A.M. Best Co. says 2012 U.S. P&C company financialimpairments fell more in-line with historical trends after a sharpincrease the year before.

In a recent special report, the Oldwick, N.J.-based ratingsagency says last year's 21 impairments were below the average countof 25.8, and well below the 34 reported in 2011.

Best designates a carrier “impaired” when an insurancedepartment takes regulatory action because the carrier facesfinancial issues placing it at risk of fulfilling its duties to payclaims.

The report notes that many of the impaired carriers in 2012 hadweakened over the past three or four years “and were victims ofseveral factors, including soft market conditions, highunderwriting losses and poor management decisions.”

The prolonged effects of the economic downturn pushed themajority of the companies over the edge in 2012. Only one company,a writer of auto insurance, was impaired directly as a result ofcatastrophe losses. Auto writers made up the largest number ofimpairments at six, accounting for 30 percent of 2012's total.

Attention to risk management, plus the strength of P&Cinsurers' capitalization and redundant reserves, has “combined tosoften the effects of the weak economy and the high catastrophelosses in 2011 and 2012,” Best says. However, the ratings agencycautions that as insurers absorb losses and draw down on capitaland reserves, their operating results have suffered, making themmore vulnerable to financial shock from catastrophe losses.

So far in 2013, there have been four impairments—three workers'compensation carriers and one auto carrier.

See the list below for information on 2012 & 2013impairments by company.