Weiss Ratings Reports PnC Insurers Suffer $9B Loss in 2001

July 9, 2002

The nation’s property and casualty insurers reported a $9 billion loss in 2001, compared to a $27 billion profit in 2000, according to research by Weiss Ratings Inc.

By year-end, claims surged to a record $381 billion, an increase of $175 billion, or 86 percent, over the $205 billion in claims reported in 2000. The loss, the first ever for the industry, reflects not only catastrophic losses from the Sept. 11 attacks but also a general increase in claims across a majority of lines of business.

“The industry was hit hard by the staggering claims from the terrorist attacks,” Martin D. Weiss, Ph.D., chairman of Weiss Ratings Inc., said. “It would be a mistake, however, to blame all of the industry’s troubles on September 11. The economic malaise, the rash of corporate bankruptcies, and the market downturn have also taken their toll.” Although the losses were very large, they were concentrated among 905 insurers, a mere 34.1 percent of the 2,653 companies analyzed. Moreover, just three large insurers, each suffering losses in excess of $1 billion, accounted for an unusually large 59 percent of the total $9 billion in red ink. The three companies reporting the largest losses for the year were: State Farm Mutual Auto Insurance Co., General Reinsurance Corp., and State Farm Fire and Casualty Co.

Among the 2,653 property and casualty insurers reviewed by Weiss using year- end 2001 data, 89 were upgraded, while 325 were downgraded. Notable upgrades include: Allstate Ins. Co., Ill. from “B+” to “A-;” Dairyland Ins. Co, Wis. from “B+” to “A-” and Travelers Indemnity Co., Conn. from “B-” to “B.”

Notable downgrades include: Liberty Mutual Ins. Co., Mass. from “B+” to “B;” State Farm Mutual Auto. Ins. Co., Ill. from “A” to “A-;” and St. Paul Fire and Marine, Minn. from “B+” to “B.”

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