Weiss Ratings


22 Insurance Companies Failed in 2003
HMOs and Banks Report Just Three Failures Each for the Year

JUPITER, Fla., January 12, 2004 — With the economy gaining momentum during the second half of 2003, the number of failed[1] insurance companies declined 21.4 percent, to 22 compared to 28 insurer insolvencies in 2002, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. Four life and health insurers and 18 property and casualty insurers failed in 2003, compared to three and 25 respective failures in 2002.

The largest failed insurance companies in 2003 were:

Company

Headquarters

Co. Type

Date of Failure

At Date of Failure

Total Assets*
($ Mil)

Weiss
Safety Rating

Western United Life Assur. Co.

Seattle, Wash.

L&H

12/24/03

1,559.8

C-

Republic Western Ins. Co.

Phoenix, Ariz.

P&C

05/20/03

576.6

C-

Reciprocal of America

Glen Allen, Va.

P&C

01/29/03

478.8

C

Old Standard Life Ins. Co.

Boise, Idaho

L&H

12/24/03

425.3

D

Old West Annuity & Life Ins. Co.

Phoenix Ariz.

L&H

12/24/03

224.4

D

Weiss Safety Ratings: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak
*Figures are as of the most recent data available at time of failure.

"Now that the property and casualty industry has arguably reached the peak of a hard market, premium increases are expected to slow, driving underwriting earnings down and potentially, the number of insolvencies up," said Melissa Gannon, vice president of Weiss Ratings, Inc. "However, the upswing in the securities market should reduce the impact of the soft market."

HMOs and Banks Report Fewer Failures in 2003

Premium increases, cost-cutting initiatives, and economic growth helped strengthen the nation's HMOs and banks, which reported only three insolvencies each in 2003. HMO failures decreased 70 percent, from 10 in 2002 to just three in 2003, while the banking industry experienced a 72.7 percent decline, from 11 insolvencies to only three during the same period.

"Premium increases and effective cost-cutting strategies helped many HMOs survive, and even prosper, during three weak economic years, while banks have benefited from a very favorable interest rate environment," added Ms. Gannon.

To avoid financially weak companies, Weiss Ratings recommends that consumers and businesses monitor the financial health of their HMO, insurance company, and bank using safety ratings with a solid track record for accuracy. The Weiss ratings are based on an analysis of a company's capital, profitability, quality of investments, liquidity, and stability.

Weiss issues safety ratings on more than 15,000 financial institutions, including insurance companies, banks, and brokerage firms. Weiss also rates the risk-adjusted performance of more than 12,000 mutual funds and more than 8,000 stocks. Weiss Ratings is the only major rating agency that receives no direct or indirect compensation from the companies it rates for issuing its ratings. Revenues are derived strictly from sales of its products to consumers, institutions, businesses, libraries, and governmental agencies.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through www.WeissRatings.com, or starting at $15 by calling (800) 289-9222.

[1] The company is deemed failed if it is either 1) under supervision of an insurance regulatory authority; 2) in the process of rehabilitation; 3) in the process of liquidation; or 4) voluntarily dissolved after disciplinary or other regulatory action by an insurance regulatory authority. Once Weiss Ratings has been advised that a company under supervision or rehabilitation has been released from supervision or successfully rehabilitated, it will be rated based upon our evaluation of the released or rehabilitated company.

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