<PAGE>
 
================================================================================
 
                      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 MARCH 31, 1999                 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.)
 
 
  1888 CENTURY PARK EAST, STE. 800                           90067-1712
     LOS ANGELES, CALIFORNIA                                 (ZIP CODE)
  (ADDRESS OF PRINCIPAL EXECUTIVE
              OFFICE)


                                (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 
                                ---           ---


    Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.

                Class                               Outstanding at May 13, 1999
   Preferred stock, par value $l.00 per share          No shares outstanding
   Common stock, par value $0.0001 per share             12,059,891 shares

================================================================================
<PAGE>
 
                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                     SCPIE HOLDINGS INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                   (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                  MARCH 31,             DECEMBER 31,
                                                                                    1999                    1998
                                                                          ----------------------   ----------------------
                                                                                 (unaudited)
<S>                                                                       <C>                      <C>
     ASSETS
Securities available-for-sale:
  Fixed-maturity investments (Note 3), at fair value
     (amortized cost 1999 -- $695,984; 1998 -- $698,971)                           $705,514               $722,196   
  Equity investments, at fair value                                                                                  
    (cost 1999 -- $23,773; 1998 -- $31,943)                                          24,131                 37,015   
                                                                                   --------               --------   
          Total securities available-for-sale                                       729,645                759,211   
Short-term investments                                                               48,417                 34,405   
                                                                                   --------               --------   
          Total investments                                                         778,062                793,616   
Cash                                                                                 10,675                 12,305   
Accrued investment income                                                            10,525                 11,440   
Reinsurance recoverable                                                              21,811                 24,899   
Deferred federal income taxes (Note 4)                                               15,305                 12,163   
Costs in excess of net assets required                                                7,604                  7,811   
Property and equipment, net                                                          20,238                 19,706   
Other assets                                                                         34,982                 39,529   
                                                                                   --------               --------   
          Total assets                                                             $899,202               $921,469   
                                                                                   ========               ========   
                                                                                                                     
     LIABILITIES                                                                                                     
Reserves:                                                                                                            
  Losses and loss adjustment expenses                                              $467,322               $477,631   
  Unearned premiums                                                                  22,234                 24,591   
                                                                                   --------               --------   
          Total reserves                                                            489,556                502,222   
Other liabilities                                                                    28,851                 32,729   
                                                                                   --------               --------   
          Total liabilities                                                         518,407                534,951   
                                                                                                                     
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 $0.0001, 30,000,000                                                                          
  shares authorized, 12,792,091 shares issued,                                                                       
  1999 - 11,732,191 shares outstanding                                                                     
  1998 - 11,878,791 shares outstanding                                                    1                      1   
Additional paid-in capital                                                           36,386                 36,386   
Retained earnings                                                                   355,195                344,587   
Treasury stock, at cost                                                                                              
 (1999 - 559,900 shares; 1998 - 413,300 shares)                                     (17,214)               (13,141)  
Accumulated other comprehensive income                                                6,427                 18,685   
                                                                                   --------               --------   
          Total stockholders' equity                                                380,795                386,518   
                                                                                   --------               --------   
          Total liabilities and stockholders' equity                               $899,202               $921,469   
                                                                                   ========               ========   
</TABLE>

                            See accompanying notes.

                                       2
<PAGE>
 
                       CONSOLIDATED STATEMENTS OF INCOME
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                              ---------
                                                                  1999                      1998   
                                                                  ----                      ----   
<S>                                                              <C>                       <C>
Revenues:                                                                             
  Premiums earned                                                $41,018                   $39,686
  Net investment income                                            9,476                    10,503
  Realized investment gains                                        6,102                     2,320
  Other revenue                                                      137                        38
                                                                 -------                   -------
          Total revenues                                          56,733                    52,547
                                                                                      
Expenses:                                                                             
  Losses and loss adjustment expenses                             33,563                    33,431
  Other operating expenses                                         7,194                     7,099
                                                                 -------                   -------
          Total expenses                                          40,757                    40,530
                                                                 -------                   -------
                                                                                      
Income before federal income taxes                                15,976                    12,017
Federal income taxes                                               4,384                     2,993
                                                                 -------                   -------
          Net income                                             $11,592                   $ 9,024
                                                                 =======                   =======
                                                                                      
Basic earnings per share of common stock                         $  0.98                   $  0.74
                                                                                      
Diluted earnings per share of common stock                       $  0.98                   $  0.74
                                                                                      
