Insurance company failures declined 48.9 percent to 23 in 2002, from 45(1) in 2001, according to Weiss Ratings, Inc.
Three life and health insurers and 20 property and casualty insurers failed in 2002, compared to six and 39 respective failures in 2001.
HMO failures declined 10 percent in 2002, with nine failed HMOs compared to 10 in 2001.
According to the report, the largest failed insurance companies in 2002 were: London Pacific Life & Annuity Co (N.C.)., Legion Insurance Co. (Pa.), Villanova Insurance Co. (Pa.), Paula Insurance Co. (Calif.), and American Growers Insurance Co. (Neb.).
“The weak economy and risky bond investments fueled insurance company failures in 2002,” Melissa Gannon, vice president of Weiss Ratings, Inc., said. “Fortunately, other mitigating factors like stricter underwriting standards and increasing rates reduced the severity of those problems.”
(1) If the 12 Reliance Group companies that failed in 2001 were excluded, the number of failures for that year would have totaled 33, consequently the decline in insurance company failures between 2001 and 2002 would have been smaller, at 30.3 percent.
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