WEISS RATINGSFour HMOs and 11 Insurance Companies Fail in 1998
|All Failed Companies on Weiss Roster Were Rated "Weak" in Advance|
PALM BEACH GARDENS, Fla., January 11, 1999 -- Despite a strong economy and stable interest rates, four HMOs and 11 insurance companies failed in 1998, according to Weiss Ratings, Inc., the only independent provider of ratings and analyses on the insurance industry.
Compared to 1997, when two HMOs failed, the number of HMO failures has doubled. In contrast, insurance company failures have declined 56%, down from 25 in 1997.
The largest failures were National Consumer Insurance Company, headquartered in Edison, N.J., with $170 million in assets and rated D+ by Weiss Ratings prior to failure; Classic Fire & Marine Insurance Company in Concord, Calif., with $127 million in assets and rated E by Weiss Ratings prior to failure; and Centennial Life Insurance Company, Merriam, Kan., with $118 million in assets and rated D- by Weiss Ratings prior to failure.
In all 12 cases in which the company was rated, Weiss issued a warning to consumers prior to the failure, with seven receiving a "very weak" rating (E+, E or E-) and five receiving a "weak" rating (D+, D or D-).
"Most HMOs are losing money on their operations, and over 400,000 Medicare patients were suddenly dropped by HMOs last year. So, it's no surprise that the number of failures has doubled, with more to come in 1999. Unfortunately, consumers caught up in the failures could be left without coverage and may be vulnerable to financial losses," said Martin Weiss, Ph.D., chairman of Weiss Ratings, Inc. "By contrast, in the life/health and property/casualty industries, the small number of failures are expected in the normal course of business."
To avoid these failures, Weiss advises consumers to monitor the financial health of their HMO or insurers by using safety ratings with a solid track record for accuracy. The Weiss ratings are based on an analysis of a company's capital, five-year historical profitability, quality of investments, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliates companies, and risk diversification.
1998 HMO and Insurance Company Failures
|Classic Fire & Marine Ins. Co. (Concord, CA)||P&C||126.9||01/07/98||E|
|PIC Insurance Group, Inc. (Fort Washington, PA)||P&C||99.8||01/21/98||E+|
|First Central Insurance Co. (Lynbrook, NY)||P&C||115.1||01/28/98||E|
|Centennial Life Insurance Co. (Merriam, KS)||L&H||117.5||02/05/98||D-|
|Assoc. Business & Commerce (Boca Raton, FL)||P&C||16.5||03/04/98||E|
|Bankers Credit Life Ins. Co. (Montgomery, AL)||L&H||1.0||05/08/98||E|
|Unified Physicians of WA (Federal Way, WA)||HMDI||N/A||05/15/98||N/A|
|American Colonial Life Ins. Co. (Montgomery, AL)||L&H||2.5||05/27/98||D|
|National Consumer Ins. Co. (Edison, NJ)||P&C||170.2||06/04/98||D+|
|Professional Benefits Ins. Co. (Houston, TX)||L&H||2.4||06/23/98||E-|
|Health Power HMO (Columbus, OH)||HMO||11.8||07/13/98||E+|
|AmeriCan Medical Plans of GA (Atlanta, GA)||HMO||5.6||07/14/98||D+|
|AmeriCan Medical Plans of MS (Jackson, MS)||HMO||3.7||07/15/98||D+|
|Personal Physician Care Inc. (Cleveland, OH)||HMO||14.1||08/01/98||N/A|
|New York Surety Co. (Great Neck, NY)||P&C||8.5||09/21/98||N/A|
D = Weak
E = Very Weak
N/A = Not Available
L&H = Life and Health insurer
P&C = Property and Casualty insurer
HMO = Health Maintenance Organization
HMDI = Hospital, Medical, Dental Indemnity plan (such as a Blue Cross Blue Shield company)
Source: Weiss Ratings, Inc.
Weiss issues safety ratings on over 16,000 financial institutions, including HMOs, life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, banks, and brokers. Weiss also rates the Y2K preparedness of many insurers and banks, as well as the risk-adjusted performance of more than 5,000 mutual funds. It 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, businesses, agents, and libraries.
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.
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