Cash dividend declared per share of common stock                 $  0.08                   $  0.06
</TABLE>



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

<TABLE>
<CAPTION>
 
                                                                                                   ACCUMULATED       TOTAL   
                                                           ADDITIONAL                                 OTHER          STOCK-
                                                  COMMON    PAID-IN      RETAINED     TREASURY    COMPREHENSIVE     HOLDERS'
                                                  STOCK     CAPITAL      EARNINGS      STOCK          INCOME         EQUITY 
                                                  ------   ----------   ----------   ----------   --------------   ----------
<S>                                               <C>      <C>          <C>          <C>          <C>              <C>
 BALANCE AT JANUARY 1, 1999                           $1      $36,386    $344,587     $(13,141)        $ 18,685     $386,518
                                                                                                                    --------
 
     Net income                                       --           --      11,592           --               --       11,592
     Other comprehensive loss for
       unrealized loss on securities sold,
       net of reclassification adjustments
       of  $3,153 for losses included in
       net income.                                                                                      (12,258)     (12,258)
                                                                                                                    --------
             Comprehensive loss                                                                                         (666)
                                                                                                                    --------
     Purchase of treasury stock                       --           --          --       (4,073)              --       (4,073)
    Cash dividends                                    --           --        (984)          --               --         (984)
                                                  ------   ----------    --------     --------         --------     --------
 BALANCE AT MARCH 31, 1999                            $1      $36,386    $355,195     $(17,214)        $  6,427     $380,795
                                                  ======   ==========    ========     ========         ========     ========
</TABLE>

                            See accompanying notes.

                                       3
<PAGE>
 
                      SCPIE HOLDINGS INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                                          ---------
                                                                              1999                        1998          
                                                                              ----                        ----
<S>                                                                         <C>                        <C> 
OPERATING ACTIVITIES                                                                                               
Net income                                                                  $ 11,592                   $   9,024   
Adjustments to reconcile net income to net cash                                                                                
  provided by (used in) operating activities:                                                                                  
   Unpaid losses and loss adjustment expenses, and                                                                             
     reinsurance recoverables                                                 (7,221)                     33,382   
   Provision for deferred federal income taxes                                   415                       1,379                   
   Realized gains on investments                                              (6,102)                     (2,320)  
Changes in operating assets and liabilities:                                                                                   
   Accrued investment income                                                     915                       1,138                   
   Unearned premiums                                                          (2,357)                      4,052                   
   Provisions for amortization and depreciation                                  801                      (1,447)  
   Other liabilities                                                           4,131                     (26,854)  
   Other assets                                                                4,754                     (11,076)  
                                                                            --------                   ---------
          Net cash provided by operating activities                            6,928                       7,278                   
                                                                            --------                   ---------
                                                                                                                               
INVESTING ACTIVITIES                                                                                                           
   Purchases--fixed maturities                                               (94,426)                   (109,602)  
   Sales - fixed maturities                                                   89,988                      62,943   
   Maturities-- fixed maturities                                               2,856                      15,862   
   Purchases - equities                                                      (12,662)                     (1,915)  
   Sales - equities                                                           24,755                       3,018                   
   Changes in short-term investments                                         (14,012)                     27,456   
                                                                            --------                   ---------
          Net cash used in investing activities                               (3,501)                     (2,238)  
                                                                            --------                   ---------
                                                                                                                               
FINANCING ACTIVITIES                                                                                                           
   Purchase of treasury stock                                                 (4,073)                     (1,534)  
   Cash dividends                                                               (984)                       (733)                  
                                                                            --------                   ---------
          Net cash used in financing activities                               (5,057)                     (2,267)  
                                                                            --------                   ---------
                                                                                                                               
Increase (decrease) in cash                                                   (1,630)                      2,773   
                                                                                                                               
Cash at beginning of period                                                   12,305                      13,252   
                                                                            --------                   ---------
Cash at end of period                                                       $ 10,675                   $  16,025   
                                                                            ========                   =========
</TABLE>
                                                         
                            See accompanying notes.      

                                       4
<PAGE>
 
                     SCPIE HOLDINGS INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

                                MARCH 31, 1999

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 and with instructions to form 10-Q and Article 7 of Regulation S-X.
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 period ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. 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, 1998.

   The accompanying March 31, 1999 and 1998 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.


