FAILURES ON THE RISE

In the face of a slowing economy and stiff competition, 35 insurance companies failed in 2000, a 30 percent increase over the 27 failures recorded in 1999, according to Weiss Ratings Inc., an independent provider of ratings and analyses on the insurance industry. “Increasing financial weakness in the property/casualty sector of the industry was the driving force behind the large jump in insurer failures. And there’s bound to be more bloodletting in this sector as the weaker companies are further pounded by a slowing economy,” stated Martin D. Weiss, chairman of Weiss Ratings. Property/casualty insurers represented a disproportionate 27 of the 35 insurance company failures last year. All told, there were 53 insurance company and HMO failures in 2000. Among these, Weiss had issued financial safety ratings on 47, giving 72 percent of those rated a grade of D+ (“Weak”) or lower. Weiss had rated the remaining 28 percent in the C (“Fair”) range. The largest failed companies were: Fremont Indemnity Company, Harvard Pilgrim Health Care Inc., Fremont Industrial Indemnity Co., Fremont Casualty Ins. Co. and California Compensation Insurance Co.