WEISS RATINGS23 Insurance Companies Fail in 1997
All Were Rated "Weak" by Weiss
PALM BEACH GARDENS, Fla., January 5, 1998 -- Despite a strong economy and rising financial markets, 23 insurance companies were taken over by state regulators in 1997, according to statistics compiled by Weiss Ratings, Inc., a leading provider of ratings and analyses on the insurance industry. ;In all, insurance company failures were up 200% from 1996 when only eight insurers failed.
Property and casualty insurers, which provide coverage for homes, autos and businesses, suffered the greatest difficulties, accounting for 19 of the 23 failures, due primarily to intense competitive pressures. This represents a ten-fold increase from 1996 when only two property and casualty insurers were taken over by state regulators.
Moreover, two of the failed property and casualty insurers were very large. Golden Eagle Insurance Company of California (rated D- by Weiss Ratings prior to failure) went under with $1.3 billion in assets, while Home Insurance Company of New Hampshire (rated D) had $3.4 billion.
The other four failures during 1997 were life and health insurers, demonstrating an improvement over 1996 when six failed. In all 23 cases, Weiss Ratings, Inc. issued a financial safety rating of D+ ("weak") or lower prior to announcement of a takeover by authorities, with 12 receiving a "very weak" rating (E+, E or E-) and 11 receiving a "weak" rating (D+, D or D-). Weiss' on-target ratings in 1997 reinforce the earlier finding by the U.S. General Accounting Office (GAO) that the Weiss ratings are the most accurate in warning consumers about insurers that subsequently fail or become financially impaired.
"Unfortunately, as a result of these failures, thousands of consumers were left without coverage and vulnerable to potentially devastating financial losses," commented Martin Weiss, chairman of Weiss Ratings, Inc. "Based on our analysis of certain other weak insurers, this situation is likely to continue or even worsen in 1998."
To avoid these difficulties, Weiss advises consumers to periodically monitor the financial health of their insurers by using safety ratings with a solid track record for accuracy.
Weiss' ratings are based on an analysis of a company's capital, profitability, investment quality, and stability, including the weakness or strength of affiliated companies. Weiss issues safety ratings on over 16,000 financial institutions, including life and health insurers, Blue Cross/Blue Shield plans, property and casualty insurers, HMOs, banks, and brokers. Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers and businesses.
Consumers needing more information on the financial safety of a specific company may purchase a rating or analysis directly from Weiss for as little as $15 by calling 1-800-289-9222. Weiss Safety Ratings are also available at many local libraries or through insurance agents.
Attached table: List of failed companies and their ratings prior to failure
1997 Insurance Company Failures
|Golden Eagle Insurance Co (CA)||P&C||1,295.6||01/01/97||D-|
|American Life Assurance (AL)||L&H||13.2||01/01/97||E|
|Armor Insurance Company (FL)||P&C||26.9||01/02/97||D+|
|Home Insurance Company (NH)||P&C||3,411.9||03/03/97||D|
|Insurance Corp of America (ICA) (TX)||P&C||42.9||03/12/97||E+|
|First Security Casualty Co (MO)||P&C||10.2||04/01/97||D-|
|National Dental Mutual Insurance Co (CO)||P&C||2.5||04/01/97||D|
|Mid Continent Life Insurance Co. (OK)||L&H||248.6||05/21/97||E-|
|Lincoln Mutual Casualty (MI)||P&C||10.3||07/01/97||D+|
|Pinnacle Insurance Co (GA)||P&C||10.2||07/01/97||E|
|Quaker City Insurance Co (PA)||P&C||23.1||07/01/97||E|
|United Republic Insurance Co (TX)||P&C||34.7||07/08/97||E+|
|American Eagle Insurance Co (TX)||P&C||136.5||07/28/97||E|
|American Western Life Insurance Co (OK)||L&H||15.7||08/01/97||E-|
|Georgia General Insurance Co (GA)||P&C||7.9||08/01/97||D+|
|Grangers Insurance Co (MD)||P&C||7.1||08/01/97||D+|
|Home Mutual Insurance Co of Binghamton (NY)||P&C||9.9||08/01/97||E|
|U.S. Capital Insurance Co (NY)||P&C||45.3||08/01/97||E|
|Home State Insurance Co (NJ)||P&C||33.9||09/03/97||E|
|United Southern Assurance Co (FL)||P&C||27.1||09/18/97||D-|
|Inland American Insurance Co (IL)||P&C||3.7||09/19/97||D|
|Conger Life Insurance Co (FL)||L&H||11.9||11/18/97||D-|
|PIE Mutual Ins. Co. (OH)||P&C||281.7||12/15/97||E+|
• D = Weak
• E = Very Weak
Source: Weiss Ratings, Inc.
15430 Endeavour Drive, Jupiter, FL 33478 · (561) 627-3300 · www.weissratings.com