2. EARNINGS PER SHARE

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

<TABLE> 
<CAPTION> 
                                                    THREE MONTHS ENDED
                                                         MARCH 31,
        (IN THOUSANDS, EXCEPT PER SHARE DATA)       1999          1998
                                                    ----          ----
     <S>                                           <C>           <C>
     Numerator:
       Net income                                  $11,592       $ 9,024
      
     Numerator for:
       Basic earnings per share of common stock    $11,592       $ 9,024
       Diluted earnings per share of common stock  $11,592       $ 9,024
      
     Denominator:
       Denominator for basic earnings per share 
       of common stock - weighted-average shares
       outstanding                                  11,808        12,228
      
       Effect of dilutive securities:
         Stock options                               - 0 -         - 0 -
                                                   -------       -------
         Denominator for diluted earnings per 
         share of common stock adjusted -
         weighted-average shares outstanding        11,808        12,228
      
     Basic earnings per share of common stock      $  0.98       $  0.74
                                                   =======       =======
      
     Diluted earnings per share of common stock    $  0.98       $  0.74
                                                   =======       =======
</TABLE>
                                        
   At March 31, 1999 and 1998, no incremental shares related to stock options
are included in the diluted average number of shares outstanding as the impact
would have been antidilutive.

                                       5
<PAGE>
 
3. INVESTMENTS

   The Company's investments in available-for-sale securities at March 31, 1999
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 investments:            
                      U. S. Government and Agencies                 $240,932       $ 7,287       $1,744     $246,475
                      State, Municipalities and        
                        Political Subdivisions                       337,350         6,593        1,445      342,498
                      Mortgage-backed securities                      35,186           189          140       35,235
                      Corporate                                       82,516            28        1,238       81,306
                                                                    --------       -------       ------     --------
                Total fixed-maturity investments                     695,984        14,097        4,567      705,514
                Equity investments                                    23,773           360            2       24,131
                                                                    --------       -------       ------     --------
                Total investments                                   $719,757       $14,457       $4,569     $729,645
                                                                    ========       =======       ======     ========
</TABLE>

4. FEDERAL INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED                
                                                                                           MARCH 31,                    
                                                                        ----------------------------------------------  
                                                                                1999                     1998           
                                                                        ---------------------   ----------------------  
                                                                                        (IN THOUSANDS)                 
                                     <S>                                <C>                     <C>                     
                                     Current                                   $3,969                   $1,614          
                                     Deferred                                     415                    1,379          
                                                                               ------                   ------          
                                     Total                                     $4,384                   $2,993          
                                                                               ======                   ======          
</TABLE>

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

<TABLE>
<CAPTION>
                                                                                     THREE  MONTHS ENDED                
                                                                                           MARCH 31,                    
                                                                        ----------------------------------------------  
                                                                                1999                     1998           
                                                                        ---------------------   ----------------------  
                                                                                        (IN THOUSANDS)
                          <S>                                           <C>                     <C>
                          Federal income tax at 35%                           $5,592                   $ 4,206
                          Increase (decrease) in taxes resulting from: 
                             Tax-exempt interest                               1,274)                   (1,259)
                             Dividends received deduction                        (36)                      (39)
                             Goodwill                                             53                        30
                             Other                                                49                        55
                                                                              ------                   -------
                          Total                                               $4,384                   $ 2,993
                                                                              ======                   =======
</TABLE>

   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 through 1995 taxable years have been assigned to the IRS Appeals
Office.

   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 operations.  However, the ultimate outcome cannot be predicted at
this time.

5. COMMITMENTS AND CONTINGENCIES

   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.

   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 plans to aggressively pursue its rights.

                                       6
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

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; compliance of the Company's computer systems with Year 2000
requirements; 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, 1998.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

   Premiums Earned. Premiums earned increased approximately $1.3 million, or
3.4%, to $41.0 million for the three months ended March 31, 1999 from $39.7
million for the same period in 1998. The increase was principally due to a $1.3
million increase in medical malpractice premiums of physicians and medical
groups to approximately $37.1 million for the three months ended March 31, 1999
compared to $35.8 million for the same period in 1998.  This increase was the
result of premiums attributable to an agency relationship with Poe & Brown,
Inc., which commenced on January 1, 1998 principally in Florida, Connecticut and
Georgia.  Hospital medical malpractice premiums were approximately $2.2 million
for the three months ended March 31,1999 compared to $2.4 million for  the same
period in 1998.  Assumed reinsurance premiums were approximately $1.0 million
for the three months ended March 31, 1999 compared to $1.1 million for the same
period in 1998.

