« Grades are in! | Main | New Report Finds the U.S. Reinsurance Market Flat to Slightly Down »

January 10, 2005

Insurance Company Failures Decline 48% in 2004, According to Weiss Ratings

With the economy continuing to strengthen, the number of insurance companies that failed(1) in 2004 declined 48 percent, to 13 compared to 25 insurer insolvencies in 2003, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. Three life and health insurers and 10 property and casualty insurers failed in 2003, compared to four and 21 respective failures in 2003.

The 13 failed insurance companies in 2004 were:

                                                    At Date of Failure

                                                      Total    Weiss
                                    Co.   Date of    Assets(a) Safety
Company               Headquarters  Type  Failure   ($ Mil)    Rating
-------------------- -------------- ----- --------- ---------- -------
National Health      Grand Prairie,  L&H  03/03/04      873.8     E
Insurance Co.        Texas

MIIX Insurance Co.   Lawrenceville,  P&C  08/27/04      813.0     U

Capitol Life         Golden, Colo.   L&H  03/03/04      304.8     D
Insurance Co.

Interboro Mutual     Mineola, N.Y.   P&C  04/06/04       58.4     E-
Indemnity Ins. Co.

Life and Health Ins. Philadelphia,   L&H  07/02/04       47.9     E-
Co. of America       Pa.

Statewide Insurance  Waukegan, Ill.  P&C  01/06/04       33.1     D-

Cascade National     Seattle, Wash.  P&C  11/30/04       27.3     D
Ins. Co.

American Superior    Plantation,     P&C  09/29/04       13.5     D
Insurance Co.        Fla.
Cumberland Casualty  Tampa, Fla.     P&C  02/26/04       12.1     D
& Surety Co.

New America          N. Lauderdale,  P&C  07/01/04       10.9     C-
Insurance Co.        Fla.

State Capital        Lawrenceville,  P&C  06/21/04        8.7     D-
Insurance Co.        N.J.

Pinnacle Casualty    Montgomery,     P&C  02/02/04        3.4     E
Assurance Corp.      Ala.

Carrol County Mutual Westminster,    P&C  04/12/04        n/a     D
Fire Ins. Co.        Md.

        Weiss Safety Ratings: A=Excellent; B=Good; C=Fair; D=Weak;
        E=Very Weak; F=Failed; U=Unrated

       (a)Figures are as of the most recent data available at time of

"Insurers have been reporting robust profits for several quarters now, which reflects both an improved securities market and economic growth, resulting in fewer company failures compared to the numbers reported several years ago," commented Melissa Gannon, vice president of Weiss Ratings, Inc.

HMOs Report Fewer Failures; Bank Insolvencies Rise 25%

Strong industry performance also contributed to fewer HMO failures in 2004. HMO failures decreased 33 percent, from three in 2003 to two in 2004. Meanwhile, the banking industry experienced a 25 percent increase, from three insolvencies to four during the same period.

The HMOs and banks that failed in 2004 were:

                                                    At Date of Failure

                                                     Total     Weiss
                                    Co.   Date of   Assets(a)  Safety
Company                Headquarters Type  Failure   ($ Mil)    Rating
---------------------- ------------ ----- --------- ---------- -------
Guaranty National Bank Tallahassee, Bank  03/12/04      104.6     D-
of Tallahassee         Fla.

Bank of Ephraim        Ephraim,     Bank  06/25/04       46.4     D-

Reliance Bank          White        Bank  03/19/04       30.3     E-

Family Health Care     Mississippi  HMO   07/15/04       25.3     U

Dollar Savings Bank    Newark, N.J. Bank  02/13/04       11.4     C+

PrimeHealth of Alabama Alabama      HMO   02/13/04        3.7     E

    Weiss Safety Ratings: A=Excellent; B=Good; C=Fair; D=Weak; E=Very
    Weak; F=Failed; U=Unrated

    (a)Figures are as of the most recent data available at time of

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 Ratings, Inc. reviews more than 8,000 stocks daily, including all those traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq. Weiss also issues investment ratings on more than 12,000 mutual funds, covering equity, fixed-income, and closed-end funds, and provides financial safety ratings on more than 15,000 financial institutions, including banks and insurance companies. It 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 and custom research solutions to consumers, institutions, businesses, libraries, and governmental agencies. Ratings and analyses, consumer financial and investment guides, and other products are available for purchase through www.weissratings.com or 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.

Posted by Tom Troceen