S&P’s Report Examines U.S. Insurer Failures for 2002

February 25, 2003

Standard & Poor’s has published a report that examines failures among U.S. insurers in 2002.

“Despite the hardening pricing environment in property/casualty and
health insurance lines, the number of U.S. insurance failures has not
diminished,” Standard & Poor’s credit analyst Steven Dreyer commented.

In 2002, 39 insurance companies succumbed to regulatory supervision because of their impaired financial positions compared with 35 in 2001. Of the 39 failed insurers, 28 were property/casualty insurers, suggesting the industry’s lingering problems have not been washed away by the rising tide of firmer pricing.

For this analysis, Standard & Poor’s tallied insurer failures in the
property/casualty, life, and health sectors. With an eye to understanding the characteristics attributable to potential problem insurers, Standard & Poor’s performed a study of the historical correlation of failed insurers and the financial strength ratings assigned. The article also provides an overview of the issues currently affecting the financial health of insurers in each sector.

The article, which is titled “Insurer Failures Rise Slightly in 2002
Despite Firmer Pricing Environment,” can be found on RatingsDirect, Standard & Poor’s Web-based credit analysis system. The article can also be found on Standard & Poor’s Web site at www.standardandpoors.com. Select Fixed Income then Insurance then Commentary & News.

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