   Net Investment Income. Net investment income decreased to $9.5 million for
the three months ended March 31, 1999 from $10.5 million for the same period in
1998. Average assets decreased to $785.8 million during the three months ended
March 31, 1999 compared to $786.3 million for the same period in 1998. The
investment portfolio has a higher percentage of lower yielding tax exempt bonds
at March 31, 1999 than the corresponding period in the prior year.

   Realized Investment Gains. Realized investment gains were approximately $6.1
million for the three months ended March 31, 1999 compared to $2.3 million for
the same period in 1998.

   Losses and LAE. Losses and LAE were level at $33.6 million for the three
months ended March 31, 1999 from $33.4 million for the same period in 1998. As a
percentage of premiums earned, losses and LAE decreased to 81.8% for the three
months ended March 31, 1999 from 84.2% for the same period in 1998 due to
continued improvement in trends such as a decrease in the frequency of claims
reporting. For the three months ended March 31, 1999, the Company reduced loss
and LAE reserves for claims incurred in prior policy years approximately $16.1
million as compared to a reserve reduction of $17.2 million for the same period
in 1998 for claims incurred in prior policy years.

   Other Operating Expenses. Other operating expenses increased by $0.1 million,
or 1.4%, to $7.2 million for the three months ended March 31, 1999 from $7.1
million for the same period in 1998. The ratio of other operating expenses to
premiums earned was 17.5% for the three months ended March 31, 1999 and 17.9%
for the same period in 1998.

   Federal Income Taxes. Federal income tax expense increased $1.4 million, to
$4.4 million for the three months ended March 31, 1999 from $3.0 million for the
same period in 1998. The effective tax rate is 27.4% for the three months ended
March 31, 1999 compared to 24.9% for the same period in 1998 due to higher
realized gains in 1999.

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 losses, LAE, operating expenses,
reinsurance premiums and taxes.

   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 three months of 1999, the
cash provided by operating activities for the Company was $6.9 million compared
to $7.3 million during the corresponding 1998 period.

   The Company invests its positive cash flow from operations in both fixed
maturity securities and equity 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, the Company's
portfolio of unaffiliated equity securities was $24.1 million at March 31, 1999.
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 have been used
almost entirely in the Company's operating activities, with the remainder leased
to third parties.  In July 1998, the Company entered into 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 moved its headquarters and
principal operations to this space in early March 

                                       7
<PAGE>
 
1999. The Company intends to lease its former headquarters to third parties. The
Company expended $4.3 million for leasehold improvements and equipment through
March 31, 1999, and estimates a total of $6.9 will be incurred.

   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 $48.4
million, or 6.2% of invested assets, at March 31, 1999. 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 primarily consist
of all of the capital stock of its insurance company subsidiaries.  Its
principal sources of funds are 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 company 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 receives regulatory approval.  The amount of dividends that
the insurance company subsidiaries are able to pay to SCPIE Holdings during 1999
without prior regulatory approval is approximately $41.1 million.  Dividends of
$16.0 million have been paid to SCPIE Holdings through April 30, 1999.

   The Company has received a commitment from a large lender for a bank facility
in the amount of $75.0 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.

   During May 1997, the Board of Directors authorized the repurchase of up to
1,000,000 shares of the Company's common stock on the open market.  The
repurchases may be made from time to time and continue until May 1999.  Since
1997, 559,900 shares were repurchased.  From April 1, 1999 to May 1, 1999, an
additional 172,300 shares were repurchased.  The Board of Directors may further
extend the program's expiration date or adopt a new program.

YEAR 2000

   The Company relies heavily on information technology ("IT") systems and other
systems and facilities such as telephones, building access control systems and
heating and ventilation equipment ("embedded systems") to conduct its business.
The Company also has business relationships with health care providers,
financial institutions, financial intermediaries, public utilities and other
critical vendors as well as regulators and customers who are themselves reliant
on IT and embedded systems to conduct their businesses.

   Worldwide concerns have arisen over the ability of IT and embedded systems to
function properly on and after January 1, 2000 ("Year 2000").  The Year 2000
concern is the result of many computer programs being written using two digits
rather than four digits to define the applicable year.  Systems that have date-
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000, or as no date.  This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business operations.

