More Insurer Insolvencies In 2002

The pace of insurer insolvencies accelerated in 2002, with 38 companies being placed under regulatory supervision or into liquidation, compared with 30 insolvencies in 2001, according to A.M. Best Co. Inc. "Several years of inadequate pricing, escalating loss costs and the need to strengthen loss reserves fueled declining operating profitability and further weakened balance-sheet strength," according to a report released by the Oldwick, N.J.-based rating agency. Of the 38 insolvencies in 2002, about two-thirds were commercial insurers, with workers compensation insurers making up the bulk of the defunct companies, the report says. Although some of the insolvencies involved high-profile insurers, such as Legion Insurance Group, most of the insolvent companies were small, single-state or regional insurers, the report says.