        The Company has received a commitment from a large lender for a bank
facility in the amount of $50.0 million. The commitment is subject to certain
terms and conditions as well as negotiation and completion of all documentation.
The Company expects to use this facility for general corporate purposes.

        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.

        The Company has no planned material expenditures for property or
equipment.

        During May 1997, the Board of Directors authorized the repurchase of up
to 1,000,000 shares of its common stock in the open market. The repurchase may
begin at any time and continue until May 1998. During the third quarter of 1997,
2,000 shares were repurchased. Subsequent to September 30, 1997, 2,200 shares
were repurchased.


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

        For information regarding legal proceedings, see "Quarterly Report Under
Section 13 or 15(d) of the Securities Exchange Act of 1934 (Form 10-Q) of the
Company for the Quarter ended March 31, 1997," incorporated herein by this
reference.


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ITEM 5. OTHER INFORMATION

        In August 1995, SCPIE entered into a marketing agreement with Sullivan,
Kelly and Associates, Inc. (SKA), one of the leading insurance brokers of
hospital and large medical group coverages in the Western United States. Under
the agreement, SKA had the exclusive right to market SCPIE's malpractice
coverage for hospitals in all states, and SCPIE recognized SKA as the exclusive
broker for medical group coverage in all states other than California. On
December 16, 1996, SKA filed for bankruptcy in the United States Bankruptcy
Court, Central District of California, and its assets were acquired by another
insurance company in September 1997 in a court approved transaction.

        Effective October 1, 1997, SCPIE and SKA mutually agreed to terminate
their exclusive marketing agreement. SCPIE now actively markets its hospital
policies under a new program directly and through regional and local brokers,
and competes with SKA and a number of insurance companies in the underwriting of
hospital malpractice policies.

        AHI, a subsidiary of SCPIE Holdings, has formed a relationship with Poe
& Brown, Inc., one of the nation's top independent insurance agency
organizations, to provide professional liability insurance to physicians
commencing January 1, 1998. This coverage will be offered to solo physicians and
medical groups in 13 states, the largest being Connecticut, Florida and Georgia.
This replaces an existing program Poe & Brown had established with another
insurance company.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)     The following exhibits are included herewith.

27      Financial Data Schedule

(b)     Not applicable.


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                                   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, 1997       By:______________________________________________
                                                 Patrick T. Lo
                                   Vice President and Chief Financial Officer


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