According to a recently published study conducted by Standard & Poor’s, the number of U.S. insurers that failed in 2000 increased to 56, compared with 40 in 1999.
Of the 56 failures, 31 were property/casualty insurers; 17 were health insurers; five were life insurers; and three were title insurers. S&P described the study as providing a historical correlation between failed insurers and financial strength ratings. Of the companies that failed in 2000 and had been rated by S&P, all but one had ratings which fell below the secure financial strength rating.
The study also indicated that despite the U.S. insurance industry’s strength, resilience, and ability to provide policyholder protection even in troubled times, there is a possibility of the increased rate of failures continuing through 2001.
The full text of the study is available on S&P’s web-based credit analysis system, RatingsDirect, and can also be found on the website, www.standardandpoors.com/ratings.
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