State of Readiness

   In 1995, the Company organized a multi-disciplinary Year 2000 Project Team.
The Year 2000 Project Team has developed and is currently executing a
comprehensive plan designed to make the Company's mission critical IT systems
and embedded systems Year 2000 ready. Outside consultants have reviewed the
Company's overall process, plan and progress to date. The Company's plan for IT
systems consists of four phases: (1) inventory-identifying all IT systems and
risk rating each according to its potential business impact; (2) assessment -
identifying IT systems that use date functions and assessing them for Year 2000
functionality; (3) remediation -reprogramming, or replacing where necessary,
inventoried items to ensure they are Year 2000 ready; and (4) testing and
certification - testing the code modifications and new inventory with other
associated systems, including extensive date testing and performing quality
assurance testing to ensure successful operation in the post-1999 environment.

   The Company completed the remediation of substantially all of its mission
critical IT systems by year-end 1998.

   During the first quarter of 1999, the Company conducted and completed testing
and certification, the Company believes that its Year 2000 project, generally,
is completed.

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<PAGE>
 
External Relationships

   The Company also faces the risk that one or more of its critical suppliers or
customers ("external relationships") will not be able to interact with the
Company due to the third party's inability to resolve its own Year 2000 issues,
including those associated with its own external relationships. The Company has
completed its inventory of external relationships and risk rated each external
relationship based upon the potential business impact, available alternatives
and cost of substitution. The Company is attempting to determine the overall
Year 2000 readiness of its external relationships. In the case of mission
critical suppliers such as banks, financial intermediaries (such as stock
exchanges), telecommunications providers and other utilities, IT vendors,
financial market data providers, major physician groups and major hospitals, the
Company is engaged in discussions with the third parties and is attempting to
obtain detailed information as to those parties' Year 2000 plans and state of
readiness. The Company, however, does not have sufficient information at the
current time to predict whether its external relationships will be Year 2000
ready.

Year 2000 Costs

   Year 2000 costs incurred were $1,018,000 and $734,000 in 1998 and 1997,
respectively and  are currently estimated to be $101,000 in 1999 for a total of
$1,853,000. A large majority of these costs are expected to be incremental
expenses that will not recur in the Year 2000 or thereafter. The Company
expenses these costs as incurred and funds these costs through operating cash
flows.

Risks and Contingency/Recovery Planning

   If the Company's Year 2000 issues were unresolved, potential consequences
would include, among other possibilities, the inability to accurately and timely
process claims, update policyholders' accounts, process financial transactions,
bill policyholders, assess exposure to risks, determine liquidity requirements
or report accurate data to management, stockholders, policyholders, regulators
and others as well as business interruptions or shutdowns, financial losses,
reputational harm, increased scrutiny by regulators and litigation related to
Year 2000 issues. The Company is attempting to limit the potential impact of the
Year 2000 by monitoring the progress of its own Year 2000 project and those of
its critical external relationships and by developing contingency/recovery
plans. The Company cannot guarantee that it will be able to resolve all of its
Year 2000 issues.  Any critical unresolved Year 2000 issues at the Company or
with its external relationships, however, could have a material adverse effect
on the Company's results of operations, liquidity or financial condition.

The Company has begun to develop contingency/recovery plans aimed at ensuring
the continuity of critical business functions before and after December 31,
1999. As part of that process, the Company has begun to develop reasonably
likely failure scenarios for its critical IT systems and external relationships
and the embedded systems in its critical facilities. Once these scenarios are
identified, the Company will develop plans that are designed to reduce the
impact on the Company, and provide methods of returning to normal operations, if
one or more of those scenarios occur. The Company substantially completed
contingency/recovery planning as of March 31, 1999.

Other Factors Affecting the Company's Businesses

   Any critical unresolved Year 2000 issues at the Company or with its external
relationships could have a material adverse effect on the Company's results of
operations, liquidity or financial condition. In addition, the Company's
expectations about the future costs and timely and successful completion of its
Year 2000 program are subject to uncertainties that could cause actual results
to differ materially from what has been discussed above under "Year 2000."
Factors that could influence the amount of future costs and the completion dates
and effectiveness of remediation, testing and certification and contingency
planning efforts include the Company's success in identifying IT systems and
embedded systems that contain two-digit year codes, the nature and amount of
required reprogramming, testing and certification, the rate and magnitude of
related labor and consulting costs, the availability of qualified personnel and
the success of the Company's external relationships in addressing their own Year
2000 issues

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 plans to aggressively pursue its rights.

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<PAGE>
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are included herewith.

3   Amended and Restated Bylaws

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:  May 13, 1999                   By:         /s/ Patrick T. Lo
                                         ---------------------------------------
                                                      Patrick T. Lo
                                                Senior Vice President and 
                                                 Chief Financial Officer

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