OLDWICK, N.J.—Most of 11 financially impaired property/casualty companies that failed last year did so because of deficient loss reserves and inadequate pricing, with underlying themes of overstated assets and reinsurance disputes, A.M. Best Co. Inc. says in a special report dated May 2.
“None of the 2010 impairments were directly attributable to catastrophe losses, although several had accumulated large underwriting losses over the prior three years,” Oldwick, N.J.-based Best said in the report.
Best also concluded that some already vulnerable insurers were pushed into impairment by the adverse operating environment. Only two failed as a direct result of investment losses or overstated assets, and these were not related to the financial crisis, Best said.
The 11 impairments compare with 19 impairments in 2009.
Life/health impairments
On the life/health insurance side, six companies became impaired in 2010, all due primarily to the combined category of deficient loss reserves and inadequate pricing, Best said.
The report, “Commercial Lines Dominated Financial Impairments in 2010,” is available to Best subscribers at www.ambest.com. Nonsubscribers can purchase a copy for $145 at www3.ambest.com.
U.S. property/casualty insurance company financial impairments more than tripled since 2007, according to a report released Tuesday by Oldwick, N.J.-based A.M. Best Co. Inc.