Weiss: Insurance'03 Insolvencies Down 21.4 Pct.

Weiss: Insurance'03 Insolvencies Down 21.4 Pct.

NU Online News Service, Jan. 12, 3:05 p.m. EST?With the economy gaining momentum in 2003, the number of failed insurance companies dropped 21.4 percent last year, from 28 insurer insolvencies in 2002 to 22 in 2003, Weiss Ratings Inc. said.[@@]

Among the 22 insurer insolvencies reported last year, 18 were property-casualty, while four were life-and-health insurers. In comparison, three life-and-health insurers and 25 property-casualty companies had failed in 2002, noted the Jupiter, Fla.-based ratings agency. Among the largest p-c insurer insolvencies reported in 2003 were Republic Western Insurance Co. in Phoenix, Ariz., and Reciprocal of America in Glen Allen, Va., according to Weiss.

Weiss warned in its report that despite the year-over-year decline in insolvencies seen in 2003, the downward trend may not continue in 2004. "Now that the property-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.

One positive development, though, is the upswing in the securities market, which should "reduce the impact of the soft market," Ms. Gannon forecast.